Practical Law UK Glossary 7-107-6986 (Approx. 3 pages)
Glossary
Penalty
A clause which operates on breach of contract (such as a liquidated damages clause) which cannot be justified by some consideration, such as the desire to compensate or to protect a legitimate interest of the innocent party.
A clause which is out of all proportion to the legitimate interests of the innocent party may be considered to be oppressive and unconscionable and, therefore, an unenforceable penalty.