Section 381.- If the debtor has promised the penalty for the case of his not performing the obligation in proper manner, such as, not at the fixed time, the creditor may demand the forfeited penalty in addition to the performance.

If the creditor has a claim for compensation on account of improper performance, the provisions of Section 380 paragraph 2 are applied.

If the creditor accepts the performance he may demand the penalty only if on acceptance he reserves the right to do so.

 

Section 382.- If another performance than the payment of a sum of money is promised as penalty, the provisions of Section 379 to 381 are applied ; the claim for compensation is barred if the creditor demands the penalty.

 

Section 383.- If a forfeited penalty is disproportionately high, it may be reduced to a reasonable amount by the Court. In the determination of reasonableness every legitimate interest of the creditor, not merely his property interest, shall be taken into consideration. After payment of the penalty the claim for reduction is barred.

The same rule applies also, apart from the cases provided for by Sections 379 and 382, if a person promises a penalty for the case of his doing or forbearing to do some act.

 

Section 384.- If the promised performance is invalid, an agreement made for a penalty for non-performance of the promise is also invalid, even if the parties knew of the invalidity of the promise.

 

Section 385.- If the debtor contests the forfeiture of the penalty on the ground of having performed his obligation, he must prove the performance, unless the performance due from him consisted in a forbearance.

 

CHAPTER IV

RESCISSION OF CONTRACT

 

Section 386.- If by contract or by the provisions of law one party has the right of rescission, such rescission is made by a declaration of intention to the other party.

The declaration of intention mentioned in the foregoing paragraph cannot be revoked.

 

Section 387.- If one party does not perform the obligation, the other party may fix a reasonable period and notify him to perform within that period. If he does not perform within that period, the other party may rescind the contract.

 

Section 388.- If the object of a contract according to its nature or to an intention declared by the parties can be accomplished only by performance at a fixed time or within a fixed period, and such time or period has passed without one of the parties having performed, the other party may rescind the contract without the notification mentioned in the foregoing Section.

 

Section 389.- If performance becomes wholly or partly impossible by a cause attributable to the debtor, the creditor may rescind the contract.