Judicial review of penalty clauses in Spanish law： A reason to not converge towards other European laws

Unlike the majority of European civil law systems （France, Germany, Italy, Austria, Belgium, Portugal and Switzerland）, the UNIDROIT Principles and the projects for the harmonization of European Private Law （PECL, DCFR and Gandolfi Code）, Spanish law only allows courts to reduce the sum stipulated by the parties in a penalty clause if the breach of contract has less entity than the one anticipated. Hence, the judicial review of penalty clauses on the grounds of equity is excluded. This paper aims to analyze why this is the most desirable solution in terms of efficiency, and why Spanish law should not converge towards other European laws.