A liquidated damages provision is the same thing as a penalty provision.

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A liquidated damages provision is a specific type of damages provision in a contract that sets a predetermined amount of compensation that one party will pay to the other in the event of a breach of contract. The purpose of a liquidated damages provision is to provide certainty and predictability for both parties in the event of a breach. A penalty provision, on the other hand, is a clause that imposes a punitive consequence for breaching a contract, generally meant to discourage the party from breaching in the first place. Penalty provisions are often unenforceable as they are viewed as a penalty rather than a true measure of damages.

A Liquidated Damages Provision Is the Same Thing as a Penalty