Limits to the cumulation of the penalty clause with other contractual liability doctrines

Abstract

The study intends to explore the criteria for limiting the incidence and cumulation of the penalty clause with other types of agreements regarding contractual civil liability. To this end, we will first examine the specific rules about penalty clauses in the Civil Code, which foresees its modalities as substitutive or cumulative. Then we will analyze doctrinal and case law understandings, which mostly overlap such modalities with the potential functions that can be attributed to the penalty clause, that are compensatory and punitive. At this point, we intend to clarify the possibility of separately assessing the modality of the penalty clause and its function. Based on this idea, we will explore the incidence of general clauses on the limitation for joint implementation of penalty clauses and other penalties, compensation, and restitution remedies, clarifying its essential elements from the analysis of case law and doctrinal understandings that are considered imprecise. In conclusion, we intend to demonstrate, based on examples of practical cases, that penalty clauses that are cumulative with the execution of the obligation can have both punitive or compensatory nature, which influences the limits of their effectiveness due to the incidence of the general clauses that prohibits bis in idem and unjust enrichment.