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Firstly,
according to the basis of application: a fine is paid in cases of non-fulfillment or 
improper fulfillment of obligations, and a surcharge is paid in cases of non-fulfillment (missing 
the deadlines for fulfilling obligations); 
secondly,
according to the method of calculation: the fine, as a rule, is in a fixed amount of 
money, and the surcharge is calculated as a percentage of the unfulfilled part of the obligation for 
each day of the missed period. 
It is also worth noting that according to Article 326 of the FC of the Republic of Uzbekistan, the 
court can reduce the amount of penalty in the following cases: 

if the penalty to be paid is disproportionate to the consequences of breaching the creditor's 
obligation. 

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188
A
MERICAN Journal of Public Diplomacy and International Studies
www.
 grnjournal.us 
 
The extent to which the debtor fulfilled the obligation, the property status of the parties 
participating in the obligation, as well as the interests of the creditor should be taken into 
account. 
As mentioned above, in addition to the measure (method) of securing obligations, penalty is also 
a measure of material liability. 
Uzb. Res. Part 1 of Article 324 of the Civil Code states that "the debtor must pay the damage 
caused to the creditor due to non-performance or improper performance of the obligation." In 
accordance with part 2 of Article 14 of the FC, damage means expenses incurred or to be 
incurred by a person whose rights have been violated to restore the violated right, loss or damage 
to his property (actual damage), as well as if this person has not violated his rights. Incomes that 
could have been received in the normal course of civil affairs, but could not be received (lost 
profits) are considered. 
Based on this norm, it can be noted that recovery of damages is a general form of responsibility 
for contractual obligations and a universal method of protecting citizens' rights. 
Therefore, the need to determine the difference between penalty and damages as a legal 
consequence arising from non-fulfillment of the terms of the contract, as a measure of material 
liability, as well as to protect the rights of citizens, requires the need to determine the mutual 
ratio of penalty and damages. 
The mutual ratio of penalty and damage is defined in Article 325 of the Civil Code, according to 
which "if penalty is established for non-fulfilment or improper performance of an obligation, the