Breach of contract: Penalty Clauses in Civil law and Common law

The thesis is about breach of contract with a specified focus on the penalty clause and their differences in common law and civil law systems. In general breach of contract is any violation of the terms agreed upon in a binding contract. This means any failure to keep a promise without legal excuse will lead to a breach of contract. Breaches can be different, from material breaches to minor breaches. After the breach of contract any sensible party that has been wronged will look for compensation. Compensations might differ based on the contract and the legal system. Some well-known remedies are termination of contract, monetary remedies or specific performance. As said above our focus is mostly on the penalty clause, which is part of the contract of the parties that means any agreement for the payment of a fixed sum for breach of contract. owing to the fact that we have different legal systems, we need to look for the differences in contracts and remedies in both legal systems and understand how they work. The aim is to find the appropriate way of using penalty clauses in legal systems in the landscape of commercial contracts. We need to understand the importance of remedies and compensations. That is why we start our thesis on the introduction of breach of contract and what can be considered one. Then we will look into the remedies and compensations and their importance in the commercial and corporate agreements supported by relevant cases and laws. The thesis will then dive into the distinctions between civil law and common law remedies and an in-depth analyses of penalty clauses, offering examples from both legal traditions while evaluating the strengths, weaknesses and limitations in civil law and in parallel, the varieties in common law while incorporating cases and comparative analyses. Later Practical considerations for businesses are presented, and the role of commercial and corporate law in shaping penalty clauses is explored. The thesis will conclude with a summary of findings, the measures of penalty clauses in commercial and corporate contracts, recommendations towards implementing penalty clause and foreseeing the future of penalty clauses implemented in commercial or corporate contracts in civil or common law legal systems.