Home » Education » BRAND: The Role of the Penalty Clause in Business

Calendar

March 2017
M T W T F S S
« Feb   Apr »
 12345
6789101112
13141516171819
20212223242526
2728293031  

Read these articles

  • BRAND: Using Reporting in the Internal Communication Process of the CompanyBRAND: Using Reporting in the Internal Communication Process of the Company
    Internal communication can be viewed either as a subsistent procedure of the association, or as a procedure helping to decode and comprehend them more effectively . The author, Cornel Marian Iosif states that associations depend on …
  • LiBRI: Risk-Assessment for Stylistic Problems in Writing and Translating Technical Texts
    Nadia-Nicoleta Morărașu and Luminița Drugă acknowledge not only the importance and utility of technical translation, but also the risks that this transfer of meaning imply if the translation is not accurate. The two authors aim …
  • LiBRI: From Passion to Cynism in Peter Shaffer’s EquusLiBRI: From Passion to Cynism in Peter Shaffer’s Equus
    The present paper plans to offer a diagram of Dixon’s From Passions to Emotions: The Creation of a Secular Psychological Category and Pugmire’s Sound Sentiments: Integrity in the Emotions, underlining the chronicled development and drop …
  • BRAIN: Browsing Semantic Data in SlovakiaBRAIN: Browsing Semantic Data in Slovakia
    Ján Mojžiš and Michal Laclavík present an interesting topic in the academic article Browsing Semantic Data in Slovakia in the latest volume of BRAIN journal. Semantic data browsing is an important task for open and governmental data in …
  • BRAIN: Efficient Filtering of Noisy Fingerprint ImagesBRAIN: Efficient Filtering of Noisy Fingerprint Images
    Fingerprint identification is an imperative field in the wide space of biometrics with numerous applications, in various zones such as: judicial, cell telephones, access systems, airports. There are many elaborated algorithms for fingerprint identification, but none …
  • SMART 2016 – Pre-conference MOOCSMART 2016 – Pre-conference MOOC
    This MOOC consists of selected conference presentations as short videos that demonstrate the main outcomes of the authors’ contributions. The scope is to enhance the discussions and exchange between the participants in the conference and …
  • BRAND: The Role of the Penalty Clause in BusinessBRAND: The Role of the Penalty Clause in Business
    In the latest volume of the BRAND, the legal adviser Maria Stegariu, in the article The Role of the Penalty Clause in Business, explains the most important things that need to be known regarding the …
  • BRAIN: Cursor Movement – a Valuable Indicator in Intelligent System Design
    It is safe to affirm that in the present days, digital devices have become indispensable. However, the emotional state of the users of said devices tends to be ignored or considered a dispensable input. In …
  • BRAIN Journal: Success in Mobile and Ubiquitous Learning: Indicators of EffectivenessBRAIN Journal: Success in Mobile and Ubiquitous Learning: Indicators of Effectiveness
    Mobile learning, also known as m-learning, is an educational system. Mobile learning supports, with the help of mobile devices, a continuous access to the learning process. This can be on appliances like your phone, laptop or …
  • LiBRI: Questioning Communication Models and ConstructsLiBRI: Questioning Communication Models and Constructs
    LiBRI is an international journal for specialists in linguistics, literature, cultural studies, and related fields. Paul Rastall is contributing with a research in the latest volume of the LiBRI journal: Questioning Communication Models and Constructs …
  • BRAIN: Conscience in Language TeachingBRAIN: Conscience in Language Teaching
    Conscience in Language Teaching and its Relationship with Language Proficiency and Emotional Intelligence of EFL Teachers by Sedighe Jalili Kalangestani was published here. Several factors contribute to the efficacy of an English language teacher, among which, …
  • BRAIN: Integrating MOOCs in Embedded Systems Blended Courses
    The Massive Open Online Course (MOOC) phenomenon has been growing in popularity and importance in the last decade, receiving valuable recognition from renowned universities from all over the world. MOOC can be simply defined as …

Categories

BRAND: The Role of the Penalty Clause in Business

In the latest volume of the BRAND, the legal adviser Maria Stegariu, in the article The Role of the Penalty Clause in Business, explains the most important things that need to be known regarding the penalty clause and emphasizes the place that the penalty clause occupies within a business.

law_justice_1

There are two reasons that stay on the basis of tackling this matter and make it appealing. The first one is the fact that provisions which control the contractual liability and those which refer to the penalty clause are susceptible to interpretation. The second one is the way in which particular proposals that aim at the regulation of situations which are not yet provided by law are conceptualized.

The penalty clause represents an agreement between the creditor and the debtor, which provides that, in the case of not fulfilling the contractual obligation, the debtor commits himself to pay to the creditor a specific amount of money stipulated in the contract, called the penalty. Resulting from the definition itself, the penalty clause has four features: it is a convention between the parties, it must be in written form, it is an auxiliary convention, and it has as the object the payment of a penalty.

There are three situations that inevitably lead to resorting to the penalty clause: not meeting the contractual obligation, the improper performance of the contractual obligation and the delay of it. In the first case, the creditor is given two options to choose from; which are asking either for forced execution in nature or for the penalty clause. If it has been stipulated in the contract, while in the other two cases, the creditor can ask at most for the penalties for delay and for the performance of the obligation, as the payment of the penalties does not take the place of the performance of the contractual obligation.

However, there must be met some certain conditions in order to give penalties. Among these conditions, there are included: the existence of a contract concluded in written form, the presence of one of the three situations mentioned above, the damage, the debtor’s culpability, and other.

An idea worth remembering is that the penalty clause is not meant to be taken advantage of in case of damage, but it is a way of avoiding in the first place the potential damage by enforcing the contractual obligation. In other words, the penalty clause comes as a real help for business, as it protects it from falling apart. Thus, it performs the following functions: sanctioning, reparatory, evaluating, and guarantee.

But, despite the fact that the penalty clause stipulated in the contract has legal force and it cannot be either removed or reduced by the court. The New Civil Code exceptionally allows two cases in which the court can reduce the penalty: the former is the case of a partial performance of the main obligation that leads to the benefit of the creditor and the latter is the case of a large discrepancy between the amount of money and the damage that could have been anticipated in the beginning. Even so, there is a cutback limit established by the law, specifying that the reduced penalty must remain bigger than the main obligation.

To sum up, the penalty clause brings many benefits to creditors, as they are entitled to an established amount of money stipulated in the contract, in the case of damage caused by the debtor, without having to actually prove the existence of that damage, nor the value of it. As the world of business itself is at times uncertain and fragile, the help given by the penalty clause represents the necessary certainty of recovering in case of damage.

Read more here!

Daniela Angheluş