Kuwait Court of Cassation principle number 2377

The penalty clause lapses when the principal obligation lapses. Reason for this: 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 this rescission. Tortious. Compensation for it is fixed by a penalty clause. - A penalty clause applies to contractual and tortious liability. - Rescission of the contract causes the penalty clause contained in it to lapse. Implication: the judge may assess compensation against the contracting party in breach of his obligation. 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 its order requiring the female purchaser to pay it.