Penalty clause


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Related to Penalty clause: Liquidated damages clause

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 ?
Penalty clauses may deter members from breaking strike out of fear of the financial consequences.
If they found that our contract with Geddo [was] valid then why didn't they apply the penalty clause and make him pay LE 30 million?
15) Meanwhile, the majority believed that the presence of the option to resign was irrelevant to the analysis of whether the penalty clause was unconscionable: "The penalty clause in the union constitution is either unconscionable or it is not.
pre-estimate of damages but rather an unenforceable penalty clause.
Atletico claim the Arsenal star had agreed a deal with them that included a penalty clause of two million euros if he backed out.
The Unfair Terms in Consumer Contracts Regulations 1999 states very clearly that a disproportionate penalty clause is unfair and therefore invalid.
Reginald Jones-Sawyer, director of asset management for the Department of General Services, said the city has actually paid far less than $1 million in penalties - perhaps half as much - because the penalty clause did not kick in right when the lease expired.
In a Communication adopted in 2000 COM(2000) 862), the Commission recommended dropping the 108% penalty clause, but the plan is currently on hold in the EU Council of Ministers.
The interest rate would be 8% (the prime rate at that time) with no prepayment penalty clause.
3 million at the Keeneland Sales in September, had to struggle on very soft ground before getting the better of Penalty Clause, after the pair had disputed the lead from over a furlong out.
The key is to make the amount of damages a reasonable amount so that the court will not consider the provision a penalty clause.