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14 Cards in this Set
- Front
- Back
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principal obligation |
can stand by itself and does not depend for it's validity and existence upon another obligation |
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accessory obligation |
one which is attached to a principal obligation; therefore cannot stand alone |
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obligation with a penal clause |
one which contains an accessory undertaking to pay a previously stipulated indemnity incase of breach of the principal prestation |
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penal clause |
accessory undertaking attached to an obligation |
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purposes of penal clause |
1. to ensure performance 2. to substitute a penalty for the indemnity of damages and the payment of interest in case of non compliance |
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kinds of penal clause according to origin |
legal penal clause conventional penal clause |
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penal clause according to purpose |
compensatory penal clause punitive penal clause |
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compensatory penal clause |
penalty takes the place of damages |
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punitive penal clause |
penalty is imposed merely as punishment for breach |
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penal clause according to demandability or effect |
subsidiary or alternative penal clause joint or cumulative penal clause |
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subsidiary or alternative penal clause |
only the penalty can be enforced |
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joint or cumulative penal clause |
both the principal obligation and penal clause can be enforced |
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when creditor may recover damages |
1. when so stipulated by the parties 2. when the obligor refuses to pay penalty 3. when the obligor is guilty of fraud in the fulfillment of the obligation |
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when penalty may be reduced by the courts |
1. when there is partial/ irregular performance 2. when the penalty agreed upon is inquitous or unconscionable |
