The functions of penalty clauses
The imposition of penalties is generally seen today as a concern of the State authorities. Penal elements in private law are very much the exception. Yet all civil-law jurisdictions recognize the possibility of voluntary subjection to a private penalty: a person may promise payment of a sum of money in the event of his doing, or refraining from doing, some act, especially in the event of his not performing an obligation which he has undertaken, or not performing it in the proper manner.
Such conventional penalty clauses are useful for two reasons.[521] On the one hand they serve as a means of exerting pressure on the other party to behave or not to behave in a specific way; on the other hand, they relieve the creditor of the necessity of assessing and proving his claim for damages in case of non-compliance.(a) Assessment of damages
Roman lawyers were familiar with both these functions.[522] Their conventional penalty was normally cast in the form of a stipulation.[523] The use of such stipulationes poenae was highly recommended by Justinian:
"Non solum res in stipulatum deduci possunt, sed etiam facta: ut si stipulemur fieri aliquid vel non fieri, et in huiusmodi stipulationibus optimum erit poenam subicere, ne quantitas stipulationis in incerto sit ac necesse sit actori probare, quid eius intersit."[524]
In the same vein, we find Venuleius arguing:
"In eiusmodi stipulationibus, quae 'quanti ea res est' promissionem habent, commodius est certam summam comprehendere, quoniam plerumque difficilis probatio est, quanti cuiusque intersit, et ad exiguam summam dedudtur."[525]
It is often difficult and cumbersome to establish "quanti ea res est", that is, the amount in which the judge was instructed to condemn, where we are dealing with a condictio certae rei.
Even more so in cases of a facere stipulation,6 where the judge had to assess "quidquid ob earn rem Num Num A° A° dare facere oportet": one always has to remember that, due to "omnis condemnatio pecuniaria", specific performance could never be enforced and that the problem of fixing monetary compensation or damages thus arose on a much broader scale than it does today. Correspondingly more important were penalty clauses obviating the need to adduce evidence, dispensing with the vagaries of judicial discretion and allowing parties to recover more safely, more speedily and more completely.'The fact that the English common law traditionally also does not render judgments obliging the debtor to perform his promise and, instead, confines the creditor to a claim for breach of contract,8 seems to be one of the reasons why penal bonds in medieval English law were as popular as stipulationes poenae were in Roman law.(b) "In terrorem "function
As far as the first of the above-mentioned functions of stipulationes poenae is concerned, C. 2, 55, 1 may be referred to:
"Ex sententia arbitri ex compromisso iure perfecto aditi appellari non posse saepe rescriptum est, quia nee iudicati actio inde praestari potest et ob hoc invicem poena promittitur, ut metu eius a placitis non recedatur...."
An appeal against an arbiter's award cannot be entertained; one of the reasons given by Emperor Caracalla relates to the stipulationes poenae entered into by the parties when they made their "compromissum": it was their purpose to deter the parties from not abiding by the arbiter's decision, and this purpose would be frustrated were one to allow an appeal. The "in terrorem" function of penalty clauses is also highlighted in Pap. D. 35, 1, 71, 1:
"Titio centum relicta sunt ita, ut Maeviam uxorem quae vidua est ducat: condicio non remittetur et ideo nee cautio remittenda est.
huic sententiae non refragatur, quod, si quis pecuniam promittat, si Maeviam uxorem non ducat, praetor actionem denegat: aliud est enim eligendi matrimonii poenae metu libertatem auferri, aliud ad testamentum certa lege invitari."Where somebody promises to pay a penalty if he does not marry Maevia, such promise will be disapproved of. The case is different where some money has been left to Titius provided he marries Maevia. This condition is not objectionable, because it constitutes an "invitation", an inducement to marry. Titius will get a special reward for marrying Maevia, but won't lose anything if he decides otherwise. In the first case, however, he is put under pressure to marry Maevia, and
Knutel. bhputatw poen
M Cf. infra, pp. 776 sqq
Vide supra, pp. 37 (note 24), 90.
Knutel. Stipulatio poenae, p. 53.
Cf. infra. PD. 776 sna.
that would be in conflict with the rule of "libera sunt matrimonia".[526] It is obvious that this side of a stipulatio poenae is — or can be— problematical. Few legal systems have, however, gone as far as the English common law, which disallows penalty clauses altogether.[527]
(c) Indirect enforcement of unenforceable acts
Stipulationes poenae served a further, very important, function in Roman law: they could be used to enforce performance of, or forbearance from, an act which was not already owed; that is, to make (indirectly) enforceable what had not been made directly enforceable by the parties. One might be tempted to ask why the creditor would contemplate this roundabout way of going about things, instead of making what he wanted the other party to do or not to do the object of an obligation itself. The answer is that in quite a few cases he was not able to do so. Again, we are here touching upon certain consequences of the "omnis condemnatio pecuniaria" rule: where the performance had no pecuniary value for the recipient, a condemnation could not be pronounced.
Thus, a stipulatio poenae was the only way of securing immaterial (non-pecuniary) interest. The same applies, as has already been discussed, to contracts in favour of a third party.[528] A stipulatio alteri was not enforceable, a stipulatio poenae was. If forfeiture of the penalty was made dependent upon non-performance to the third party, this was a convenient device to exert pressure on the promisor to perform rather than to pay the penalty. Another example is given by Ulpianus in D. 45, 1, 38, 2:.. si quis velit factum alienumpromittere, poenam... potest promittere". Ifa vendor had guaranteed that the purchaser would not be disturbed in his position ("habere licere"), the question arose whether such a promise covered interferences by third parties too.[529] An interpretation along those lines would have clashed with the rule that one cannot promise what somebody else will or will not do. Ulpianus shows the way out: a penalty, forfeiture of which is dependent upon third-party interference with the purchaser's habere.
2.
More on the topic The functions of penalty clauses:
- Genuine conventional penalty clauses
- Non-genuine conventional penalty clauses
- The problem of excessive penalty clauses
- Forfeiture of the penalty
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