The penal clause in the contracting contract in the Iraqi and Jordanian civil law and the extent of the court’s authority to amend it

Abstract

This study analyzed the penalty clause and clarified what it is, and explained its benefits and provisions, in addition to the manufacturing contract (Istisna'’), and the extent of the contracting parties’ commitment to implement the penalty clause, which is to pay compensation and not to procrastinate in complying with it as it is subject to the Hadith of Muhammad Allah's Messenger - May the blessing and peace of Allah be upon him: “Muslims must abide by their conditions (which they have made).” The researcher depend on the inductive and comparative approach to achieve the objectives of the study. Thus, a comparative study of the Iraqi and Jordanian civil law and some other civil legislation was conducted. The study found a set of results, the most significant of which is that the Iraqi civil law is very close to the vision of the Jordanian civil law in the extent of the contractors’ commitment to the penalty clause and the determination of the judge’s authority as much as possible, so as not to conflict with the rule of  "agreements must be kept" or "Pacta sunt servanda" in Latin. In addition to not to infringe the freedom of contract and that the penalty clause is part of the original contract and is subject to the rule (the accessory follows the principal). If the original contract is invalid, the penalty clause is invalidated accordingly. The penalty clause must receive wide attention by the Iraqi legislator through enacting  a law requiring the registration of the penalty clause in the official authorities to become binding and formal. The jurists have different opinions about it, so some of them considered it a financial punishment, while others called it a “financial threat,” and others called it “financial compensation.”