In https://www.youtube.com/watch?v=TVVSSbLUm0g, Ian Bailey SC and Laina Chan barristers, discuss the developments in the law of penalties since ANZ v Andrews. They also consider the approach of the Supreme Court in the UK in the first of a series of Chatz with Bailey SC and Chan in Cavendish Square Holding BV v Talai El Makdessi [2015] UKSC 67. This is the powerpoint that accompanies the chatz
‘Remoteness’ refers to the test of causation that is used to determine the loss caused by a breach of contract. It limits the ability of the plaintiff to recover damages to not too remote losses
‘Remoteness’ refers to the test of causation that is used to determine the loss caused by a breach of contract. It limits the ability of the plaintiff to recover damages to not too remote losses
Rights of the Parties and Discharge; Remedies for Breach of ContractHelpWithAssignment.com
Business law is the body of law that applies to the rights, relations, and conduct of persons and businesses engaged in commerce, merchandising, trade, and sales.It is often considered to be a branch of civil law and deals with issues of both private law and public law.
Powerpoint for New York State Bar LectureLaina Chan
Powerpoint used in the lecture on 29 October 2014 to the New York State Bar presented at Hinshaw & Culbertson on the Enforcement of International Arbitral Awards in the Asia Pacific. An event supported by the International Subcommittees for International Arbitration, Insurance and Reinsurance as well as the Chinese American Bar Association
When Do Liquidated Damages Become an Irrecoverable Penalty?Sarah Fox
An overview of the recent case Makdessi v Cavendish [2013].
In this case the court reviewed agreed damages ie sums set out in a construction contract payable on breach of that contract. Such damages, known as liquidated damages or LADs are often payable for delay on construction projects.
This note summarises the judgment of the Court of Appeal.
For help writing simpler contracts or understanding complex ones, including how the court might view your limitations and exclusions of liability, email: sarah@500words.co.uk or visit www.500words.co.uk
Research Study on Contract Law: The equitable doctrine where brought to provide equity in cases which had a defect in consideration, at which it is unconscionable for a party to suffer the determent. The court has the power to practice judicial discretion in these circumstances, where seen there is unjust enrichment or unconscionable. However, it is mandatory for the applicant filing for equity to satisfy the conditions forming the equitable doctrine.
The predictability and certainty of these causes have lead to comprise the law, having it called “The dangerous doctrine”, as a person could preplan the events that will lead another person to be victimized by an estoppel. Rather having solid common law that sets the rules, equitable doctrine bend these rules and compromises the law.
2014 has been a year of remarkable upheaval and uncertainty across the globe. The aftershocks of the 2008 financial crisis and Eurozone debt crisis continue to reverberate throughout the world’s financial markets. To the challenges posed by these aftershocks have been added those of continued warfare and strife across much of the Middle East, the deteriorating situation in the Ukraine and the attendant cooling in relations between Russia, the US and the EU. The effect of these and other similar events on the contractual relations entered into by our clients is uncertain and may necessitate the invoking of the doctrine of frustration and the use of Force Majeure clauses, particularly for those clients doing business in emerging markets. This session examines the kind of events which may justify the invocation of frustration and Force Majeure, such as political change, civil unrest and the imposition of sanctions, and offers tips on how best to minimise the effect of such risks at the contract drafting stage and during times of unrest
This is Remedies Law in the United States. This does not inlcude statutory or constitutional remedies. It is intended for law students who are currently taking this course in law school I hope you find my outlined notes useful.
Rights of the Parties and Discharge; Remedies for Breach of ContractHelpWithAssignment.com
Business law is the body of law that applies to the rights, relations, and conduct of persons and businesses engaged in commerce, merchandising, trade, and sales.It is often considered to be a branch of civil law and deals with issues of both private law and public law.
Powerpoint for New York State Bar LectureLaina Chan
Powerpoint used in the lecture on 29 October 2014 to the New York State Bar presented at Hinshaw & Culbertson on the Enforcement of International Arbitral Awards in the Asia Pacific. An event supported by the International Subcommittees for International Arbitration, Insurance and Reinsurance as well as the Chinese American Bar Association
When Do Liquidated Damages Become an Irrecoverable Penalty?Sarah Fox
An overview of the recent case Makdessi v Cavendish [2013].
