Practice question
The debtor performs none of the principal obligation. The court nevertheless finds the stipulated liquidated damages iniquitous and unconscionable. The creditor argues equitable reduction is legally impossible because no partial performance occurred. Which answer is correct?
- Absence of partial performance necessarily prevents all reduction
- Articles 1229 and 2227 recognize reduction for an iniquitous or unconscionable penalty or liquidated amount despite the asserted absence of partial performance
- The debtor automatically owes double
- Every breach automatically invalidates the contract
- The creditor's preferred label eliminates judicial review
Legal references
- Civil Code Articles 1228–1229, 2216 and 2226–2228: https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html
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