Is the concept of rescission (Iqālah) contradictory to or convergent with the penalty clause (Shart Jazāʾī) in sales, and what is the ruling on the penalty clause in Islamic Sharia?
Iqalah (rescission) is the annulment of a contract and the cancellation of its ruling by mutual consent of both parties. It is recommended, and may even be obligatory after a void contract. Its scope is binding contracts. As for the penalty clause, it is an agreement on compensation that one of the contracting parties is entitled to for the actual damage incurred if the other party fails to fulfill their obligation. It applies to both binding and non-binding contracts. Thus, iqalah and the penalty clause are two different contracts.
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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