penalty clause


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Related to penalty clause: Liquidated damages clause

penalty clause

A contract provision setting forth the damages a party must pay in the event of his breach. If such a clause is regarded by the court as too harsh to be regarded as a fair estimate of probable damages, it will normally be held invalid. See liquidated damages.
McGraw-Hill Dictionary of Architecture and Construction. Copyright © 2003 by McGraw-Hill Companies, Inc.
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