The penalty

The penalty

    The penalty is a contractual clause that is not generally due by law. For this reason, you can only claim one if it exists as a clause in the contract. The penalty is included as a clause in the contract by you and the contractor. When the counterparty fails to fulfill its obligation or fails to comply with the agreement at all, you are entitled to receive a sum which is a penalty. There is no need to prove the damage caused. The penalty may be negotiated in case of complete failure of the contract, for delayed performance, for incorrect performance. You may bring an action for damages before the district court in the event that the agreed penalty would not be sufficient to recover the damages. You may want the court to reduce the penalty, but you must prove that the amount agreed exceeds the damages suffered. If the obligation is partially fulfilled or incorrectly fulfilled, there is also a possibility of reducing the penalty. Where both parties are traders, it cannot be reduced by the excessive penalty due on a commercial transaction. It is suggested that traders, as professionals, can more accurately predict the magnitude of the harm of default.