Entitlement to an existing contractual penalty in case of termination by a termination clause

The Supreme Court of the Czech Republic stated in its decision no. 23 Cdo 2615/2018, dated 29.05.2019, that if and contract is terminated by a termination clause, the existing right to a contractual penalty does not expire.

In the following case, the plaintiff has undertaken in the negotiated future purchase agreement to comply with the obligation to conclude a trust agreement and a purchase agreement und until 30.06.2011. To fulfill these obligations, a contractual penalty of 40.000 euros was agreed. Since the plaintiff did not even conclude the trust agreement on the last day of the deadline within the working hours of the bank, it has been already clear after closure of the bank that the plaintiff could no longer comply with the negotiated future agreement, thus the agreed contractual penalty came into force, even if the deadline itself has not expired yet.

In this connection, the Supreme Court referred to §602 of Act No. 89/2012 Coll. Civil Code. If a right has to be exercised on a particular day or period, it is expected to be exercised at the usual time of day, unless the practice of the parties dictates otherwise.