IMPOSITION OF FORFEIT PENALTY AND LATE PAYMENT CHARGES FOR DEFAULT FROM OBLIGATION ON TERM

Abstract

The Civil Law of Latvia involves two different civil obligation institutes – percent for the usage of the capital and percent of penal sanctions. The Civil Law determines regulations in the occasion of default. In case of one default – lateness is possible to enforce penalty or percent for delays, or both. In this, the author points out that so complicated calculations for payout of percent is not needed, furthermore it is difficult to understand and is difficult to control by both the debtor and the creditor. The problem of applying penalties and percent for delay arises due to the fact that in contractual practice and in differing normative acts different terms are used, for example, fine, penalty, penalties, interest for delay. In case when the parties enter an agreement to determine the payment in case of failure and percent for delay, the terms must be clearly defined; otherwise disputes can arise about calculating the penalties and percent for delay, because there is a possibility of different interpretation of the terms used. It is advisable to use unified terminology of the Civil Law in the normative acts and contracts, to avoid misunderstanding. And it is necessary to determine very precisely the penalty in case of delay – the delay will be applied as penalty or as a percent for delay.