Before entering into a contract, one needs to understand how contracts are enforced and their value. The reality is that a contract is only as good as it can be enforced and it can only be enforced in court. Otherwise, if there is a contract dispute between two parties, there is little, legally, that can be done.
For example, John and Joanna enter into a contract and John agrees to paint Joanna's house. Joanna decides not to pay John and John obviously wants his money. How can he get his money? He can not take back the paint or undo his work. He can not take Joanna's property to fulfill this debt. He can not call Joanna's bank and demand the bank pays him from Joanna's bank account. He can only sue her in the court of law, get a judgement, then enforce the judgment by attaching the judgment to Joanna's assets (absent a settlement).
So if you are negotiating a contract and find that the other party engages in unethical behavior or does not respect your rights as early as the negotiation phase, putting terms to penalize that person after a contract is signed means that you may have to spend months (if not years) and way too much money to solve a situation that you saw coming. Additionally, consider that the type of person who engages in unethical behavior will probably makes the legal process even more difficult such as evading service of process, delaying court dates, ...
For example, John and Joanna enter into a contract and John agrees to paint Joanna's house. Joanna decides not to pay John and John obviously wants his money. How can he get his money? He can not take back the paint or undo his work. He can not take Joanna's property to fulfill this debt. He can not call Joanna's bank and demand the bank pays him from Joanna's bank account. He can only sue her in the court of law, get a judgement, then enforce the judgment by attaching the judgment to Joanna's assets (absent a settlement).
So if you are negotiating a contract and find that the other party engages in unethical behavior or does not respect your rights as early as the negotiation phase, putting terms to penalize that person after a contract is signed means that you may have to spend months (if not years) and way too much money to solve a situation that you saw coming. Additionally, consider that the type of person who engages in unethical behavior will probably makes the legal process even more difficult such as evading service of process, delaying court dates, ...