Penalty clauses … bite size
A penalty clause is a provision in a contract which requires a specific sum to be paid in the event of a breach of contract and the sum specified is not a genuine estimate of the loss which the injured party would have suffered in the event of a breach.
Penalty clauses are designed to threaten or penalise the party who breaches the terms of the contract.
Penalty clauses are invalid.
Key case:
Cavendish Squarev Makdessi (2015)