Payments to be borne by the private party if there is a breach of contract.
They may also be referred to as direct or explicit penalties, so as to differentiate them from payment deductions.
In many common law countries, the term “penalty” has a specific legal meaning, referring to an amount of compensation specified in a contract that is out of proportion to the likely loss suffered by the other party. In these countries, different terminology such as “liquidated damages” is used.


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