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Fatwa Clarifies Sale with Late Payment Penalty
The Egyptian Dar al-Ifta’ has generated controversy over the legality of stipulating a monetary penalty for delaying debt repayment. It clarified that any legally permissible increase on the principal amount due to delay is not permissible, as it is considered an increase in exchange for postponement. The authority emphasized that the creditor has no right to include a condition for an increase in the debt’s value at the outset; such a condition is invalid, and the creditor is only entitled to demand the original amount owed. If the debtor intentionally delays payment without a valid excuse, the creditor may resort to legal action to seek compensation for the actual damages caused by the delay, in accordance with legal regulations. However, charging an usurious penalty is not permitted in Islamic law.
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