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Penalty
An English law expression.
Under English law, any provision of a contract which seeks to penalize a party to the contract if it fails to perform under the contract is a penalty and may be unenforceable.
Such a provision will however be enforceable if, in summary, the provision is a genuine attempt to compensate the other party for loss it will suffer as a result of the failure to perform.18 Common areas where this question arises are in relation to default interest and liquidated damages.
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