A bonus clause is a clause in a contract that rewards the contractor for doing more than the letter of the contract; particularly, to finish the job early. It is in apposition to a
penalty clause
Penal damages are liquidated damages which exceed reasonable compensatory damages, making them invalid under common law. While liquidated damage clauses set a pre-agreed value on the expected loss to one party if the other party were to breach th ...
where the contractor loses by providing less than the letter of the contract, or providing it later than agreed.
The aim of a bonus clause is to give a
win-win situation whereby the contractor wins by getting more money for finishing early, and the holder of the contract wins by having a product earlier to market.
Contract law
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