Contractual penalties

It may happen that you receive a debit note due to penalty clauses. You need to know that not every contractual penalty is legitimate and effective. Claiming under a contractual penalty for the non-performance or improper performance of an obligation by the contractor, may not be contrary to applicable law.

If your counterparty is demanding that you pay a penalty or has already deducted it from your remuneration, be sure to consult with us. Especially when it concerns:

● violation of non-compete,

● loading delays,

● unloading delays,

● delivery delays,

● order cancellation,

● untimely delivery of documents,

● document neutralization,

● other provisions from transport orders.

We will verify documentation you provide and propose the most favorable solution for you.

We will provide you with substantive support and help you determine your strategy for the court case.

Before you include a provision for any contractual penalty in an order or contract, you'd better consult a lawyer about its content. This will make it easier to claim it later.

However, if a situation has arisen in which you wish to assert your rights on the basis of executed contracts, we can conduct a thorough analysis of the case and provide you with our recommendations.

We can also prepare correct records for you in accordance with national and international laws to properly safeguard your interests.

The main purpose of the contractual penalty is to protect the interests of the ordering party against non-performance or improper performance by the contractor.

The basis for the application of contractual penalty is the provisions of the Civil Code. Article 483 § 1 of the Civil Code states that "It may be stipulated in the contract that compensation for damage resulting from non-performance or improper performance of a non-monetary obligation shall be made by payment of a specified sum (contractual penalty)."

The amount of the contractual penalty is determined by the provision of art. 484 § 1 of the Civil Code. "In the event of non-performance or improper performance of an obligation, the contractual penalty shall be due to the creditor in the amount reserved for this case, regardless of the amount of damage suffered. Demand for compensation exceeding the amount of the reserved penalty shall not be allowed, unless otherwise agreed by the parties."

It is important to remember that the provisions of contractual penalties must always be in accordance with applicable law.

In the case of the TSL industry, the provisions of the Transport Law and the CMR Convention apply.

The issue of carrying out the loading and unloading of goods on time is one of the biggest problems in the transport industry. The CMR Convention specifies that a mere delay in the delivery of goods cannot be grounds for imposing a contractual penalty on the carrier.

In order for a claim for compensation for delay to be valid, it is necessary to prove that damage was caused as a result. This can be done, for example, by presenting invoices defining the costs for the production line downtime.

The situation is different in Polish law, where the Transport Law does not prohibit the use of contractual penalties for late delivery of goods.

Provisions setting contractual penalties for delay are often included in the wording of contracts of carriage (transport orders), which will not always be of a binding nature.

The essence of the contractual penalty according to the provisions of the Civil Code is that it may be due without any proof of damage suffered.

In such a case, the recipient may claim damages, the amount of which is written down in the terms defining the contractual penalty.

However, it should be borne in mind that any stipulation of a contractual penalty must comply with the applicable law. Therefore, in cases of dispute, we encourage you to seek the advice of a lawyer who will carefully check whether the claim has legal standing.

Ordering parties often demand payment of compensation for, for example, failure to deliver an invoice, CMR letter or other documentation.

However, it must be emphasized that the object of the transportation contract is the mere fact of delivering the cargo to the place at the agreed time. On this account, the carrier is entitled to payment of remuneration, and the principal cannot refuse it on the grounds of non-delivery of documentation or delivery in incomplete form. However, contractual penalties for failure to deliver transport documents on time are possible. The time for delivery of these documents must be sufficient for the carrier to meet it, and the contractual penalty itself should not be excessive.

Each case involving contractual penalties is different.

Therefore, a good solution in disputes is to use a lawyer who specializes in international or national transportation law. Our experts in such situations carefully analyze the provided documents and facts to propose the most favorable solution.