Contractual penalty

The contractual penalty is one of the instruments for securing the fulfilment of an obligation under a contract. It consists in the fact that if you do not fulfil your obligation within the stipulated period, you will incur an additional obligation (i.e. a contractual penalty). For example, you have a contractual obligation to deliver new accounting software by Friday. If you fail to do so on time, not only do you still have to deliver the software, but you also have to pay CZK 50,000. Its purpose is not only punitive but also preventive. It is therefore intended to discourage non-compliance.

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