According to Art. 300 of Act No. 513/1991 Coll., the Commercial Code (the “CC”), “circumstances excluding liability (Art. 374) do not affect the duty to pay the contractual penalty.” These circumstances are so-called force majeure events: situations where a breach of legal duty is caused by an unforeseeable, insurmountable and overwhelming obstacle outside the obliged person’s control. It has been – and remains – questionable whether a breach of duty caused by a force majeure event automatically extends the performance period, i.e. the period for fulfilling the contract. Arguably there should be no breach of duty in this case, and thus, no duty to pay the contractual penalty could arise. Such an interpretation is, however, directly contrary to Art. 300 of the CC. 

The view that events excluding liability have no effect on the duty to pay the contractual penalty does not reappear in the new rules on contractual penalties under Act No. 89/2012 Coll., the Civil Code, as amended (the “CivC”). It is therefore likely that these events affect the duty to pay the contractual penalty with the result that it does not need to be paid. A definite answer on this point cannot be given, however, in the absence of new case law. Since the rules on events excluding liability under Art. 2913 para. 2 of the CivC, only concern the duty to compensate damage (and, thus, do not mention contractual penalties), they could also support the opposite interpretation. 

The controversy on this question must be reflected in all arrangements about contractual penalties. 

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