In a Polish services contract, can a 20% late payment penalty be enforceable and capped by law?

Dear Sir or Madam, In the described situation, the provision stipulating a 20% "contractual penalty" for late payment of remuneration for services raises serious doubts as to its validity in principle and may be deemed contrary to the provisions of the Civil Code, and in relations with a consumer, also to the rules on unfair contract terms.

According to Article 483 § 1 of the Polish Civil Code, the principle is that a contractual penalty may be stipulated exclusively in the event of non-performance or improper performance of a non-monetary obligation. Stipulating a contractual penalty for delay in payment of a monetary performance (e.g., remuneration for services) is contrary to Article 483 § 1 of the Civil Code and, as such, is invalid by operation of law. In the event of a delay in payment of money, the creditor is entitled to interest for delay (statutory or contractual, within the limits of maximum interest rates), not a contractual penalty.

Each situation must be assessed individually, as there are exceptions to the above principle. For example, in the resolution dated June 30, 2020 (III CZP 67/19), the Supreme Court held that it is permissible to stipulate a contractual penalty for failure to pay or untimely payment of remuneration due to subcontractors, where the obligation to make timely payment to the subcontractor is treated as a specific non-monetary obligation of the contractor towards the investor.

In such a configuration, the contractual penalty concerns the investor–general contractor relationship and sanctions the breach of the obligation to ensure timely payment to subcontractors, rather than a typical delay in payment of remuneration in an ordinary services agreement.

The matter requires a detailed examination of the entire agreement, the circumstances of its conclusion, and your status as a consumer or entrepreneur, so an individual legal analysis is necessary. This response is of a general and informational nature and does not constitute legal advice in a specific case.