Contract and liability

Twenty-second on this list is a cláusula penal, and it is the entry where a word-for-word translation does real damage. In Portuguese the clause is ordinary and useful: the parties fix in advance what will be paid if the contract is broken, so that nobody has to prove a loss afterwards. « A penalty clause », in English, names something the courts have long refused to give effect to. The rule is short enough to state: a term put there to frighten the other side into performing is a penalty and falls away, while a term that is a genuine attempt to put a figure on the likely loss stands. The same words therefore land on opposite sides of the line in the two languages. What an English contract calls the thing that a cláusula penal actually is, is « a liquidated damages clause », and drafters keep off the other word on purpose, because calling a term a penalty is halfway to arguing that it should be struck out. Read the entry as « agreed damages », never as a punishment.