“Application of Article 333 of the Civil Code: are we going the right way?” — Tatiana Tereshchenko’s post for Zakon.ru
This post is a kind of observation from my professional teaching practice.
I often notice that both students and colleagues are quite skeptical about the possibility of canceling the application of Article 333 of the Civil Code by agreement of the parties, as well as about the possibility of finding an effective (understandable to the court in case of a dispute) alternative method of ensuring/measure of liability excluding Article 333 of the Civil Code of the Russian Federation.
In my opinion, this is a question about the freedom of contract and its limits, about the structure and boundaries of the contractual penalty clause (whether the contractual penalty includes as its part the usual condition on the possibility of reduction, whether this part is dispositive or imperative), about the presence of an explicit or implied imperative prohibiting such agreements, about the ratio of existing explanations (Plenary No. 7 vs Plenary No. 16), about the availability of necessary and sufficient arguments, about the conformity of the approach chosen by practice with the essence of the penalty, as well as about, does the practice of reducing the penalty distort the essence of the penalty (if so, how to fix it), etc.
For example, we have a basic explanation in paragraph 69 of the Resolution of the Plenary of the Supreme Court of the Russian Federation dated 03/24/2016 No. 7 "On the application by courts of certain provisions of the Civil Code of the Russian Federation on liability for breach of obligations": "The penalty to be paid, established by law or contract, in case of its apparent disproportionality to the consequences of the breach of the obligation, may be reduced in court (paragraph 1 of Article 333 of the Civil Code of the Russian Federation). The pre-established terms of the agreement on the non-use or restriction of the application of Article 333 of the Civil Code of the Russian Federation are null and void (paragraphs 1 and 4 of Article 1, paragraph 1 of Article 15 and paragraph 2 of Article 168 of the Civil Code)".