Bonus-penalty clause

Bonus-penalty clause,

Definition of Bonus-penalty clause:

  1. A clause in a contract stipulating a penalty for failure to fulfil certain of its obligations.

  2. Provision in a contract that offers a bonus for timely completion without cost overruns, and prescribes an equal amount as penalty for any violation. It is a carrot and stick approach to keeping a project within budget and schedule.

Meaning of Bonus-penalty clause & Bonus-penalty clause Definition