Details, position 6. is very problematic. If you have a contract fine, especially this much and after the money has been spent ... you need to be much more specific. What is fully functional?
Also, depending on the development progress 1 year is not a lot of time to plan, code, fix, test, fix, test ... and so on. How many bugs are allowed to pop up afterwards before the thing becomes not 'fully functional' and said fine is imposed?
What if it's not quite ready in May, but the company decides to keep the devs working on it? Still a fine? That may force a rushed, minimally 'functional' product.