Article 390

What it means when you sign

This article lets the parties to a contract fix the amount of compensation in advance, either in the contract itself or in a later agreement, subject to the provisions of the law. It then gives the judge a power: in all cases, if either party asks, the judge may vary that agreement so that the compensation equals the loss actually suffered. Any agreement to the contrary is void, so the parties cannot agree that the pre-set figure is final.

When you are about to sign a contract, this article means that a clause setting a fixed sum payable on breach, such as a late-delivery charge or a cancellation penalty, is allowed in principle, but the figure is not necessarily final. Either side can ask the judge to adjust it to match the real loss, and a clause that says the figure cannot be changed is void. The clauses to look at are those on liquidated damages, penalties, delay charges and any wording that calls the amount fixed and not open to challenge.