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Enforcement Under Portuguese Law

Overview of Default Remedies

I. In brief, “default” in Portuguese law includes: (a) non-performance; (b) impossibility of performance; (c) delay in performance (mora debitoris, but not mora credi- toris); (d) defective performance.[1]

If the contractual obligation is not performed by the debtor and the nonperformance is not excused, the creditor has the right to damages for any loss caused by the debtor’s non-performance (Article 798 CC). The fault of the debtor is presumed in cases of non-performance and of defective performance (Article 799 CC).

When the impossibility of performance is excused, the obligation extinguishes (Article 790(1) CC).

If performance becomes partially impossible the debtor will be discharged by performing the obligation to the fullest extent possible; the creditor’s obligation will be proportionately reduced. However, if the creditor’s interest in performance is justifiably lost, he may terminate the contract (Article 793 CC).

When the impossibility of performance is not excused, the debtor is liable as in case of non-performance (Article 801(1) CC). If the obligation results from a bilateral (synallagmatic) contract, the creditor, regardless of the right to damages, may terminate the contract and, if he has performed, he may claim for restitution (Article 801(2) CC). Therefore, in that case, the creditor may choose between the right to damages and the termination of the contract.

In the case of delay in performance, the debtor is liable for damages for any loss caused to the creditor (Article 804 CC).

In conclusion:

Non-performance of a contractual obligation will be excused if performance becomes impossible for reasons that do not result from the debtor’s fault. An impediment to perform will discharge the debtor, unless it is temporary and the creditor’s interest in performance is unaffected by the delay.

When non-performance of a contractual obligation is not excused, the creditor may resort to one or more of the remedies set out in the law. Different remedies may be accumulated, provided they are not incompatible.

II. According to Portuguese law, it is null and void the clause under which the creditor renounces in advance to any rights emerging from non-performance or delay in performance by the debtor (Article 809 CC).

However, the parties may, by agreement (named “penalty clause”), fix the amount of damages due by the debtor to the creditor (Articles 810 ff CC).[2]

  • [1] For developments on this matter: A. Menezes Cordeiro, Tratado de Direito Civil Portugues, Vol.II - Direito das Obrigagoes, Tomo IV - Cumprimento e nao cumprimento, transmissao, modifica-gao e extingao, garantias, Coimbra 2010, p. 103 ff; M. Lima Rego & C.F. Almeida, “ContractLaw”, Portuguese Law. An Overview, Coimbra, 2007, p. 187 ff (p. 191 ff).
  • [2] About “penalty clause”: A. Pinto Monteiro, Clausula penal e indemnizagao, Coimbra, 1990; N.Pinto Oliveira, Clausulas acessorias ao contrato: Clausulas de exclusao e de limitagao do deverde indemnizar e clausulaspenais, 3rd ed., Coimbra, 2008, p. 71 ff.
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