Contractual penalty
An amount agreed in advance that falls due on a breach of contract, for instance on construction delay; reducible by the court (section 1336 ABGB).
The contractual penalty is a sum fixed in the contract for the case of non-performance or defective performance, on construction projects typically for default on completion dates. It is payable independently of proof of actual loss.
Under section 1336 ABGB the court may reduce an excessive contractual penalty. Whether the penalty can be claimed in addition to further damages depends on the agreement. The precise wording of the penalty clause in the construction contract is therefore important.
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Legal basis
Statutory texts for orientation; the version in force at the relevant time prevails.
This explanation gives a general overview of Austrian law and does not replace advice in an individual case. The specific circumstances of your construction project are always decisive.
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Default (delay in performance)
The failure to render a performance due on time; in case of construction delay the client has specific remedies depending on the situation (sections 918 et seq. ABGB).
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Damages
Fault-based compensation for loss caused by a defect or breach of duty; on construction projects often alongside warranty (sections 1293 et seq., 933a ABGB).
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Contract for work
A contract under which the contractor undertakes to produce a specific result (the works) in return for payment (sections 1165 ff ABGB).
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