Kuwait Court of Cassation principle number 3083

Penalty clause: its nature: an agreement between the creditor and debtor on the amount of compensation if the debtor fails to perform his obligation, constituting compensation for nonperformance or delay in performance. - Liability remaining after rescission of the contract. Tortious liability specified 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 field of proof, as it results in 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, 303 of the Civil Code.