Creditors can demand contractual penalties regardless of damage size, but proper drafting ensures enforceability and avoids litigation.
The Principle of Contractual Penalties
The principle is that a creditor can demand payment of the contractual penalty in the stipulated amount regardless of the size of the damage incurred, and the possibility of claiming compensation exceeding the penalty depends on an explicit contractual provision.
Ensuring Enforceability Through Proper Drafting
Note! The way the provisions concerning penalties are formulated is extremely important. It determines whether this penalty will be a real instrument for pursuing claims. Imperfect, general, or statutory-inconsistent provisions often turn out to be unenforceable and become a source of long-lasting court disputes.
Therefore, proper drafting of penalty clauses is as important as the construction of the main provisions regarding remuneration, deadlines, and quality of work.
