The Peculiarities of Contractual Penalty Clauses in Commercial Contracts

Abstract

In this article, we will look at one area in which there is a notable difference between civil law and common law - the execution of penalty clauses and, in particular, contractual penalty clauses. This article analyses and compares the rules applying to contractual penalties in Germany, France, Italy and England, as well as in accordance with the UNІDROIT Principles on Internatіоnal Commеrcial Cоntrаcts, PICC and the Principles of European Contract Law, PECL. Also, the different approaches found in these legal systems are scrutinized with regards to their practical implications for contracting parties. This paper demonstrates that there is a need to establish transnational rules for the enforcement of penalty clauses in international commercial contracts because of the lack of contractual instruments that parties can use to address the clash of civil and common law traditions as well as the existing differences between civil law in this area.