Condition of Imposing a Fine on the Trader

Question
The institution agreed with the trader that the institution's profit is 40% (capital 10,000 dinars) contract clause: * The trader is required to provide financial statements once a week. (How much was sold and how much remains of the offers). Next clause: * In case of violating the previous clause of this contract, the trader will pay a fine of 2% increase on the profit (which will make the institution's profit 42%), and this fine will be repeated if the violation by the trader recurs. Is it permissible to impose this condition? If it is not permissible to impose a common part, is it permissible to impose a specific amount as a fine? The institution is concerned about non-compliance by the trader.
Answer
I say, and with God's success: this is an usurious condition in the contract, and the company should seek another means to encourage him to comply; because penalty clauses in debts are considered usury, and God knows best.
imam icon

Send your question to the smart assistant

If the previous answers are not appropriate, please send your question to the Mufti via