WESTPHALEN, G. von F.: Hranice účinnosti paušalizovaných náhrad škody a smluvních pokut v podnikatelském styku. Právny obzor, 108, 2025, č. 1, s. 3 – 15.
https://doi.org/10.31577/pravnyobzor.2025.1.01
The limits of effectiveness of lump-sum damages and contractual penalties in business relations. The German case-law on pre-formulated penalty clauses is primarily based on the assumption that such clauses combine two distinct aspects: first, they are closely connected with liquidated damages incurred due to a breach of contract, and – secondly – such penalty clauses serve the purpose of exercising pressure on the debtor in order to properly fulfil its obligations entered into. On the basis of such bi-functionality the Supreme Court on Civil Matters started its precedents by limiting the amount due under a penalty clause on the basis of the general rule of trust and confidence according to Art. 242 German Civil Code. After the enactment of the special Law of General Conditions of Contract a large number of precedents relating to penalty clauses have been adjudicated by the courts. Without limiting the generality of the foregoing, one can readily state that a maximum amount of five percent of the contract price for penalty clauses relating to delays of the debtor and a very small amount for a delay per day have been decided as being adequate and acceptable. Apart from this, a penalty clause will not be held to be in line with trust and confidence on the basis of Art. 307 Section 1 of the German Civil Code, if such clause combines first penalties agreed upon and thereafter allows the creditor to also collect any damages incurred by the creditor without taking the penalties as being the minimum amount of damages. This ruling is due to the fact that Art. 341 Sec. 2 and Art. 340 Sec. 2 German Civil Code hold that a penalty always will be construed as being the minimum amount of a damage claim. Thus, only an excess damage, i.e. being above the limit of the respective penalty may be collected, provided it can be evidenced by the creditor. Moreover, the courts – as a general rule - have held that any penalty clause shall be held to be null and void if it will fall due even in such cases where the debtor was not in default. To sum up, the limits for penalty clauses, as shown by many decisions of the German courts, are very narrow, as they have to respect the general limits of trust and confidence in view of the legitimate interests of the debtor.
Key words: Bi-functionality, trust and confidence, fault, legitimate interests of the debtor, general limits of penalties