penalty clauses

(redirected from Penalty clause)
Also found in: Dictionary, Financial, Encyclopedia, Wikipedia.
Related to Penalty clause: Liquidated damages clause

penalty clauses

clauses that impose a liability more extensive than general damages. They are contrary to public policy and accordingly unenforceable. However, the courts will allow parties to agree the amount of damages in advance by way of what is called a liquidate damages provision. These often look the same, and the result may be little different. It has been said that the factors in determining what is allowed and what is not are as follows:
  1. (i) the difficulty of calculating the actual loss on breach;
  2. (ii) the reasonableness of the stipulated sum;
  3. (iii) a clause will be presumed penal if it makes the same sum payable for breaches of differing severity;
  4. (iv) a clause will be penal if the principal obligation is to pay money and the stipulated sum is larger.
References in periodicals archive ?
2 billion in damages as per the penalty clause from January 1, 2015.
This is unacceptable and we need to get a report within 7 days on the sequence of events since the awarding of the contracts as to who were the contractors, and the reasons as to when and why penalty clauses were removed from contract agreement.
Death penalty abolitionists hoped that the country would finally repeal the death penalty clause from the penal code in accordance with international laws.
Penalty clauses are unenforceable and it is the foolish attorney who uses the word "penalty" in drafting a contract --except in the phrase "not a penalty.
The second most important thing, regardless of whether you are or aren't dealing with a solid real estate agent and/or a solid law firm, is that when you get into such agreements, you should first make sure that both parties are subjected to a kind of penalty clause in case of not honoring the contract.
But the idea that there is no penalty clause for the company is just not good enough.
the agreements conducted with QInvest - regarding the strategic alliance - do not include a penalty clause in case of the termination of any party to those agreements; however, consequences of such termination - like any contract - are subject to judicial claims.
The majority of the Ontario Court of Appeal focused on whether the penalty clause was so unconscionable as to be unenforceable.
The high court had earlier argued that rules were violated as the new/additional charges against Salem entailed the death penalty clause, which refutes the extradition rules of Europe.
It would also strike out section 5A, the penalty clause.
2) The section in question was the Penalty Clause, which allows states