Contractual Penalty Clause Validity and Judicial Review

The dispute centered on the validity of a contractual penalty clause stipulated for non-performance, where the claimant argued that the stipulated indemnity should be reduced because the actual damages were lower than the fixed penalty. The court of cassation quashed the lower court's decision, reasoning that while a judge may reduce an excessive penalty to a fair level, they cannot do so when the party seeking reduction has caused the breach themselves or when the clause was freely negotiated without evidence of abuse, thereby affirming the principle that contractual penalties, freely agreed upon, are generally binding unless manifestly disproportionate.