Legal Definitions - penal bond

Definition: A penal bond is a type of bond that includes a penalty clause. The penalty clause specifies that if the terms of the bond are not met, the person who signed the bond will have to pay a certain amount of money as a penalty.

Example: John signs a penal bond with his landlord when he moves into his apartment. The bond includes a penalty clause that states that if John damages the apartment, he will have to pay $1000 as a penalty.

Explanation: In this example, the penal bond includes a penalty clause that specifies the consequences if John damages the apartment. If John does damage the apartment, he will have to pay $1000 as a penalty. This penalty clause is meant to ensure that John takes good care of the apartment and does not cause any damage.