Is it permissible to take the amount resulting from the penalty clause in a contract between a colleague and a contractor, given that the contractor delayed the execution of the work, despite his acknowledgment of imposing the penalty clause on himself, and the total amount of penalties and defects in execution reached 680,000 riyals?

Liquidated damages are divided into two types: The first relates to debts, and this is impermissible because it is usury (riba). The second relates to the execution of works, and this is valid and permissible, such as when a contractor defaults on their work and the other party is harmed. This is permissible unless there is evidence prohibiting it, and the default rule for conditions is validity. Many scholars and organizations have issued fatwas (religious edicts) permitting this type of liquidated damages. It must be taken into consideration to grant respite to the one in hardship and to be lenient with them, as Allah Almighty says: "And if there is one in adversity, then [let there be] a delay until [a time of] ease. But if you give [it in charity] as a charity, it is better for you, if you only knew."