A change in the case law on the moment, to which a contractual fine is moderated, and on the impossibility of one-sided setoff
At the end of this year, there is not that many legislative news, which would be generally relevant for all entrepreneurs, as usual. Not only the Czech legislature, but also the Czech courts can introduce changes for entrepreneurs. One of the interesting and important case law for entrepreneurs in 2019 is the decision of the Supreme Court of the Czech Republic on the moment of moderation of the contractual fine and on the impossibility of one-sided setoff, which changed the existing long-term interpretation of the Supreme Court itself.
A change in the case law on the moment, to which a contractual fine is moderated, and on the impossibility of one-sided setoff
In decision made on April 11, 2018, File No. 31 Cdo 927/2016, published in this year's Collection of Court Decisions and Opinions, the Czech Supreme Court diverged from the so far constant legal opinion, expressed in nearly dozen decisions and ruled, that the contractual fine is moderated ex-tunc to the moment when the contractual fine was agreed. Therefore, it is impossible to use a disproportionately high contractual fine for a setoff of mutual claims, and thus prevent the courts from evaluation of the proportionality of agreed contractual fine, which has been, so far, an acceptable practice by the Czech courts.
The Grand Chamber of the Czech Supreme Court diverged from the previous decisions, respectively from the Czech Supreme Court decision made on August 28, 2006, File No. 32 Odo 1007/2006, and all subsequent decisions which followed. The Czech Supreme Court came to the completely new conclusion, that “the moderation of the contractual fine is not effective ex-nunc, but ex-tunc to the moment when the contractual fine was agreed. Where the contractual fine is disproportionately high, the one-sided setoff resulting in the extinction of the claim arising out of the contractual fine is not possible in the extent of its disproportionality, as well as setoff resulting in the extinction f to claim against which such contractual fine is setoff. ”
For more information, contact us at:
JUDr. Mojmír Ježek, Ph.D.
ECOVIS ježek, advokátní kancelář s.r.o.
Betlémské nám. 6
110 00 Praha 1
e-mail: mojmir.jezek@ecovislegal.cz
www.ecovislegal.cz
About ECOVIS ježek advokátní kancelář s.r.o.
The Czech law office in Prague ECOVIS ježek practices mainly in the area of Czech commercial law, Czech real estate law, representation at Czech courts, administrative bodies and arbitration courts, as well as Czech finance and banking law, and provides full-fledged advice in all areas, making it a suitable alternative for clients of international law offices. The international dimension of the Czech legal services provided is ensured through past experience and through co-operation with leading legal offices in most European countries, the US, and other jurisdictions. The Czech lawyers of the ECOVIS ježek team have many years of experience from leading international law offices and tax companies, in providing legal advice to multinational corporations, large Czech companies, but also to medium-sized companies and individual clients. For more information, go to www.ecovislegal.cz/en.
The information contained on this website is a legal advertisement. Do not consider anything on this website as legal advice and nothing on this website is an advocate-client relationship. Before discussing anything about what you read on these pages, arrange a legal consultation with us. Past results are not a guarantee of future results, and previous results do not indicate or predict future results. Each case is different and must be judged according to its own circumstances.
