The parties agree that forfeitures or penalties are disfavored under Illinois law. The source of their disagreement is whether the provision requiring Medallion to pay the full amount of the seven months of abated rent constitutes a penalty, and is therefore void under Illinois law, or whether it is liquidated damages or some other kind of payment allowable under Illinois law. Raffel, of course, argues that payment of the first seven months of rent was excused only on the condition that Medallion pay the other months' rent in a timely fashion. Medallion contends that no matter how Raffel characterizes the provision, it is grossly disproportionate to the harm suffered if Medallion is late in paying, and is thus an unenforceable penalty. Whether a provision for damages is a penalty clause or a liquidated damages clause is a question of law.
Illinois courts resolve doubtful cases in favor of classification as a penalty.
However, in the event Medallion Kitchens is in default in the payment of rent for a period of more than 30 days from notice, the amount in the arrears of the free rent provided herein is due and payable to Landlord. According to Raffel, a late fee equivalent to seven months' rent merely compensates him for those first seven months. We cannot agree. The plain terms of the provision contradict this reading. Raffel is already compensated for the seven months' rent by Medallion's concession of entering into an extended lease term of sixty-one months.