Judicial principles and studies
Delay Penalty and Liquidated Damages in a Supply Contract and Contract Termination
A concise rule: contractual delay penalties are due only when the obligation is performed late; if there is no performance or incomplete performance, damages follow general civil-liability rules. In the cited matter the claimant’s request for the liquidated penalty was denied because she sought contract termination limited to undelivered goods.
Updated: 10 September 2026
Prepared and reviewed by: Ashraf Al-Khawaja
Subject
Examination of entitlement to a contractual delay penalty/liquidated damages in a supply contract dispute where contract termination was sought with respect to undelivered goods, and the limits of applying a liquidated clause versus general damage assessment.
Summary
- A contractual delay penalty is payable only when the obligor performs the duty late—i.e., a belated but complete performance.\n- Where the obligor fails to perform or performs incompletely, assessment of compensation does not follow the delay penalty; instead damages are measured under Article 363 of the Civil Code and general civil liability principles based on actual proven loss.\n- The claimant’s demand for the liquidated penalty was dismissed because she sought rescission limited to the undelivered items rather than asserting delayed performance; accordingly the challenged award of the penalty was set aside.\n- The decision departs from earlier rulings of the Court of Cassation numbered (3280/2021, 6857/2021, 5694/2022) that held damage is not presumed when a liquidated clause exists. This is an educational summary and does not constitute judicial text or legal advice.
Practical significance
This is a general educational summary based on the points published in the official source. It does not replace the original material or a review by Ashraf Al-Khawaja before relying on it for any action.
Sources and references
Verify the official text and latest amendments before relying on this material professionally.