Abstract

The authors of the article present the advantages of an amicable settlement of legal disputes, especially by public finance sector entities. The article aims to encourage public contracting authorities to seek the means of an amicable settlement of legal disputes more frequently, in particular as regards contractual penalties imposed on contractors. The authors also outline an important, yet often overlooked aspect, namely that a public contracting authority, acting within the limits of its authority, may by itself reduce the value of imposed contractual penalties. Examples presented in the article show that such flexibility pertaining to the application of contractual penalties may lead to more effective and rational outcomes, in particular with regard to the well-being of public finance.