270. Penalty or liquidated damages.

270.     Penalty or liquidated damages.

Although expressed in the contract to be a liquidated damages clause, in law such a clause may amount to a penalty1. The question whether such provision is in the nature of liquidated damages or is unenforceable as a penalty is a question of the construction of the terms and the inherent circumstances of each contract judged at the time the contract was made2. The fact that it would be difficult to ascertain the loss caused to the employer by delaying completion indicates that the provision is in the nature of liquidated damages3.