(1) If the obligor has promised the penalty in the event of their failing to perform their obligation, then the obligee may demand the penalty that is payable in lieu of fulfilment. Where the obligee declares to the obligor that they are demanding the penalty, the claim for performance is excluded.
(2) If the obligee is entitled to a claim for damages for non-performance, then they may demand the penalty payable as the minimum amount of the damage. Assertion of additional damage is not excluded.