It sounds like a clumsy way of saying "If you make a mess of a job and we have to pay someone else to fix it, we'll charge it to you," which is fair enough.
The OP lives in Thailand and, according to her profile, sometimes charges the same rate per word of translation as I charge for proofreading French to English from my home in Europe. I agree that it can be fair for a client to request a reduction if a translation is proven to be inadequate for the job, but it isn't appropriate for the client to charge the translator whatever they like.
I've been translating for 25 years, and no one has ever said: "It says XYZ in your contract and we're going to enforce it against you."
Oh dear, Phil, I do hope you don't live to regret those words.