In this case the court reviewed agreed damages ie sums set out in a construction contract payable on breach of that contract. Such damages, known as liquidated damages or LADs are often payable for delay on construction projects.
This note summarises the judgment of the Court of Appeal.
For help writing simpler contracts or understanding complex ones, including how the court might view your limitations and exclusions of liability, email: sarah@500words.co.uk or visit www.500words.co.uk
Research Study on Contract Law: The equitable doctrine where brought to provide equity in cases which had a defect in consideration, at which it is unconscionable for a party to suffer the determent. The court has the power to practice judicial discretion in these circumstances, where seen there is unjust enrichment or unconscionable. However, it is mandatory for the applicant filing for equity to satisfy the conditions forming the equitable doctrine.
The predictability and certainty of these causes have lead to comprise the law, having it called “The dangerous doctrine”, as a person could preplan the events that will lead another person to be victimized by an estoppel. Rather having solid common law that sets the rules, equitable doctrine bend these rules and compromises the law.
2014 has been a year of remarkable upheaval and uncertainty across the globe. The aftershocks of the 2008 financial crisis and Eurozone debt crisis continue to reverberate throughout the world’s financial markets. To the challenges posed by these aftershocks have been added those of continued warfare and strife across much of the Middle East, the deteriorating situation in the Ukraine and the attendant cooling in relations between Russia, the US and the EU. The effect of these and other similar events on the contractual relations entered into by our clients is uncertain and may necessitate the invoking of the doctrine of frustration and the use of Force Majeure clauses, particularly for those clients doing business in emerging markets. This session examines the kind of events which may justify the invocation of frustration and Force Majeure, such as political change, civil unrest and the imposition of sanctions, and offers tips on how best to minimise the effect of such risks at the contract drafting stage and during times of unrest
This is Remedies Law in the United States. This does not inlcude statutory or constitutional remedies. It is intended for law students who are currently taking this course in law school I hope you find my outlined notes useful.
Show Me My Money (Reisenfeld & Company v. The Network Group Inc..docxedmondpburgess27164
Show Me My Money (Reisenfeld & Company v. The Network Group Inc., p. 313)
Why does the court see this case as involving a quasi-contract as opposed to an actual contract? What other case law does the court rely on in finding precedent/support for compensating Reisenfeld? Does this decision appear to follow the golden rule guideline set forth in Chapter 2 (pp. 27 and 28)? Describe another example of an implied-in-fact or quasi-contract that you have experienced or is mentioned in the text.
Note: please read all the information correctly before you begin the assignment I have also copy and paste pages 27 and 28 that you would need to complete the assignment.
CASE
13-3
REISENFELD & CO. v. THE NETWORK GROUP, INC.;
BUILDERS SQUARE, INC.; KMART CORP. U.S. COURT OF APPEALS FOR THE SIXTH CIRCUIT 277 F.3d 856 U.S. App. (2002)
Network Group (“Network”) was contracted by BSI to assist in selling or subleasing closed Kmart stores in Ohio. A few years later, Network entered into a commission agreement with Reisenfeld, a real estate broker for Dick's Clothing and Sporting Goods (“Dicks”). Dicks then subleased two stores from BSI. According to executed assignment and assumption agreements signed in November of 1994, BSI was to pay a commission to Network. Network was then responsible, pursuant to the commission agreement with Reisenfeld, to pay a commission of $1 per square foot to Reisenfeld. There was no direct agreement made between BSI and Reisenfeld.
During this time, Network's sole shareholder was defrauding BSI. This shareholder was convicted of several criminal charges stemming from his fraudulent acts. Network was ordered by the district court to disgorge any commissions received from BSI, and BSI was relieved of any duty to pay additional commissions to Network. As such, Reisenfeld never received his commission related to the Dicks sublease.
Reisenfeld sued in state court for the $160,320 in commissions he had not been paid. In addition to suing Network, Reisenfeld also named BSI as a defendant. The suit alleged, among other things, that based on a theory of quasi-contracts, BSI was jointly and severally liable for the commission.
JUDGE BOOGS: . . .
