contract-law european-union payment ireland
Can you request a potential additional payment at own discretion?
<p>Let's say you sell a service/activity to a customer for €150.</p>
<p>Can you state something like this in your contact?</p>
<ul>
<li>An initial €150 payment must be payed upfront.</li>
<li>An additional charge of €850 may apply afterwards at our own discretion. This may be for, but is not limited to, damages or other loses due to your usage of our service.</li>
</ul>
<p>This is similar to my previous question: <a href="https://law.stackexchange.com/q/70314/27004">Can you refuse to pay back deposit at your own discretion?</a> but differs in the fact that this would be an additional payment after the service is complete that is not required to be payed up front.</p>
<p>Answers for any jurisdiction would be useful, but preferably Ireland and the European Union</p>

<p>Not as such. As the contract author, you must clearly and specifically identify risks that you want to other party to accept. Your whims i.e. &quot;our own discretion&quot; are not a clearly identified risk.</p>
<p>The trivial solution is to state that there are two payments, €150 up front and €850 afterwards. Then, you claim the right to waive (at your sole discretion) part or whole of the second payment.</p>
<p>It should be noted that the tax implications of such a contract could be non-obvious. You probably have to claim the whole €1000 as income when the contract is signed, and any waived payment as a discretionary expense. You're unlikely to get a VAT refund on that €850, I suspect. So given that you'd have paid €187 to the Irish government, refunding €850 would be hard.</p>

<p><a href="/questions/tagged/england-and-wales" class="post-tag" title="show questions tagged &#39;england-and-wales&#39;" rel="tag">england-and-wales</a></p>
<h2>No</h2>
<p>Such a term would likely be void for uncertainty if the reasons for making the charge were not spelled out in sufficient detail such that the other party would clearly know the circumstances where the charge might be levied. “Because we want to” is not such a reason.</p>
<p>It’s perfectly legitimate to give one party discretionary powers but the scope of these must be defined. Giving discretion means that the party is released from considering the adverse effects that the exercise of the discretion might have on the other party although, in general, the discretion still has to be executed reasonably.</p>
<p>With respect to a damages clause, common law (e.g. Ireland) requires that these must be a genuine pre-estimate of the loss and not be so high as to constitute a penalty. Contracts cannot have punitive clauses.</p>
