THE PENALTY CLAUSE IN FINANCIAL LOANS ACCORDING TO THE SAUDI CIVIL TRANSACTIONS LAW (A Comparative Referential Study between Egyptian Law and Islamic Jurisprudence)

Article

The penalty clause is one of the important contractual procedures to ensure the implementation of obligations and the speedy settlement of disputes. However, the penalty clause in the field of financial loans is problematic, contrary to the general principle in the penalty clause. This is because it adopts the rule of usury and its justification. This research dealt with the penalty clause in financial loans according to the Saudi civil transactions law, following comparative referential scientific approach between the Egyptian law and Islamic jurisprudence, with the aim of identifying the position of each of them regarding this condition within the scope of financial loans. The research included an introduction, three topics and a conclusion. The research concluded that the people agreed on the prohibition of the penalty clause in financial loans if the increase will return to the creditor, and that this is a form of usury unanimously forbidden. The Saudi regulator agreed with Islamic jurisprudence to prevent the penalty clause in the event that the object of the obligation was a monetary amount, unlike the Egyptian law that where penalty clause is permitted in financial loans in all their forms. Whether they were agreed upon in the contract or estimated at the discretion of the judge, and whether the loan was paid in installments or by paying it with its interest in one payment when the deadline came.