Subcontracts frequently include penalty clauses to provide the main contractor defence into the case of the supplier’s poor performance. Why are penalty clauses not the complete answer to safeguarding the chief contractor’s position?

Penalty clauses only give for monetary compensation to be paid into specific specified conditions. Apart from the complexity of enforcing penalty clauses, they seldom give complete recompense for all the significances of a supplier’s failure – as business loss or public damaged like the consequence of late delivery or poor performance of a system.