Penalty clauses

Fetter not risk it: avoiding penalties and curtailing contractual rights

Jason Rix

Last week, Richard Hooley gave one of his regular talks on recent developments in banking and finance law. Below I have set out a couple of knotty contractual issues I noted down: “Clever” (or careful) drafting may stop a clause being a penalty (Holyoake v Candy). A requirement to pay a redemption amount on voluntary early Read More

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When is a contract not a contract? When it’s a CVA.

Oliver Rule

A company voluntary arrangement (or CVA) – the procedure under the Insolvency Act through which companies can compromise their liabilities provided enough creditors agree – is often thought of as statutory contract. But, as Wright v Prudential Assurance shows, this does not mean that every contractual principle applies to a CVA. BHS’ stores were costing Read More

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Limiting liability under your contract

Jason Rix

Last month, a group of us (Erwan Poisson, Joost Everaert, Julie Metois, James Freeman and I) gave some training on limiting liability in commercial contracts. So far so unsurprising. The sting in tail was that we were covering the topic under Belgian, French and English law. This served to highlight some legal and cultural differences Read More

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Penalty clauses: are they out of fashion?

Orla Fox

The High Court has applied the Makdessi test on penalty clauses to the terms of a side letter between a tenant of retail premises and the landlord. In doing so it held that the termination provision in the side letter amounted to an unenforceable penalty. Following Makdessi, when considering whether a clause is a penalty, the first Read More

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It’s a penalty! Isn’t it? Penalty clauses since Makdessi

Daniel Grimwood

In November 2015 the UK Supreme Court restated the test for penalty clauses in Cavendish v Makdessi. One year on, how is the test being applied by the courts? There has been much debate around whether provisions are primary or secondary obligations. Members of the court in Makdessi did not agree on this point on Read More

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