judicial reduction of the penalty clause: the persistence in the error and inefficient civil code article 1346 of the Peruvian
By: Andrew Chang Guillermo Hernández (*)
I. Preface: Reduction of the penalty clause and Appeal N º 761-2003-LIMA.
resolution discussed here, the contract regulates a very controversial issue in our midst, and is referred to the possibility that the judge assigned to reduce the amount agreed upon as a penalty, under the assumptions contained in Article 1346 of the Peruvian Civil Code.
In an account of the facts we have is an application for enforcement of the penalty clause as follows sentence itself is a penalty clause for the purpose moratorium meet the defendants pay the sum of $ 50.00 to reason for each day of delay in that tenants do not vacate the leased property, under clause thirteen the contract between Dona Rosa Goshi Goshi Tsuchida Ura Nakagawa and Succession of Guillermo Garcia and Julia Refulio Max Suarez Estela Montalvo. In this respect a criminal clause merit the rental demand payment of the agreed penalty and therefore the trial judge states based on the demand side and therefore mandates that defendants tenants, pay fifteen thousand U.S. dollars each American or equivalent in local currency. Judgement reversed by the superior court overruled reforming, this latest decision is subject to appeal before the Supreme Court of the Republic.
With this background, the Supreme Court declares Founded the appeal for review filed by Mrs. Rosa Goshi Goshi Ura Nakagawa Tsuchida, and consequently married the view resolution issued by the Fourth Civil Division of the Superior Court of Lima, and acting in place of analysis, partly confirmed the initial sentence instance partially upheld the demand and the end Revoked as to fixing the amount of fifteen thousand dollars to be paid by each of the defendants Succession Refulio Maximo Guillermo Garcia and Julia Estela Suarez Montalvo, the overhaul is set at six thousand U.S. dollars Americans give the defendants to pay jointly by Queen concept of penalty.
Although it is important to know criteria by which to declare the invalidity-quem, the highlight of the same resolution, relates to the possibilities and justifications which the Judge has to apply Article 1346 of CC and thus reduce the amount established by the parties, as penalty, subject developed in the following lines.
II. penalty clause notion of the doctrine and case law in Peru.
Our civil code, as in many other topics obligational law contains no explicit definition of a penalty clause, however, if it has the doctrine and jurisprudence, so we
Felipe Osterling, express that through the penalty clause The parties can be set conventionally at lead and the date of maturity of the bond the amount of damages that correspond to the creditor if the debtor fails to comply with this obligation "
For its part to Professor Carlos Cardenas Quiroz, penalty clause, for the same author is more appropriate to speak of punishment, is obligational ... compulsive mechanism derived from a binding relationship established by a provision to give, to do or not to make the debtor or a third, according to some authors or laws, and though the creditor in certain cases, when such is not cooperating with the debtor in order to enable it to establish the performance of the service charge, in violation of the duty to co-run undertakes to the creditor, a third or a debtor if the creditor violates the duty of collaboration, in the event of total non-performance or partial performance, late or defective primary obligation "
The penalty clause for Raúl Ferrero Costa, constitutes an agreement between the parties for a mandatory relationship, by which provides that in case of breach of the benefit due, the debtor is required to pay a benefit by way of compensation for damages caused by the breach "
Similarly our friend and teacher Carlos Soto, states that" ... the Peruvian Code does not define properly figure the penalty, but merely describes the effects of it, by providing in Article 1341 which The pact laying agree that in case of default, one party is obliged to pay a penalty, has the effect of limiting the compensation for this benefit as they return the consideration, if any, except as may be specified further compensation for damage. In the latter case, the debtor must pay the entire amount of the penalty, but this is computed as part of the damages and injuries if they were older. " For the same author penal clause must be strictly a preventive or if a punitive or punishment, thus defining the penalty clause as "The provision - to give, to do or not do, freely agreed to the character of penalty, in order to enforce compliance with its obligations and that in the event of total or partial performance, late or defective obligation, the debtor is obliged to pay the agreed penalty "
For its part, legislative level we have the reading of articles from 1341 to 1350 of the Code civil, penal clause is conceived as an obligational relationship the parties intended to set the compensation for non-compliance. Value expressed in clauses in a contract or acts after its conclusion, by which the parties agree that one must pay a penalty in case of failing to provide them. This relationship deserves some peculiarities, proper when it comes from further harm, ie when the damage from the failure of the debtor exceeds the agreed penalty CC Article 1341 of the power of the judge or, at the request of the debtor, may reduce the amount of the penalty agreed Article 1346 CC
