Contractual Penalty
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A Contractual Penalty is a legal remedy that enforces a penalty on a party for breaching a specific contractual obligation.
- Context:
- It can (typically) be intended to provide clarity and predictability regarding the consequences of a breach.
- It can (typically) be intended to deter against Non-Compliance with a Contractual Obligations.
- It can (often) be a pre-determined amount specified in the contract.
- It can range from being a Monetary Penalty to being a Performance-based Penalty.
- It can range from being a Reasonable Contractual Penalty to being an Unreasonable Contractual Penalty.
- It can be subject to legal scrutiny to ensure it is not punitive beyond the breach's impact.
- It can be enforced by courts if deemed justifiable.
- ...
- Example(s):
- a Late Delivery Penalty (late delivery definition) clause in a supply contract.
- a Penalty for Breach of Confidentiality (breach of confidentiality) in an employment contract.
- a Penalty for Non-Payment (non-payment provision) in a service agreement.
- a Penalty for Early Termination (early contract termination) in a lease agreement.
- ...
- Counter-Example(s):
- Liquidated Damages, which serve a similar purpose but are specifically calculated to reflect the actual loss.
- Statutory Penalties, which are imposed by law rather than agreed upon by contractual parties.
- Voluntary Remediation Measure, which are agreed upon after a breach has occurred.
- See: Contractual Obligation, Breach of Contract, Liquidated Damages, Penalty Clause, Legal Remedy, Contract Law, Enforcement (Law)