A contractual penalty is a sanction agreed in the agreement on the provision of the NFP for the case of a breach of a specific obligation. Unlike a financial correction, which responds to ineligible expenditure, the penalty is tied to a breach of contractual discipline regardless of whether damage arose. Contracts usually have a schedule of rates in which an amount is assigned to each type of breach – most often this involves a delay in submitting a monitoring report or a payment claim, failure to meet publicity obligations, refusing to allow an inspection, failing to meet the archiving obligation, or failing to notify a change within the set deadline. Most of these can be avoided through administrative discipline: a calendar of deadlines, a single responsible person, and a checklist before every submission. Go through the schedule of rates as soon as you sign the contract, not only after the first penalty.
See also: Financial correction, Project publicity, Monitoring report.
