Judicial judgment — Civil Code
Earnest Money and Contractual Penalties
Decision reference: A comparative principle drawn from civil-law commentary on earnest money and contractual penalties.
With earnest money, the agreed amount may be due from the party who withdraws even without proof of damage. A contractual penalty, by contrast, is generally linked to the existence of damage, subject to the contract and applicable civil rules.
Crime and penalties
Judicial judgment — Civil Code
Updated: 22 September 2026
Prepared and reviewed by: Ashraf Al-Khawaja
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With earnest money, the agreed amount may be due from the party who withdraws even without proof of damage. A contractual penalty, by contrast, is generally linked to the existence of damage, subject to the contract and applicable civil rules.
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Question
What is the difference between earnest money and a contractual penalty?
Extracted principle
With earnest money, the agreed amount may be due from the party who withdraws even without proof of damage. A contractual penalty, by contrast, is generally linked to the existence of damage, subject to the contract and applicable civil rules.
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