Summary
Highlights
Explains that a penal clause is an accessory undertaking attached to an obligation to impose greater liability on the debtor in case of breach. The three main purposes are ensuring performance, substituting indemnity for damages/interest, and punishing the debtor for non-compliance.
Distinguishes penal clauses from conditional, facultative, and alternative obligations. It emphasizes that a penal clause is accessory, meaning it depends on the principal obligation and does not give the debtor the right to choose the penalty over performance unless expressly agreed.
Categorizes penal clauses by origin (legal or conventional), purpose (compensatory or punitive), and effect (subsidiary or joint). It highlights that in 'joint' clauses, both the principal obligation and the penalty can be demanded.
Discusses Article 1226, which states that the penalty substitutes damages and interest unless there is an express agreement to the contrary, the debtor refuses to pay, or the debtor is guilty of fraud.
Clarifies that a creditor cannot demand both the principal performance and the penalty simultaneously unless clearly granted. It also notes that proof of actual damages is not required to demand the penalty, simplifying the litigation process.
Explains that courts may reduce penalties if the obligation is partially or irregularly performed, or if the penalty is unconscionable. Article 1230 establishes that the nullity of a penal clause does not invalidate the principal obligation, but the nullity of the principal obligation does invalidate the penal clause.