OBLICON Chapter 3 Part 6

What is a penal clause in an obligation?

• A penal clause is a suggestion for contract negotiation.

• A penal clause is a provision in a contract that specifies a penalty for non-performance.

• A penal clause is a type of legal advice for contract drafting.

• A penal clause is a reward for good performance.

How does a penal clause affect indemnity for damages?

• A penal clause increases the amount payable in case of a breach.

• A penal clause has no effect on indemnity for damages.

• A penal clause only applies to criminal cases, not civil damages.

• A penal clause can limit indemnity for damages by capping the amount payable in case of a breach.

What happens if there is no stipulation to the contrary regarding the penalty?

• A fine will be imposed regardless of the situation.

• The default legal penalties will apply.

• The case will be dismissed without any penalties.

• The penalties will be waived entirely.

In what situation must damages be paid despite the penal clause?

• When both parties agree to waive damages.

• When the penal clause is not enforced by the court.

• When the contract is fulfilled without any loss.

• When actual loss occurs beyond the penal clause.

What is the role of the obligor in an obligation with a penal clause?

• The obligor is the party entitled to receive the benefits of the obligation.

• The obligor is the party responsible for fulfilling the obligation and may face penalties for non-compliance.

• The obligor has no responsibilities and cannot be penalized for non-compliance.

• The obligor is responsible for enforcing the penal clause against the other party.

Can a penalty be enforced at any time?

• Penalties can only be enforced during specific hours.

• Penalties can be enforced without prior notice.

• Yes, penalties can be enforced at any time.

• No, a penalty cannot be enforced at any time.

What is an example of a penal clause in a construction contract?

• A clause that allows the contractor to change the project scope without penalties.

• A clause stating that the contractor will receive a bonus for early completion.

• A clause requiring the contractor to complete the project within a year.

• A common example is a clause stating that the contractor must pay $500 for each day the project is late.

What does it mean for a penalty to substitute indemnity?

• It suggests that penalties are only applicable in criminal cases.

• It indicates that penalties can be ignored in favor of compensation.

• It means a predetermined penalty replaces the need for actual damage compensation.

• It means actual damages are always required regardless of penalties.

What is the significance of fraud in the context of penal clauses?

• Fraud is a legal term that does not relate to penalties.

• Penal clauses are only activated by financial loss, not fraud.

• Fraud is irrelevant to penal clauses and has no impact.

• Fraud is significant as it activates penal clauses, imposing penalties for deceitful actions.

How does a penal clause create greater liability for the obligor?

• A penal clause increases liability by imposing a predetermined penalty for breach, exceeding actual damages.

• A penal clause only applies to non-monetary damages and has no effect on financial penalties.

• A penal clause eliminates liability for the obligor in case of breach.

• A penal clause reduces liability by limiting penalties to actual damages.