contract question

[kamakaz68]

What is the name of your state (only U.S. law)? California

I am drafting a personal loan contract for repayment. loanee does not have any collateral, so I want to add a stipulation for a default penalty, what are the cali regulation for this, please advise..

 

[HappyWanderer]

Almost all liquidated damages have to be reasonably related to the damages anticipated. I don't think you want to use the term "penalty" as that is what you're trying to avoid.

See California Civil Code 1671.

 

[You Are Guilty]

I think this is more in line with what you're looking for, but take note of the various requirements to make it binding:
http://law.justia.com/california/codes/ccp/1132-1134.html