is unanimously considered a penalty clause as a means of compulsion either repair or, in the first case, seeks, through the possibility of implementing the agreed penalty clause, the performance of the obligation and the second principal is a prominent mechanism of repair of damage caused by the breach, which amount is previously determined by the parties
Usually the penalty clause, the parties seek to identify in advance the conventional manner, a penalty for failure of providing the debtor or otherwise in case of default of the debtor, this measure can be identified in a cash amount or any other provision to give, do not do. And in this regard to ensure that, when such catastrophes occur, go to court in search of a remedy to the creditor or a debtor punishment for delivery to the creditor. All this in order to reduce transaction costs of contract, because we know that the potential risks of a total failure, partial or defective provision are charged to transaction costs. Then they spend on solving legal problems is to stop investing in other more productive, reduce the number of opportunities. This means less productive investment, less production consequently less work and less development. And that impoverishes us. Accordingly, as we appreciate not only reduce those costs encourages the negotiations to increase security but also to generate higher output and higher correlation development.
To conclude the doctrinal treatment given to this institution, we said that is thought to be more appropriate to call it a "penalty clause." And it is a covenant or obligation that is ancillary to the principal obligation
For its part, the national case law also attempted to define the penalty, so on the Appeal N º 761-2003-Lima, has argued that The penalty clause is a ancillary provision added a contract, why and to ensure the implementation of the provision, subjecting the debtor to pay a fine or make other provision in case of delay or failure "
The Appeal No. 1753-97, Lima, states that The penalty clause determines a penalty for the part that does not comply with the provisions in the contract to compensate the damage it could cause "
It is extremely important as determined by the highest court of our country, through Cassation Judgement No. 3031-99, Lima, indicating that The penalty clause is to support the autonomy or contractual freedom the parties have to fix in advance the amount of compensation for the creditor by the failure of delay in breach of the obligation of the debtor, which is calculated on the basis of representation of the damage that the parties take into account hire "
In this regard, however, that for national law, the penalty clause is also a tool to ensure compliance with an obligation or prior determination of the damage caused by the breach, it must be remembered that in our country this desire of the parties free to determine the content of free content contract a penalty clause, in this case is reduced by legal intervention, as it does on this issue through Article 1346 of Civil Code provision that allows variation through reduction of the penalty, when this is manifestly excessive or when the principal obligation had been partly or irregularly complied with, the amount of the penalty.
III. The judicial review of the content of contractual agreements: special reference to the mutability of the penalty.
As you know the whole contractual system rests on a vast carpet called "private autonomy", which is nothing else than the recognition of self-determination that has the individual to "govern" freely their relationships with others. Autonomy of contract it is manifested by two freedoms of contract and the contract, the first refers to the freedom to decide when and with whom it contracts, while the contractual freedom of speech freedom to decide freely the content of the contract . Ignoring these freedoms would be like ignoring the existence of the contract
However, currently there are certain cases in which the State may interfere with the exercise of these two freedoms, whether freedom of contract and contractual freedom, and spoke the freedom of contract, to forced through contracts (SOAT, supply of public services: electricity, telephone). Involved, for its part, the contractual freedom through the so-called contractual interventionism, which seeks to channel the contents of the contract provisions generally outlawing some ethical, moral or public policy, provided, of course, under the general principle of good contractual faith.
also states that for reasons of social policy, the state intervenes to restore the balance between the parties and seek, generally, the protection of the weakest part of the contractual relationship such as employment contracts and certain figures Contract (Injury, Excessive cost of supply), obviously in these cases of state intervention to the standard found in Article 1346 of the Civil Code, because no matter what the parties freely agreed between the amount of the penalty, the State, via the judiciary, by Article 1346 permits equitable reduction of sentence by the court itself.
