Late Payment Penalty in a Contract

Contracts and agreements

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Question

What is the status of a contract containing the following clause: "Without prejudice to any other remedy and rights available to the landlord under law and this agreement, any delay or late payment due from the tenant to the landlord under this agreement shall obligate the tenant to pay a late payment penalty on the amount delayed or late at the maximum rate applicable at Bank Hapoalim Ltd. for overdrafts on debit current accounts"?

Answer

This clause in the contract involves a prohibition of interest (ribit), as it is not a one-time penalty but a variable penalty.

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