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 ?
scholar arguing for greater enforcement of penalty clauses, see Swan,
Penalty clauses are often inserted into contracts so that the contractor has a strong incentive to finish on time and within budget.
discrete transactions, different contexts of contracts, the norms of contracts, the practical use of relational theory, the economic functions of contract and contract law, the design of default rules, regulation, standard form contracts, contract interpretation, economic theories of legal remedies, debates on efficient breach, liquidated damages and penalty clauses, impossibility and impracticability, and the behavioral approach to contract law.
This places the project team under enormous pressure to deliver work that is coordinated and meets contract obligations to avoid high penalty clauses.
Work has already started on one, with penalty clauses in the contracts if they are cancelled.
But economic minister Andrew Davies said cancelling the lease would cost as much in penalty clauses as keeping the boxes.
But penalty clauses for late delivery can be disastrous to a manufacturing or building company.
But the council's Lib-Dem and Labour groups are arguing over who agreed penalty clauses in the contract.
A view is taken about service provision, leasing fees are agreed, penalty clauses inserted and contracts are signed.