IV. The distortion of the penalty clause in Peruvian law.
As we have seen the penalty clause, by its nature should be immutable, however both domestic and foreign law are inclined due its mutability.
However, this predominance of mutability penalty clause does not mean it is the only option adopted by the legislature, since codes are opting for a different position, in fact there are some systems where the variation of the amount of the penalty clause is immutable, there we have the French Code 1804, which in the original wording of Article 1152, provided that it could not compel the debtor to pay an amount greater or less than the concentration in the penalty.
It is worth remembering that the historical origin of the penalty clause is found in Rome, specifically in the stipulatio penalty, which was devised as a means of forcing debtors to meet their obligations. William A. Borda, about this, adding that in modern law, the penalty clause is twofold to collate the debtor to meet its obligations to the danger of having to pay a sum more burdensome than compliance itself b advance Fix the amount of damages, avoiding difficulties after the death of injury "
A rather unusual variation of absolute immutability of the sentence is found-as they do doctors note Walter Rebaza Alfonso Gutiérrez-Camacho and the now-repealed 1916 Civil Code, which in its articles 920 and 927, provided that the debtor could not exempt compliance arguing that the sentence is excessive. The creditor for its part, is not obliged to probanza of damage in order to demand the punishment. However, the Brazilian Code abrogated demanded a stop to be observed in the amount of the penalty clause in effect Article 920 stipulated that the amount of the penalty may not exceed the principal obligation.
Among the grounds that protect the rule of immutability of the penalty are those who argue that the penalty clause seeks to avoid all future discussion on the existence of damages and amounts also that respect for the will of the parties freely expressed at the time of agreeing the penalty, under the principle of contractual freedom
Coinciding with Gutierrez Camacho and Rebaza, this system seems, analyzed from a conceptual standpoint, regular consistency, the reasons inherent in the penalty clause despite its advantages the doctrine Most up its criticism against absolute immutability noting that the penalty clause can be a source of abuse and injustice against the debtor. Thesis was peacefully adopted by numerous laws and is taking an absolute or relative mutability of the penalty.
Indeed, from the German Code BGB 1900, establishing for the first time the possibility to reduce the penalty clause and in article 340 paragraph 2, the Code provides for the possibility that the creditor initiated actions to compensate for further damage being empowered to demand the punishment as a minimum amount of damage
And as logical we can not ignore the position of Code 1942, rule as an important benchmark of our national civil body. The Code regulates in its Article 1384 the possibility of reducing the penalty when the amount is disproportionate and when, taking the value of benefits and other circumstances, you can set that there was an abusive use of the creditor. In this sense
German civil code, Chilean, Argentine, Italian and Peru, among others are part of what are called relative immutability system of punishment.
mentioned codes are part, as it expresses the doctrine of the immutability theory relative. " Ie allowing the reduction of the penalty clause when it is manifestly excessive, but does not authorize the increase in the amount of the penalty.
Indeed, our legislation allows the reduction of the penalty, is manifestly excessive or when the principal obligation had been partly or irregularly complied
As has commented that the sentence, however distort the essence of the penalty, reduce the amount of punishment in strict application of Article 1346 of the Civil Code. On this issue the Supreme Court has been, shall we say uniform, for strict application of Article 1346 of Civil Code, the majority has opted for the mutability of the penalty, they argue in the following resolutions CAS No. 3861-97, CAS 3179-2002-Callao, among others.
indeed absurd the possibility that the law gives the debtor to request a reduction of penalty, judicial process through which mediate tests, exceptions and expansions known to was precisely what was to be prevented, so we share the opinion of Dr. Carlos Soto, when he expresses ... illogical, to say the least, the Peruvian legislature allows a debtor who has failed in its duty or who, having partially fulfilled, recourse to the judiciary to apply the reduction of the penalty he agreed and accepted. At heart this fact is none other than the review of contractual arrangements freely arrived at, especially if you have negotiated and signed the contract in equal "
being so if the penalty clause by establishing a service delivery by the debtor either by way of any its aims punitive damages or deterrent, is this agreement that under Article 1361 of the Civil Code, acquires binding force between the parties and must be demanded by the debtor and creditor are unwise but the rule in article Code 1346 of substantive, because it contravenes the guiding principles of the penal clause, to allow its decline, when the nature of the penalty clause forbids.
