Contractual penalty
An amount fixed in the contract in advance that becomes due if a named duty is breached, without anyone having to prove a loss.
A contractual penalty is an amount fixed in the contract in advance. It becomes due when a precisely named duty is breached. Its purpose is twofold: it is meant to deter the breach, and it is meant to spare the injured side the laborious calculation of a loss.
What productions use it for
Three cases show up regularly in model contracts. The first is an unexcused no-show on the shoot day. The second is a breach of confidentiality — passing on names, addresses or material from the production, as set out in the confidentiality clause. The third is publishing set material yourself, typically phone photos from makeup, the studio or a break.
The background to a no-show is easy to follow in money terms. A shoot day ties up a studio or location, crew, makeup and scene partners. Those costs arise as soon as the day has started, whether you arrive or not. With set material the issue is exclusivity and protection for everyone involved, because a picture from the background can show people who never consented themselves.
The measure is the fee
The amount has to stand in a reasonable relation to what you earn that day. On a video production the day rate is between 400 and 1,200 euros; on a photo production it is between 250 and 600 euros. A penalty in the order of the day’s fee is negotiable and can be justified by the cancellation costs. A penalty that is a multiple of that can no longer be justified that way.
The German Civil Code treats the contractual penalty as a distinct legal device and provides for a reduction if the penalty is disproportionately high. In pre-formulated contracts an unfair clause can also be invalid. Neither is automatic: anyone who wants to rely on it has to enforce it, and that costs time and money.
What a striking figure says about the production
A five-figure penalty clause next to a day fee of a few hundred euros is rarely a miscalculation. More often it is meant as leverage, to make questions and objections unattractive. In that case check the surroundings of the clause at once: is there also a duty on the production, such as a cancellation fee if they cancel at short notice, and a deadline for payment. With us the fee is transferred within fourteen days. If those counterweights are missing entirely, the penalty is a warning sign of the kind described in the article spotting unreliable offers.
Clarify before you sign
Have every penalised breach named separately, with no catch-all at the end. Ask for the figure, not a range. Insist on a rule that excused absence is carved out, for example illness with proof. And make sure the duties run both ways. What else belongs in this document is in the entry on the model contract.
This text places the contract practice in context and is not a substitute for legal advice.
An open question about this?
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