Kuwait Court of Cassation principle number 3055

A penalty clause lapses upon the lapse of the principal obligation. The reason: it is an obligation accessory to the latter. - The debtor's failure to perform his contractual obligation. A fault giving rise to his liability. - The contracting parties' determination of the amount of compensation in the event of rescission of the contract. Liability resulting from that rescission. Tortious. Compensation therefor is determined by a penalty clause. - A penalty clause may apply to contractual and tortious liability. - Rescission of the contract causes the penalty clause contained therein to lapse. The implication: the judge may assess compensation against the contracting party in breach of his obligation. An example of rescission of a contract for the sale of a car by instalments for failure to pay the instalments, and the court's assessment of the amount of compensation and order requiring the female purchaser to pay it.