Contractual Penalty: (Un)Certain Specification of Contractual Obligations
Monday, 29 July 2013 08:34

The Supreme Court of the Czech Republic stated in its decision dated 19 March 2012, file no. 23 Cdo 4281/2011, that a provision in which contracting parties agreed on an obligation to pay a contractual penalty in the event that one of them “fails to meet the conditions stipulated by the Contract or the Terms”, with respect to each individual breach, shall be invalid pursuant to Section 37 (1) of the Civil Code on grounds of its uncertainty. The obligation the breach of which gives rise to the right to claim a contractual penalty must according to the Supreme Court be specified absolutely precisely, inter alia, in order to be able to assess the adequacy of the contractual penalty in relation to the seriousness of the given breach. On the other hand, in its decision dated 22 June 2012, file no. 32 Cdo 493/2011, the Supreme Court of the Czech Republic concluded that “The requirement of certain specification of obligations secured by a contractual penalty is met not only in the case where the secured obligations are expressly individually specified, by also in the case where the contractual penalty is agreed for the event of a breach of obligations comprising a compact and identifiable set, without the potential breach of individual obligations being specified in the contract.” Considering the significant inconsistence of the conclusions of various senates of the Supreme Court of the Czech Republic, it is necessary to specify the contractual obligations the breach of which gives rise to the other party’s right to a contractual penalty consistently enough to ensure their certain specification, non-interchangeable with any other obligations, in particular if the contractual penalty is determined as a fixed amount and where the contracting parties, despite the potential risk, insist on their specification by means of reference to the contract, to supplement this general reference at least by a demonstrative list of specific contractual obligations.

 

Advokátní kancelář

Advokátní kancelář KVAPIL & ŠULC sídlí na Národní třídě v Praze 1 a poskytuje právní služby společnostem i ostatním právnickým a fyzickým osobám. Advokátní kancelář zajišťuje svým klientům poradenství ve všech právních odvětvích, zejména se však specializuje na poskytování služeb v oblastech obchodního a občanského práva. Díky znalostem a zkušenostem jednotlivých členů a spolupracovníků kancelář rovněž nabízí poradenství v oblasti evropského práva a práva mezinárodního obchodu.