Answers.com > Wiki Answers > Categories > Law & Legal Issues > Business Law > How do you calculate a bonus or penalty clause in a contract?

How do you calculate a bonus or penalty clause in a contract?

In: Business Law [Edit categories]

Answer:

Answer

You read the clause. If it was properly written, it will tell you exactly how the bonus/penalty is to be calculated. The contract may even include examples.

In contractual terms, a penalty clause is specifically there to encourage the other party to finish the contract, and to punish that party if there is a breach. Penalty clauses are not calculated with respect to a genuine estimate of the losses that will be incurred by the contracting party. If there is a genuine attempt to estimate damages, and you agree to them, it is called liquidated damages. The courts will ignore a penalty clause because it is unfair, and calculate the actual damage you cause the other party.

Contributor:

Josh

First answer by Aggie80. Last edit by Josh Brochu. Contributor trust: 0 [recommend contributor ]. Question popularity: 30 [recommend question].

[report abuse]

Can you answer these Business Law questions?

	What are essential elements of valid contract according to Japan contract law?	Answer it!
	What are the remedies available to unpaid seller?	Answer it!
	What is address for Equifax?	Answer it!
	What gives a corporation legal status?	Answer it!
	Can agent sell below authorised price?	Answer it!

Relevant answers:

What are the possible penalties for breach of contract?
You can take the business to court and get money off them.
What is a evergreen clause used in contracts?
i wish i know that
What to do when a contract has a variation clause and an extension of time clause?
describe and explain the term, "variation clause" as it applies to a contract and provide at least 3 examples variation clauses. The question is not clear, since the term "unworkable" extension of...
Where can you download a free contract with a breach of contract clause?
You can go to itunes and get free downloads somtimes of go to download free music .com or ask wiki answers there is a lot of sites you can go to.
Can a breach of contract clause be included inside a commercial contract?
Yes, it is quite common to include one or more breach clauses in commercial contracts. They can include, among other things, specific obligations of notification of a perceived breach, prescribed...