Penalty clause

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Penalty clause

A clause found in contract agreements that provides for a penalty in the event of default.

Penalty Clause

In a contract, especially a loan agreement, a clause stating that the payer must pay extra in the event of a late payment and/or default. The penalty clause states the amount of the penalty and the circumstances under which it must be paid.
References in periodicals archive ?
Although there are any number of breaches that can give rise either to a penalty clause or a liquidated damages clause, the two most common categories of tenant misconduct are: when the tenant leaves too early--when the tenant abandons the tenancy; and when the tenant stays too long--when the tenant holds over after the natural conclusion of the lease.
We have penalty clauses in our contract with Nexus which were activated during the summer due to the service problems.
Whenever the new State Finance Act prohibits Accounting Officers from certain actions like unauthorised expenditure, the opening of unauthorised bank accounts or ignoring Treasury Instructions, the Act should have appropriate penalty clauses so that Accounting Officers that do not adhere to the rules can be punished for their wrong doing.
To protect against such withdrawal, a buyer should ensure that the agreement contains a hefty penalty clause obliging the seller to pay in the event that he or she withdraws without due cause," said Jerry Parks at Taylor Wessing.
Other courts may approach these penalty clauses with a simple rule against enforcing penalty clauses.
The Culture Ministry was accused of failing to submit contracts worth more than BD300,000 to the legislative and legal affairs committee and not including penalty clauses in contracts, in addition to delay in collecting hotel services and tourism fees.
There should, however, be penalty clauses for the developer as regards construction delays.
2) Those cases marked a positive development in Canadian contract law, as adherence to the traditional rule against penalty clauses is difficult to justify.
of penalty clauses as being relatively settled, this article tracks the
Economic Minister Andrew Davies last week claimed cancelling the lease would cost as much in penalty clauses as keeping the boxes.
The common law relating to penalty clauses is clear.
A lesson should be learned from the existing system - pounds 40 million of construction costs written off, pounds 10 million operating losses incurred, penalty clauses built into the manufacturer's contract for late delivery/faulty equipment not activated.