Section 74 - Compensation for breach of contract where penalty stipulated for

Penalty clauses: non-breaching parties receive reasonable compensation up to the stipulated sum, subject to limited exceptions.

A contractual sum named for breach or any stipulation by way of penalty entitles the aggrieved party to reasonable compensation not exceeding the amount so named or the penalty stipulated, whether or not actual loss is proved; increased interest from date of default can constitute a penalty. Exception: bonds, recognizances or instruments for public duties or interests render the obligor liable for the whole sum on breach.