This section is from the book "Popular Law Library Vol7 Equity Jurisprudence, Trusts, Equity Pleading", by Albert H. Putney. Also available from Amazon: Popular Law-Dictionary.
Equity looks with the greatest disfavor upon penalties. Not only will equity courts never assist in the enforcement of a penalty, but also, in proper cases, equity will grant affirmative relief against them. Such relief was originally limited to cases where the penalty was intended to secure the payment of money.1 Later the relief was extended to cases where the penalty was for the purpose of securing the performance of some act or the enjoyment of any collateral object.2 The same relief which equity gives against penalties can now, in this country, be secured at common law, but equity still retains concurrent jurisdiction.
Alternative stipulations,3 agreements for the reduction of an existing debt upon prompt payment,4 and liquidated damages are not considered as creating penalties.