A contract implied-in-law, or “quasi-contract,” is not a true contract, but instead a liability imposed by courts in order to prevent unjust enrichment. … Under Ohio law, there are three elements for a quasi-contract claim. There must be: (1) a benefit conferred by the plaintiff upon the defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the benefit by the defendant under circumstances where it would be unjust to do so without payment. …
There is no disagreement as to the first two requirements. It is clear that Reisenfeld's work as broker benefited BSI and that BSI was aware of the work Reisenfeld was doing. The disagreement rests on the third requirement—whether it would be unjust for BSI to retain the benefit it received without paying Reisenfeld for it. … U.
1. Uniform Commercial Code › U.C.C. - ARTICLE 2 - SALES (2002) › PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT › § 2-302. Unconscionable contract or Clause.
§ 2-302. Unconscionable contract or Clause.
(1) If the court as a matter of law finds the contractor any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
(2) When it is claimed or appears to the court that the contractor any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.
https://www.law.cornell.edu/ucc/2/2-302
Weaver v. American Oil Company
276 N.E.2d 144 (1971)Supreme Court of Indiana.
ARTERBURN, Chief Justice.
In this case the appellee oil company presented to the appellant-defendant leasee, a filling station operator, a printed form contract as a lease to be signed, by the defendant, which contained, in addition to the normal leasing provisions, a "hold harmless" clause which provided in substance that the leasee operator would hold harmless and also indemnify the oil company for any negligence of the oil company occurring on the leased premises. The litigation arises as a result of the oil company's own employee spraying gasoline over Weaver and his assistant and causing them to be burned and injured on the leased premises. This action was initiated by American Oil and Hoffer (Appellees) for a declaratory judgment to determine the liability of appellant Weaver, under the clause in the lease. The trial court entered judgment holding Weaver liable under the lease.
Clause three [3] of the lease reads as follows:
"Lessor, its agents and employees shall not be liable for any loss, damage, injuries, or other casualty of whatsoever kind or by whomsoever caused to the person or property of anyone (including Lessee) on or off the premises, arising out of or resulting from Lessee's use, possession or operation thereof, or from defects in the premises whether apparent or hidden, or from the installation existence, use, maintenance, condition, repair, alteration, removal or replacement of any equipment thereon, whether due in whole or in part to negligent acts or omissions of Lessor, its agents or employees; and Lessee for himself, his heirs, executors, administrators, successors and assigns, hereby agrees to indemnify and hold Lessor, its agents and employees, harmless from and against all claims, demands, liabilities, suits or actions (including all reasonable expenses and attorneys' fees incurred by or imposed on the Lessor in connection therewith) for such loss, damage, injury or other casualty. Lessee also agrees to pay all reasonable expenses and attorneys' fees incu.
Laina discussed the impact on claims of the extended statutory duty of care in the Design and Building Practitioners Act 2020 (NSW) and the recovery of damages in construction claims at the 2023 UNSW Edge Construction Law Edge.
What Can You Claim for Breach of A Construction Contract?Sarah Fox
A summary of the law setting out the damages you can claim in the event that someone breaches their contract with you.
The note was developed by Sarah Fox, author of the 500-Word Contract. The tips and techniques from her 500-Word series of talks, workshops and contract coaching will help you create simple, ethical contracts you can read, use and understand.
Contact her by email sarah@500words.co.uk or for more information, visit her website www.500words.co.uk
A penny saved is a penny earned: Navigating your company through spoliation claims and strategies to maximize recovering attorneys' fees. Presented at the Association of Corporate Counsel.
How to Obtain Permanent Residency in the NetherlandsBridgeWest.eu
You can rely on our assistance if you are ready to apply for permanent residency. Find out more at: https://immigration-netherlands.com/obtain-a-permanent-residence-permit-in-the-netherlands/.
Military Commissions details LtCol Thomas Jasper as Detailed Defense CounselThomas (Tom) Jasper
Military Commissions Trial Judiciary, Guantanamo Bay, Cuba. Notice of the Chief Defense Counsel's detailing of LtCol Thomas F. Jasper, Jr. USMC, as Detailed Defense Counsel for Abd Al Hadi Al-Iraqi on 6 August 2014 in the case of United States v. Hadi al Iraqi (10026)
Responsibilities of the office bearers while registering multi-state cooperat...Finlaw Consultancy Pvt Ltd
Introduction-
The process of register multi-state cooperative society in India is governed by the Multi-State Co-operative Societies Act, 2002. This process requires the office bearers to undertake several crucial responsibilities to ensure compliance with legal and regulatory frameworks. The key office bearers typically include the President, Secretary, and Treasurer, along with other elected members of the managing committee. Their responsibilities encompass administrative, legal, and financial duties essential for the successful registration and operation of the society.
