Smluvní pokuta

Under Czech law

The contractual penalty is regulated by § 2048–§ 2052 of the Civil Code (Act No. 89/2012 Sb.). It secures a specific contractual duty; if that duty is breached, the penalty is due whether or not the creditor suffered loss, and — unless agreed otherwise — it replaces damages for that breach (§ 2050). Since the 2014 Civil Code it need not be in writing, though it practically always is. Fault is not required unless the contract says so (§ 2048 presumes strict liability).

The court's moderation power in § 2051 is the safety valve: a disproportionately high penalty can be reduced down to the level of actual harm, considering the value and significance of the secured duty. Consumer contracts face stricter scrutiny — surprising penalties hidden in business terms can be invalid outright (§ 1753, § 1813).

A practical example

A commercial lease sets a penalty of 5 000 Kč per day for late handover of the premises after termination. The tenant leaves 40 days late and argues the 200 000 Kč penalty is absurd since the landlord re-let immediately. The court, using § 2051, cuts it to a fraction — the secured interest was real, but the amount had drifted far from any conceivable harm.

When you need a lawyer

When drafting: penalties that are too high invite moderation, and penalties attached to the wrong duty (like a penalty for exercising a lawful termination right) are void. When facing one: moderation and validity arguments regularly cut penalties dramatically, but they must be raised and argued.