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If the compensation agreed to be paid in the event of breach of contract is excessive and highly…

An excessive and highly disproportionate amount stipulated for breach is termed a penalty. Section 74 of the Indian Contract Act, 1872 permits reasonable compensation up to…

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If the compensation agreed to be paid in the event of breach of contract is excessive and highly disproportionate, the amount thus fixed is called:

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An excessive and highly disproportionate amount stipulated for breach is termed a penalty. Section 74 of the Indian Contract Act, 1872 permits reasonable compensation up to the stipulated limit rather than automatic recovery of the entire penalty. Liquidated damages ordinarily describe a genuine pre-estimate of loss.

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