Explanation:

Section 74 –
74. Compensation of breach of contract where penalty stipulated for. When a contract has been broken, if a sum is named in the contract as the amount be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or 68not actual damage or loss or proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. ExplanationA stipulation for increased interest from the date of default may be a stipulation by way of penalty.