Kuwait Court of Cassation principle number 2378

Penalty clause or agreed compensation. It is an advance agreement assessing the compensation due upon the debtor’s breach of his obligation. Existence of this clause. Its effect: a presumption that the assessment of compensation therein is proportionate to the damage sustained by the creditor. - 410 - Commercial - Penalty clause. When the judge may not award it and when he may reduce it. - Invoking the absence of damage in order to prevent application of the penalty clause. Burden of proof thereof. It rests upon the debtor.