What is the jurisprudential adaptation of a penalty clause that obliges a scholarship student to work in the Ministry of Education after graduation for a certain period or pay double what was spent on him?
The closest legal classification for the contract between the Ministry and the scholarship student is a lease contract. In this contract, the scholarship period represents the rent for study expenses, and employment at the agreed-upon salary. The student is obligated to work for a specified period after completing studies; otherwise, they are liable for financial compensation as a penalty clause. This compensation must be proportionate to the actual damage incurred by the Ministry and is waived if the student has a valid excuse. The penalty clause is valid unless there is a legitimate excuse, and it must observe justice and fairness, so it does not become an exaggerated financial threat. The compensable damage is the actual financial loss, real loss, and certain missed profit, and it does not include moral or emotional damage. The penalty clause is not enforced if the student proves that their breach was due to circumstances beyond their control, or if the Ministry did not suffer any damage. There is no harm in stipulating the repayment of what the Ministry spent on the student if they breach the contract. However, stipulating a predetermined increase over the actual expenditure is not permissible, as it involves uncertainty (gharar) and wrongful appropriation of funds. It cannot be construed as compensation for moral damage, a financial punishment (ta'zir), or a reward (hiba thawāb).
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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