We therefore believe that the legislature should amend section 1346 of the Civil Code, seeking to respect the will of the parties involved, who are free to choose the amount of the penalty, more even when the institution seeks to prevent future legal action where it determines the amount of damages caused by the breach or pay the arrears for the delay in implementing the provision.
The penalty clause is a provision that is part of contractual content. Therefore. It is a legal rule that integrates the program established by the parties to satisfy their interests. It is a manifestation of contractual autonomy by which the parties stipulate that, at the failure or lack of fidelity to the program contract, the contractor fails to perform must give the other a sum by way of penalty. It is, therefore, a real penalty civil or, in other words, a private grief. Do not forget that the penalty clause may consist of a sum of money or any other benefit. Similarly, approaching from another angle the penalty clause is a private guardianship order mechanism that operates to the breach of a contractual obligation and that source is the release of a certain sum of money agreed upon in advance by the parties also
the formula of Article 1346 of the Civil Code is guilty of not guilty to trying to limit the reduction of sentence only when it is manifestly excessive, since in practice we see that every debtor that by the mere whim of not wanting to pay the penalty established in the penalty clause demand reduction, the process should the lender prove that the sentence is not manifestly excessive, which is done by estimating the existence and amount of damage that produce the failure, which is exactly what parties try to avoid when setting a penalty. Therefore deny the possibility of reducing the amount of the penalty, it coincided with Dr. Carlos Soto The penalty freely agreed on joint or negotiated contracts should be respected and must be met if the debtor fails to comply with its obligations, which do not share the thesis of a judicial or arbitral review of the penalties, or by request debtor or officially carried out by the Judge "
However, in the Appeal under analysis shows that the judges, as already indicated, strictly speaking are only applying the rule in Article 1346 of the Civil Code, since despite be an inefficient must be respected by the judges, because in cases like this, where a rule is inefficient or inadequate, the judges still should only implementation, and noted by the Appeal 2390-2004-Ica, as express ... changes in legal rules is not the function of this branch of government but their interpretation and application for resolving conflicts interests and the elimination of legal uncertainty so that the proper application of the law in any way may be the effect on due process rights of the appellant ...".
Pursuant to paragraphs exposed, we believe we urgently the repeal of Article 1346 of the Civil Code in order to ensure freedom of contract giving full effect contractual arrangements and, especially, in this case, freely agreed to the penalties.
therefore believe that, in order to recover the true purpose of the penalty, the judge must verify the scrupulous observance of the assumptions that enable the application of clause criminal.
First it should be noted that the reduction of the clause does not operate automatically, as the court is only entitled to their reduction at the request of the debtor, the provision of Article 1346 of the Civil Code is clear on this point also different decisions they do know, for example, the file number 8023-98, Lima, states that analysis of the court ruling shows that the A-quo in the seventh recital in the same, reduce the amount payable compensation and damages referred to in the fourth clause of the contract, without having been requested by the defendant debtor , contrary to the provisions of Article 1346 of Civil Code which states that the penalty clause can only be reduced at the request of a party, and the absence of this order, the judge erred in "
also should be noted that the reduction of sentence only applies when this is manifestly excessive or when the principal obligation had been partly or irregularly complied with. For this purpose, in order to establish the existence of the two cases already identified, the Court must base its decision and has expressed in Exp-Lima 3293-99, which states that The judge has reduced by half the penalty amount agreed between the parties but any way justify the reasons justifying its decision to reduce the penalty making it clear that the device has been unobserved legal "
