penalty

An elastic term with many different shades of meaning; it involves idea of punishment, corporeal or pecuniary, or civil or criminal, although its meaning is generally confined to pecuniary punishment. Allied v. Graves, 261 N.C. 31, 134 S.E.2d 186, 192.

The sum of money which the obligor of a bond undertakes to pay in the event of his omitting to perform or carry out the terms imposed upon him by the conditions of the bond. A penalty is a sum inserted in a contract, not as a measure of compensation for its breach, but rather as punishment for default, or by way of security for actual damages which might be sustained by reason of nonperformance. Stein v. Bruce, Mo.App., 366 S.W.2d 732, 735.

The sum a party agrees to pay in the event of a contract breach, but which is fixed, not as a pre-estimate of probable actual damages, but as a punishment, the threat of which is designed to prevent the breach. Westmount Country Club v. Kameny, 82 N.J. Super. 200, 197 A.2d 379, 382.

A penalty provision operates to compel performance of act and usually becomes effective only in event of default on which a forfeiture is compelled without regard to actual damages sustained by party aggrieved by breach. Garrett v. Coast and Southern Federal Sav. and Loan Ass'n, 9 C.3d 731, 108 Cal.Rptr. 845, 850.

See penalty clause.

A penalty is a sum of money which the law exacts payment of by way of punishment for doing some act which is prohibited or for not doing some act which is required to be done. Hidden Hollow Ranch v. Collins, 146 Mont. 321, 406 P.2d 365, 368.

A statutory liability imposed on wrongdoer in amount which is not limited to damages suffered by party wronged. Missouri-KansasTexas R. Co. v. Standard Industries, Inc., 192 Kan. 381, 388 P.2d 632, 634. io wewjq HI ;fer ;

See also fine

- forfeiture

- penal action

- statutory penalty

@ penalty clause

Provision in contract, loan agreement, savings instrument or the like providing penalties for default, late or missed payments, early withdrawals, etc. Such clauses are generally not enforceable by the courts. A provision for liquidated damages, however, will be enforced by the courts but the liquidated damages must be a reasonable estimate at the time of contracting of the likely damages from breach. Whether a provision for damages is a penalty clause or a liquidated damages clause is a question of law. Lake River Corporation v. Carborundum Co., C.A.I11., 769 F.2d 1284, 1288-92

@ penalty phase

The part of a criminal trial in which the fact-finder determines the punishment for a defendant who has been found guilty.

Also termed sentencing phase. Cf. guilt phase

@ penalty point

A punishment levied for a traffic offense and accumulated on the driver's record. If a driver receives a statutorily set number of points, the driver's license may be restricted, suspended or terminated.

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