—for validation has no meaning unless the contract produces its legal effect and its intended purpose is achieved, and the very purpose of every contract is that it be fulfilled.

Abū Dāwūd relates—on the authority of Abū Hurayrah—that the Messenger of Allah ﷺ said, “Muslims are bound by their stipulations.” Tirmidhī graded the report ḥasan ṣaḥīḥ. This is precisely the sense affirmed by the Qur’an and the Sunnah.

The aim of stipulations, then, is to render obligatory that which was neither obligatory nor forbidden beforehand; whatever was merely permissible without the condition becomes mandatory once it is made a condition.

The sound analogy in this area—upon which the legal foundations of Aḥmad and other hadith-jurists rest—is that stipulating an increase or a reduction is permissible so long as nothing in the Law prohibits it.

Shaykh al-Islām said: “Every condition that does not contradict the Sacred Law is valid in all contracts. Whether the purchaser requires the seller to do something or to refrain from something in the sale—be it for the seller’s benefit or pertaining to the very item sold—both the sale and the condition stand valid.”

Ibn al-Qayyim stated: “The Sharīʿah criterion is that every condition which conflicts with the ruling of Allah and His Book is void, whereas what does not conflict is binding; for ‘Muslims are bound by their stipulations, except a stipulation that makes lawful the unlawful or unlawful the lawful.’ This is the view chosen by our teacher Ibn Taymiyyah (may Allah have mercy on him).”

• Resolution of the Council of Senior Scholars regarding the validity and enforceability of the penalty clause:

Their decision may be summarized as follows:

The penalty clause commonly inserted into contracts is a sound and recognized condition that must be observed, unless a legally acknowledged excuse prevents fulfillment of the obligation that triggers it. Such an excuse suspends the clause’s enforceability until the impediment is removed.

When the stipulated penalty is, by customary standards, excessive—being intended as a form of financial intimidation and lying far outside the bounds set by Sharīʿah principles—recourse must be had to justice and fairness, in proportion to the benefit lost or the harm incurred. In case of dispute, its determination is referred to the Sharīʿah judge, who may consult specialists and experts, in accordance with the Almighty’s words: “And when you judge between people, judge with justice…” (Q. 4: 58).