Non-genuine conventional penalty clauses
All these stipulationes poenae which are not attached to an already existing obligation (that is, those that perform the third of the above- mentioned functions) are usually referred to as independent or non- genuine conventional penalties.
Their legal nature is described by Paulus in the following words: "Si ita stipulatus sim: 'si fundum non dederis, centum dare spondes?' sola centum in stipulatione sunt, in exsolutione fundus."13 Only "centum" are owed; the promisor is under no obligation to transfer the tract of land. Such a transfer, however, is one way of discharging his obligation. We still find the non-genuine penalty in modern German law,14 but it is living the sad life of a pitiful little wallflower. Its loss of significance is due largely to the fact that modern law has moved away from the principle of necessary condemnatio pecuniaria and has also broadened the scope of contractual freedom of the parties. Yet, analytically, even today it is the most basic form of conventional penalty, of which the genuine conventional penalty merely represents a specialized modification.15 In Rome the non- genuine form was of great practical importance and was regularly employed, even in cases where that which was contained in the conditional part of the penalty stipulation could well have been the object of an obligation in itself. The agreement to submit a dispute to arbitration has been mentioned above. A mere pactum on those lines was not enforceable. Indeed, the technical term "compromissum" indicates that formal promises by both parties had to be given to abide by the award of the arbiter. Of course, the parties could execute two straightforward stipulations to that effect,16 but the resulting protection was so unsatisfactory that it was general practice to enter into a penalty stipulation without any further ado:.. quod... arbiter ex compromisso... sententiam prove sententia dicat dicive iubeat...: si quid adversus ea factum erit sive quid factum non erit HS M probos recte dari."17 This is a non-genuine penalty. The parties seem not to have bothered to promise, first of all, to abide by "sententia arbitri". The reason why the penalty was so much more important is obvious:B D. 44, 7, 44. 5.
B Mentioned, but rather in passing and by no means fully regulated, in § 343 II BGB. South African law, like most other modern legal systems, does not recognize an undertaking of this kind as a penalty: cf. De Wet en Yeats, p. 218 and Guenther H. Treitcl, "Remedies for Breach of Contract", in: International Encyclopedia of Comparative Law, vol. VII. 16 (1976). p. 91, discussing the English case oi Alder v. Moore [1961] 2 QB 57 (CA), where a professional football player who received a sum of money from an insurance company on account of a personal injury undertook to repay that money in the event of his playing professional soccer again.
Á The practical and dogmatic importance of the independent conventional penalty has been emphasized by Eduard Botticher, "Wesen und Arten der Vertragsstrafe sowie deren Kontrolle" 1970 Zeitschrift für Arbeitsrecht 3 sqq.
B Cf. Ulp. D. 4, 8, 27, 7.
17 Cf. Tab. Here. 76. On this fragment and on the structure and content of the compromissum, see Ziegler, Privates Schiedsgericht, pp. 47 sqq. (64, 93). "Cum poena ex compromisso petitur, is qui commisit damnandus est, nee interest, an adversarii eius interfuit arbitri sententia stari nee ne."[530] Historically, furthermore, the non-genuine conventional penalties were the earliest form of stipulationes poenae and had a considerable influence on the development of the law of obligations.[531] At some early stage, a binding promise, enforceable by means of the legis actio per iudicis arbitrive postulationem,[532] could have only certa pecunia as its content.
Commitment, for instance, to a facere could be achieved only indirectly: by making the other party promise certa pecunia if the desired act was not forthcoming."[533] It is from this starting point that certa res and, finally, incertum gradually gained recognition as things that could be owed directly, that is, become acceptable objects of a stipulation in their own right.[534] Thus (non-genuine) conventional penalties can well be said to have paved the way for the comprehensive range of classical stipulatio. A similar development (namely an advance from the use of—independent—penalties made conditional upon the occurrence or non-occurrence of a specific act to the recognition of the binding character of this act itself) is observable in the medieval English common law. Like the Roman jurists, the common lawyers started off, not with a general principle of actionability, but with a list of transactions which were actionable through the procedural forms. This formulary system, as in Roman law, determined the content and structure of the common law to a very considerable extent. The most commonly used of the medieval contractual actions was the writ of debt.[535] It' was available, wherever a "sum certain" was due in law by debtor to creditor. This would usually be the case on the basis of a bond, a sealed instrument, whereby the one party had acknowledged to be the debtor of the other. Where such a bond was made subject to a condition, it became a most flexible institution which could be used to accommodate any lawful agreement.[536] These conditional penal bonds "functioned] in what appears to us to be a peculiarly topsy-turvy way. Performance of what may be called the underlying agreement is not imposed as a duty; instead performance is only relevant as providing a defence to an action of debt for the penalty."[537] They are what we would call in civil-law terms non-genuine penalties.3.
More on the topic Non-genuine conventional penalty clauses:
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- Forfeiture of the penalty
- Conventional sequestration
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