What is the ruling on a penalty clause that obliges the customer to pay compensation upon延迟in settling the price of the commodity, or to compensate for the expected profit? And is it permissible to apply this condition to the customer if it has been approved for the company?
The penalty clause in financial contracts is permissible except in debt contracts, such as increasing the price of a commodity for someone who delays installment payments, as this is clear usury (riba). As for other rights and obligations, a penalty clause is permissible therein to compensate for actual damages, but it does not include moral damages. It is not enforced if the breach was due to circumstances beyond one's control, or if no harm was inflicted upon the injured party. The court may adjust its amount if it is excessive.
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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