Contract Law. Right of notice of termination in fixed term contracts – penalty clause. A party can give a notice of termination for a significant reason, even in fixed term supply contracts, based on the principle of good faith and by analogy to labor law. A compensation clause is deemed as a concealed penalty clause, when a possible damage is not set as a qualification and the parties set only factual elements as qualifications. An objection for reduction of the claim based on the penalty clause, can be sustained only under specific factual elements, such as the ratio of the amount of the penalty clause to the owed counter-granting and the financial state of the parties, and not as a vexatious action.