Contractual penalty
A payment agreed in the contract for the event of a breach — due without any proof of damage.
A contractual penalty under §§ 339 et seq. BGB becomes due without proof of a specific loss. In standard terms it is subject to strict content review (§ 307 BGB) — blanket penalties are often invalid. In unfair-competition law the 'new Hamburg custom' suffices: the creditor sets the amount at its reasonable discretion, reviewable by the court in case of dispute.
¹Note: This definition is for general orientation only and does not replace legal advice for your case.
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