ARTICLE 1226

• What is the role of the penalty in obligations with a penal clause?


  The penalty substitutes the indemnity for damages and the payment of interests in case of noncompliance.
• Under what condition must damages be paid in obligations with a penal clause?


  Damages must be paid if the obligor refuses to pay the penalty or is guilty of fraud.
• When can the penalty in an obligation with a penal clause be enforced?


  The penalty may be enforced only when it is demandable according to the provisions of the Code.
• How can an obligation with a penal clause be defined?


  An obligation with a penal clause is one with an accessory undertaking to ensure its performance.
• What are the purposes of a penal clause in obligations?


  1. Coercive function - to ensure performance of the obligation
  2. Liquidatory function - to determine damages for breach
  3. Strictly penal function - to punish the obligor in exceptional cases
• What does the accessory obligation in a penal clause impose on the obligor?


  It imposes an additional liability in case of breach of the principal obligation.
• How does the penalty encourage the debtor in obligations with a penal clause?


  It pushes the debtor to perform the obligation faithfully and without delay.
• What is the nature of the penalty in obligations with a penal clause?


  The penalty is a fixed civil penalty without the need to prove damages.
• What does the penalty substitute for in obligations with a penal clause?


  The penalty substitutes for:

  • Indemnity for damages
  • Payment of interest in case of breach
  • Unless otherwise stipulated
• What are the exceptions for recovering additional damages in obligations with a penal clause?


  Additional damages may be recovered if:

  1. The debtor refuses to pay the penalty
  2. The debtor is guilty of fraud
  3. There is an express stipulation for other damages or interests