A contractual penalty constitutes a legal instrument of the law of obligations aimed at ensuring discipline in the performance of contractual obligations, by predetermining the consequences of their non-performance, late performance, or improper performance. It enhances legal certainty, as the parties, already at the time of concluding the contract, anticipate the risks and financial implications of a potential breach.

In accordance with statutory provisions, the creditor and the debtor may agree that the debtor will pay a specified monetary amount or provide another material benefit to the creditor in the event of non-performance, delay, or improper performance of the obligation. Unless otherwise stipulated in the contract, it is presumed that the contractual penalty is agreed for the case of delay. An important limitation, however, is that a contractual penalty may not be agreed for monetary obligations.

With regard to the method of determination, the contractual penalty may be set in various ways, such as a fixed amount, a percentage, a daily rate for delay, or through another appropriate model, depending on the nature of the obligation. Nevertheless, its validity is subject to compliance with the form prescribed for the underlying contract, meaning that the clause must be agreed in the same form as the obligation it secures.

As an accessory right, the contractual penalty is inseparably linked to the principal obligation. It shares its legal fate, which means that it ceases to have effect if the underlying obligation becomes void or is terminated on other grounds. Additionally, the contractual penalty has no legal effect if the non-performance or delay occurred due to circumstances for which the debtor is not liable.

The rights of the creditor depend on the purpose for which the contractual penalty was agreed. If it is stipulated for non-performance, the creditor may choose between claiming performance of the obligation or claiming the contractual penalty, but not both simultaneously. Conversely, where the contractual penalty is agreed for delay or improper performance, the creditor may claim both performance and the contractual penalty. However, if the creditor accepts performance without delay and without reserving the right to the contractual penalty, they lose the right to claim it.

Although the contractual penalty is based on the principle of party autonomy, the law provides for the possibility of judicial intervention. Specifically, upon the debtor’s request, a court may reduce the amount of the contractual penalty if it finds it to be disproportionately high in relation to the value and significance of the obligation.

Regarding its relationship with damages, the contractual penalty does not exclude the creditor’s right to claim compensation. The creditor may claim the contractual penalty regardless of whether any actual damage has been suffered and irrespective of its amount. If the damage exceeds the amount of the contractual penalty, the creditor is entitled to claim the difference up to full compensation.

Finally, where the law provides for a specific statutory compensation (penalty or similar) for non-performance or delay, and the parties have additionally agreed on a contractual penalty, the creditor is not entitled to claim both simultaneously, unless expressly permitted by law.

Therefore, the contractual penalty represents an important mechanism for ensuring contractual discipline, but its application must always remain within the principles of good faith, fairness, and proportionality.