- A condition in a contract that obligates one party to suffer or pay a penalty if certain specific terms aren't met
- A stipulation in a statute or court-decided sentence outlining a penalty for a certain type of act or omission such as delaying a mandated support payment
- The rental agreement outlined a penalty clause if the tenant failed to vacate the premises at the contract's end.
- Because of the consistent late payments, a penalty clause was inserted into the child support agreement.
- To ensure the project was finished on time, the contractor's business deal included a penalty clause for delayed completion.