V. Colophon: relevant aspects of failure analysis.
Finally, having defined the nature of the penalty, we see, as we advance, "the cassation N 761-2003-Lima, discussed here, deals with a penal clause reduction via the application of Article 1346 of Civil Code. Similarly
have to invoke the derogation of Article 1342 of the Civil Code, the same as expressed When the penalty clause stipulated in the event of default or safety of a specific agreement, the creditor is entitled to demand also of the penalty, the performance of the obligation " in this regard as we can see the resolution under consideration, the penalty clause effectively agreed between the parties is a moratorium in nature and therefore the plaintiff to sue a derogation from that article, deserve judicial protection. Indeed, by requiring the payment of the penalty agreed to by the delayed delivery of goods, is a clear case of default and penalty clause as well as payment requirement does not preclude the applicant requires the fulfillment of the obligation, as it allows that Article 1342 of the Civil Code.
also believe questionable when the study Cassation when supports made reduction of the penalty clause in real damage "must understand that the Supreme Magistrates believe that real damage is less than the agreed contractual penalty, however forget that the main basis of the penalty, is actually determining the amount compensation, this is to set an amount as a penalty clause which serves to compensate for the damage it would suffer any party for breach of the obligation. Thus we believe that the identification of the alleged actual harm to the creditor can not be grounds for reducing the penalty, to account for the parties are better off than a third party (judge) to calculate the damage occurring in their relationships.
For our part we can only add that this resolution and others which Supreme Court level have been issued, only make inappropriate and inefficient ratify Article 1346 of the Civil Code, as for example in the sentence in comment you bet by reducing the amount of the penalty, as expressed in its tenth Whereas That, in fact, the penalty is not a settled and reasonable sum for which execution can be shipped due to the power that the law gives the fairly judge to reduce it if the debate and the evidence shown in the normal procedures, which is excessive, "We wonder
Did the judge should suppress the will of the parties in their private relationships? Do the parties are aware and responsible enough to agree and regulate their obligations?. We think not, ie, they must release the contractors to identify and determine freely their obligations, including assumed a penalty, as permitted by Article 1354 of the Civil Code, which establishes the principle of contractual freedom
Another striking point is that in this Appeal referred to a reduction of the penalty clause on grounds of fairness, of course not contained in Article 1346 of the Civil Code to enable the reduction of the sentence, in fact that rule does not invoke the equity to reduce the penalty clause but only when it is manifestly excessive or when it has met irregularly in part or provision. Indeed we can see that the tenth recital of Cassation N º 761-2003-LIMA, states: "That, in effect, the penalty is not a very liquid and enforceable by which it can dispatch execution, because the power law gives the judge to reduce it equally if the debate and the evidence shown in the regular procedure, which is excessive "(emphasis ours). On that basis not just see a poor lift when reference is made to equity to reduce the sentence but when invocation is only to be excessive, when the rule only authorizes a reduction when it is manifestly excessive, because although Article 1346 of Civil Code uses the term makes it fair for the purpose of reducing the sentence manifestly excessive and not course to authorize their decline.
on the statement we have to state that one thing to talk about a sentence "excessive" and another very different one is referring to a sentence "manifestly excessive", which expresses the ideas quite different, since the term denotes something too "That is exceeded or leaves or anticipated reasonable limits, while the term "manifestly" means "clarity and evidence discovered" as we appreciate, from a literal interpretation of this requirement, authoritative for the reduction of the penalty, imposed by Article 1346 of the Civil Code, it is noted that the penalty should not only be manifestly excessive but excessive, which makes us think that the legislator wanted to emphasize and make clear that simply is not enough excess in determining the amount of the penalty by the creditor but it must be manifestly excessive and therefore this excess must be clear and clear and not a meager or tiny.
* Professor of Civil Law at the Universidad Privada San Juan Bautista - Affiliate Ica, Post Graduate Diploma in Law University Civil Castilla - La Mancha (Toledo - Spain), legal consultant of the Regional Directorate of Energy and Mines of Ica
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