break fee

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Break Fee

A break fee refers to a financial penalty paid by one party to another when a contract is terminated or broken prematurely. It is designed to compensate the innocent party for the costs and losses incurred due to the termination.

Senses:

Noun: A sum of money paid as compensation for terminating a contract.
Noun: A contractual provision specifying the amount of compensation to be paid in case of contract termination.
Noun: A penalty imposed on a party for failing to complete a transaction as agreed upon.

Usages:

Due to the unexpected termination of the business partnership, Company A had to pay a hefty break fee to Company B.
Investors are often cautious when signing contracts to include a break fee clause to protect their investment.
The buyer forfeited their deposit as a break fee for backing out of the real estate deal at the last minute.

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