Abstract
The new article 1231-5 of the Civil Code, resulting from the 2016 reform of the law of obligations, turns the traditional interpretation of former article 1152 of the Civil Code on its head. The former articles 1226 et seq. have been purely and simply deleted, the notion of "penalty clause" no longer appears in the Civil Code, and the term "peine" appearing in the second paragraph of the former article 1152 has been replaced by "pénalité". "Pénalité" is now strictly synonymous with " a certain sum as damages ". As a result, the judge can revise any lump-sum payment clause if it stipulates a compensation package that is manifestly excessive or derisory. This means that the judge can review penalty clauses, lump-sum payment clauses and limitation of liability clause. Indeed, a compensation ceiling is never more than a lump sum, in any case where it is manifestly derisory in relation to the loss suffered. The treatment of compensation clauses and disproportionate lump-sum clauses has therefore been unified under article 1231-5 of the French Civil Code. The result is the culmination of a trend that has long been evident in the history of the law and in recent developments. Penalty clauses, lump-sum payment clauses and limitation of liability clauses all share a common mechanism and intention, and are therefore best understood as variations on a single concept. By unifying the treatment of these clauses, a useful common and coherent judicial response is provided. The judge's power of review is thus strengthened, and the co-contracting parties' will is better respected.