Newsletter-21

267 LAW OF OBLIGATIONS The most distinctive characteristic of penal clauses is that unlike the debtor being at fault, the creditor does not have to suffer damages in order to enjoy compensation through the penalty clause. As per Ar- ticle 180/1 of the TCO, even if the creditor has not suffered any losses, the penalty obligation must be fulfilled. Similarly, the degree of dam- ages does not affect the penalty obligation; therefore, having a penal clause under a contract releases the creditor from the burden to prove its damages. Elimination of the possibility of confronting difficulties in evidencing damages, and the prevention of any possible disputes that may arise in relation to the calculation of the damages are the main reasons for using penal clauses, in practice. A debtor who would not hesitate to incur a compensation obligation with an undetermined amount and calculation method, and therefore procrastinating to fulfil its obligations, might feel the necessity to act cautiously and prudently in the event of the existence of an agreed, certain and accurate pen- alty that would accrue, irrespective of the occurrence of the creditor’s damages 3 . The creditor is entitled to claim damages in addition to the pen- alty only if its damages exceed the penalty amount, and only for the exceeding portion. However, the burden of proof to evidence the debtor’s fault passes to the creditor, and the creditor must prove that the debtor is at fault in the non-fulfilment of its obligation in order to claim the exceeding damages. Types of Contractual Penalties Penalty in Lieu of Performance Article 179/1 of the TCO regulates the penalty in lieu of per- formance, which means that the creditor is entitled to claim the performance of either the obligation or the penalty. This is when a penalty has been agreed upon between the parties for cases where the obligation is not duly fulfilled, or not fulfilled at all. In such a case, unless otherwise explicitly understood from the contract, the creditor 3 Oğuzman, Öz , Law of Obligations General Provisions Volume 2, 9th Edition Updated and Extended in accordance with the New Turkish Code of Obligations No. 6098, Vedat Kitapçılık, İstanbul 2012, p. 504.