Penalty clause


Also found in: Dictionary, Legal, Encyclopedia, Wikipedia.
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 ?
The dissenting judge concluded that the penalty clause was not unconscionable.
He says: "If the person selling the house agrees to complete before March 24, you can always add a penalty clause to the contract, saying that if they fail to do so, the value of your offer is reduced by the amount of stamp duty you will have to pay.
Penalty Clause is ripe for reexploration; the modern form and
There may have been arrears, as well as a penalty clause for terminating the loan agreement early.
A Jordanian court ruled in Mohammad's favor and sentenced Diana to three months in jail, or pay the penalty clause in the contract between them.
Liverpool would argue that under new Premier League rules regarding parent companies, if the club itself is a fully solvent entity, as Liverpool are, then the penalty clause should not apply.
The application judge declared that the clause was not only a penalty clause but also unconscionable, and thus unenforceable on both counts.
Appeal, which concluded that it was a penalty clause. On further appeal
THE rail contractor whose failure to supply engineers fuelled travel chaos over New Year, had no penalty clause in its contract, according to Network Rail.
Atletico claim the Arsenal star had agreed a deal with them that included a penalty clause of two million euros if he backed out.
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.