Contractual penalty

On 25 January 2017, the Supreme Court adopted Judgment No 23 Cdo 3196/2016, which in interesting way discusses the issue of the contractual penalty.

The Supreme Court has had for a long time the opinion that the contractual penalty is formulated (and therefore valid) properly only if the obligation is described in detail. In the last few years, however, the opinion of some of the judges has changed. They said that it is sufficient if the contractual penalty is agreed for a violation of a certain group of obligations without specific determination of each individual obligation. Thus a contract penalty could also be valid formulated for violation of any duty in the specific contract in general.

The judgment is noteworthy because it makes the above-mentioned opinion universally valid, name judgments from different senates who have already applied them, and therefore considers this opinion to be consistently enforced by the court.