DNA Testing in Civil and Criminal Matters.pptxpatrons legal
Get insights into DNA testing and its application in civil and criminal matters. Find out how it contributes to fair and accurate legal proceedings. For more information: https://www.patronslegal.com/criminal-litigation.html
NATURE, ORIGIN AND DEVELOPMENT OF INTERNATIONAL LAW.pptxanvithaav
These slides helps the student of international law to understand what is the nature of international law? and how international law was originated and developed?.
The slides was well structured along with the highlighted points for better understanding .
Introducing New Government Regulation on Toll Road.pdfAHRP Law Firm
For nearly two decades, Government Regulation Number 15 of 2005 on Toll Roads ("GR No. 15/2005") has served as the cornerstone of toll road legislation. However, with the emergence of various new developments and legal requirements, the Government has enacted Government Regulation Number 23 of 2024 on Toll Roads to replace GR No. 15/2005. This new regulation introduces several provisions impacting toll business entities and toll road users. Find out more out insights about this topic in our Legal Brief publication.
In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
ASHWINI KUMAR UPADHYAY v/s Union of India.pptxshweeta209
transfer of the P.I.L filed by lawyer Ashwini Kumar Upadhyay in Delhi High Court to Supreme Court.
on the issue of UNIFORM MARRIAGE AGE of men and women.
PRECEDENT AS A SOURCE OF LAW (SAIF JAVED).pptxOmGod1
Precedent, or stare decisis, is a cornerstone of common law systems where past judicial decisions guide future cases, ensuring consistency and predictability in the legal system. Binding precedents from higher courts must be followed by lower courts, while persuasive precedents may influence but are not obligatory. This principle promotes fairness and efficiency, allowing for the evolution of the law as higher courts can overrule outdated decisions. Despite criticisms of rigidity and complexity, precedent ensures similar cases are treated alike, balancing stability with flexibility in judicial decision-making.
2. Andrews v ANZ (2012) 290 ALR 595
2 stated questions:
whether the penalty doctrine was limited to cases
respecting breach of contract; NO
whether the trial judge erred in concluding, in effect, that
the absence of contractual breach or obligation or
responsibility on the customer to avoid the occurrence of
an event upon which the relevant fees were charged.
YES
ian bailey SC
laina chan
barristers
3. Dunlop Pneumatic Tyre Co Ltd v New Garage
and Motor Co Ltd [1915] AC 79
5 maxims:
the essence of a penalty is a payment of money
stipulated as in terrorem of the offending party; the
essence of liquidated damages is a genuine
covenanted pre-estimate of damage.
ian bailey SC
laina chan
barristers
4. Maxim no 2
The question whether a sum stipulated is penalty or
liquidated damages is a question of construction to be
decided upon the terms and inherent circumstances
of each particular contract, judged of as at the time of
the making of the contract, not as at the time of the
breach.
ian bailey SC
laina chan
barristers
5. Maxim no 3
Various tests have been suggested:
It will be held to be a penalty if the sum stipulated is
extravagant and unconscionable in amount in comparison
with the greatest loss that could conceivably be proved to
have followed from the breach.
ian bailey SC
laina chan
barristers
6. Maxim no 4
It will be held to be a penalty if the breach consists only in
not paying a sum of money, and the sum stipulated is a
sum greater than the sum which ought to have been paid.
ian bailey SC
laina chan
barristers
7. Maxim 5
There is a presumption (but no more) that it is a penalty
when ‘a single lump sum is made payable by way of
compensation, on the occurrence of one or more or all of
several events, some of which may occasion and others
but trifling damage’.
ian bailey SC
laina chan
barristers
8. Legione v Hateley (1983) 152 CLR 406 at 44
a penalty is in the nature of a punishment for non-
observance of a contractual stipulation and consists,
upon breach, of the imposition of an additional or
different liability.
penalty doctrine was a principle of law and equity had
no part to play.
