Legal protection of right to claim contractual penalty

(Decision of the Supreme Court from 24 May 2016, file no. 32 Cdo 1186/2016 )

In this case the Supreme Court granted a contractual penalty to the plaintiff because of a breach of contract for work on side of the defendant.

The defendant (a contractor) undertook to provide work (internet pages) for the plaintiff (an ordering party) based on the contract for work. The defendant did not fulfil its obligation in time. As a consequence of this breach the plaintiff withdrew from the contract and claimed the contractual penalty before the court.

The main point of this dispute was the fact that the plaintiff claimed the contractual penalty nearly more than 4 years as of the breach of the contractual obligation by the defendant; however, the claim had not been statute-barred at the time of filing the action.

The Supreme Court did not accept the resolution of the appellate court according to which after such a long time the contractual penalty could not perform its legal function (sanction and security) and thus its acceptance would mean misuse of justice. On the contrary, in accordance with the previous courtsꞌ decisions, the Supreme Court ruled that in order to duly claim the contractual penalty it is not necessary to urge the debtor to pay it, nor it is necessary to prove that by breach of an agreement the plaintiff has sustained damage. The claim, however, has to be made within a statutory limitation period.