Definition : Penal clause

Clause by which the parties assess the damages in advance, stipulating that the debtor will suffer a penalty if he fails to perform his obligation. A creditor who avails himself of a penal clause is entitled to the amount of the stipulated penalty without having to prove the injury he has suffered. However, the amount of the stipulated penalty may be reduced if the creditor has benefited from partial performance of the obligation or if the clause is abusive. See Declaration of co-ownership - Penal clause .