ian bailey SC
laina chan
barristers
9. AMEV – UDC Finance Ltd v Austin & anor
(1986) 162 CLR 170 at 191
‘The equitable jurisdiction to relieve against penalties
withered on the vine for the simple reason that it
offered no prospect of relief which was not ordinarily
available in proceedings to recover a stipulated sum
or damages.’ per Mason and Wilson JJ
ian bailey SC
laina chan
barristers
10. Office of Fair Trading v Abbey National plc
[2010] 1 AC 696
charges that became payable when an account
became overdrawn by reason of the actions of a
customer which caused a cheque to bounce or the
bank allowed the customer to overdraw on their
account or overdraft, were not penalties.
ian bailey SC
laina chan
barristers
11. Andrews v ANZ
‘In general terms, a stipulation prima facie imposes a
penalty on a party (the first party) if, as a matter of
substance, it is collateral (or accessory) to a primary
stipulation in favour of a second party and this
collateral stipulation, upon the failure of the primary
stipulation, imposes upon the first party an additional
detriment, the penalty, to the benefit of the second
party. In that sense, the collateral or accessory
stipulation is described as being in the nature of a
security for and in terrorem of the satisfaction of the
primary stipulation.’
ian bailey SC
laina chan
barristers
12. It appears that the payment of a sum of money
constitutes a penalty if:
The sum of money payable represents an additional
detriment to the benefit of the second party;
The sum of money payable is in the nature of security for
the performance of the primary stipulation; and
The sum of money payable is collateral to the primary
stipulation; and
In those circumstances, the collateral stipulation is prima
face a penalty; but
The penalty is enforceable to the extent appropriate to
provide compensation.
ian bailey SC
laina chan
barristers
13. French v Macale(1842) 2 Drury and Warren
269 at 275–6
A tenant paid 2 guineas an acre to rent the land from
the landlord and paid a further 2 guineas to till the
land.
This was held not to be a penalty because in effect
the tenant had agreed to pay a sum of money for the
additional right to till the land.
ian bailey SC
laina chan
barristers
14. Metro-Goldwyn-Mayer Pty Ltd v Greenham
[1966] 2 NSWR 71
The exhibitor agreed to pay a fee for a single
screening of the film.
The exhibitor also agreed to pay for each additional
screening a sum equivalent to 4 times the original fee.
This was held to be not a penalty because the
additional sum payable was for the right for additional
screenings of the film.
ian bailey SC
laina chan
barristers
15. Paciocco v Australia & New Zealand Banking
Group Ltd (2014) 309 ALR 249
6 step process
Identify the terms and inherent circumstances of the
contract, judged at the time of making the contract.
ian bailey SC
laina chan
barristers
16. Step 2
Identify the event or transaction which gives rise to the
imposition of the stipulation.
ian bailey SC
laina chan
barristers
17. Step 3
Identify whether the stipulation is payable upon a breach
of contract (necessary at law but not in equity)
ian bailey SC
laina chan
barristers
18. Step 4
Identify whether in substance, the stipulation is collateral
to a primary stipulation in favour of one party and the
collateral stipulation, upon failure of the primary
stipulation, imposes upon the other party an additional
detriment in the nature of security for, and in terrorem of,
the satisfaction of the primary stipulation (not applicable
at law).
ian bailey SC
laina chan
barristers
19. Step 5
If the answer to steps 3 and 4 above is ‘yes’, identify
whether the sum stipulated is a genuine pre-estimate of
damage or extravagant and unconscionable in
comparison with the greatest loss that could conceivably
be proved.
ian bailey SC
laina chan
barristers
20. Step 6
If the sum stipulated is not a genuine pre-estimate of
damage and is extravagant and unconscionable in
comparison with the greatest loss that could conceivably
be proved, the sum stipulated is unenforceable to the
extent that the stipulation exceed that amount.
ian bailey SC
laina chan
barristers
21. Cavendish Square Holding BV v Talai El
Makdessi [2015] UKSC 67
English law cannot take the same path as Andrews v ANZ
ian bailey SC
laina chan
barristers
22. per Lord Neuberger and Lord Sumption (with
whom Lord Carnwath agreed) at [42]
In the first place, although the reasoning in Andrews was
entirely historical, it is not in fact consistent with the
equitable rule as it developed historically.
The equitable jurisdiction to relieve from penalties arose
wholly in the context of bonds defeasible in the event of
the performance of a contractual obligation.
