Penalty Clauses: Are they Governed by the CISG?

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Zeller, Bruno (2011) Penalty Clauses: Are they Governed by the CISG? Pace International Law Review, 23 (1). pp. 1-14. ISSN 1553-7897


This paper will only analyze one issue; namely whether the inclusion of penalty clauses or fixed sums into a contract is governed by the Convention of International Sale of Goods (CISG)1 and, therefore, falls inter alia under Article 74. In essence, a penalty clause or fixed sum is a pre-determined amount of money which becomes due in the event of a breach of contract. The word “penalty” is used in this paper to describe the fact that the amount due is greater than the actual damage. The main reasons to include penalty clauses in contracts are to “reduce legal costs, [to provide] time for producing evidence, and [to mitigate] the risk of losing litigation or arbitral proceedings due to the required level of proof not being met.

Item type Article
Official URL
Subjects Historical > Faculty/School/Research Centre/Department > Centre for Strategic Economic Studies (CSES)
Historical > FOR Classification > 1801 Law
Historical > SEO Classification > 9404 Justice and the Law
Keywords ResPubID24023, sales contracts, penalties, commercial law, business
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