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The question

Is it permissible or forbidden to take the penalty clause stipulated in the contract between the seller and the buyer if one of the parties breaches the terms of the contract (such as the seller backing out a week after receiving the down payment for the sale)?

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Source: FtawySummary from Ftawy's records · added here Sep 2, 20261 min readAlso available in العربية
The answer

If two people agree to purchase something in the future, there is no harm in that. It is permissible to document this promise with a penalty clause to be paid by the party who reneges, as there is no legal impediment. However, if the sale contract has been concluded, the seller has received the price, and they have parted ways, the seller does not have the right to back out and is compelled to deliver the sold item, unless the buyer grants rescission. Likewise, the buyer does not have the right to back out after the contract is finalized.

Summary from Ftawy's records · added here

Reviewed by El Fatwa's sharia committee.

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Where this answer came from
Source platform
Ftawy
Original fatwa ID
38073
Added here
. This is when the answer was added to El Fatwa, not the fatwa's date.
Text
Summary from Ftawy's records, reviewed by El Fatwa's sharia committee.
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Read the full answer on Ftawy