Kuwait Court of Cassation principle number 4117

Penalty clause: its nature: an agreement between the creditor and debtor on the amount of compensation if the debtor does not perform his obligation, constituting compensation for non-performance or delay therein. - The liability remaining after rescission of the contract. Tortious, determined by the contracting parties under a penalty clause among the contractual terms on the basis of which compensation is due. Its inclusion of contractual liability and tortious liability as well. - A penalty clause or agreed compensation is an advance agreement assessing compensation. Its effect and rationale: the assessment of compensation relates to the element of damage in the sphere of proof, since it entails a presumption that damage equal to the amount assessed by the contracting parties has occurred. The burden of proving that no damage occurred rests on the debtor. Articles 302 and 303 Civil Code.