Making sure contractual penalties are correctly stipulated in your contract can be a tall order. Errors or inconsistencies are a relatively frequent feature in this process. This is especially true where the parties specify penalties otherwise than by stating fixed amounts. They are naturally allowed to do so but should avoid automatism when

drawing up the underlying clauses. And they’d better remember about the general rules applicable in such cases. These are hugely relevant because an incorrect structuring of contractual penalty provisions can lead to their invalidity.

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