It necessarily posited a breach of that obligation.
ian bailey SC
laina chan
barristers
23. per Lord Neuberger and Lord Sumption (with
whom Lord Carnwath agreed) at [42]
Secondly, if there is a distinct and still subsisting equitable
jurisdiction to relieve against penalties which is wider than
the common law jurisdiction, with three possible
exceptions it appears to have left no trace in the
authorities since the fusion of law and equity in 1873 …
ian bailey SC
laina chan
barristers
24. per Lord Neuberger and Lord Sumption (with
whom Lord Carnwath agreed) at [42]
Thirdly, the High Court’s redefinition of a penalty is,
difficult to apply to the case to which it is supposedly
directed, namely where there is no breach of contract.
It treats as a potential penalty any clause which is ‘in the
nature of a security for and in terrorem of the satisfaction
of the primary stipulation.’
By a ‘security’ it means a provision to secure
‘compensation …for the prejudice suffered by the failure
of the primary stipulation’.
This analysis assumes that the ‘primary stipulation’ is
some kind of promise, in which case its failure is
necessarily a breach of that promise.
ian bailey SC
laina chan
barristers
25. per Lord Neuberger and Lord Sumption (with
whom Lord Carnwath agreed) at [42]
If for example, there is no duty not to draw cheques
against insufficient funds, it is difficult to see where
compensation comes into it, or how bank charges for
bouncing a cheque or allowing the customer to overdraw
can be regarded as securing a right of compensation.
ian bailey SC
laina chan
barristers
26. per Lord Neuberger and Lord Sumption (with
whom Lord Carnwath agreed) at [42]
Finally, the High Court’s decision does not address the
major legal and commercial implications of transforming a
rule that controlling remedies for breach of contract into a
jurisdiction to review the content of the substantive
obligations which the parties have agreed.
ian bailey SC
laina chan
barristers
27. per Lord Neuberger and Lord Sumption (with
whom Lord Carnwath agreed) at [42]
provisions for termination upon insolvency, contractual
payments due on the exercise of an option to terminate,
break-fees chargeable on the early repayment of a loan
or the closing out of futures contracts in the financial or
commodity markets, provisions for variable payment
dependent on the standard or speed of performance and
‘take or pay’ provisions in long-term oil and gas purchase
contracts, to take only some of the more familiar types of
clause.
ian bailey SC
laina chan
barristers
28. per Lord Neuberger and Lord Sumption (with
whom Lord Carnwath agreed) at [42]
The potential assimilation of all of these to clauses
imposing penal remedies for breach of contract would
represent the expansion of the courts’ supervisory
jurisdiction into a new territory of uncertain boundaries,
which has hitherto been treated as wholly governed by
mutual agreement.
ian bailey SC
laina chan
barristers
29. per Lord Neuberger and Lord Sumption (with
whom Lord Carnwath agreed) at [42]
in relation to the concept of partial enforcement ‘the
difficulty about this approach was pointed out by the
potential assimilation of all of these to clauses imposing
penal remedies for breach of contract would represent the
expansion of the courts’ supervisory jurisdiction into a
new territory of uncertain boundaries, which has hitherto
been treated as wholly governed by mutual agreement.
ian bailey SC
laina chan
barristers
30. Per Lord Hodge at [249]
When the court makes a value judgment on whether a
provision is exorbitant or unconscionable, it has regard to
the legitimate interests, commercial or otherwise, which
the innocent party has sought to protect
ian bailey SC
laina chan
barristers
31. Per Lord Hodge at [255]
the correct test for a penalty is whether the sum or
remedy stipulated as a consequence of a breach of
contract is exorbitant or unconscionable when regard is
had to the innocent party’s interest in the performance of
the contract.
ian bailey SC
laina chan
barristers
32. Per Lord Hodge at [255]
Where the test is to be applied to a clause fixing the level
of damages to be paid on breach, an extravagant
disproportion between the stipulated sum and the highest
level of damages that could possibly arise from the
breach would amount to a penalty and thus be
unenforceable.
ian bailey SC
laina chan
barristers
33. Per Lord Hodge at [255]
In other circumstances the contractual provision that
applies on breach is measured against the interest of the
innocent party which is protected by the contract and the
court asks whether the remedy is exorbitant or
unconscionable’
ian bailey SC
laina chan
barristers