The claimant sought summary judgment under a guarantee. The defendant said that the liquidated damages clause under which the claim was made was a penalty clause and unenforceable.
Held:The request for summary judgment was granted.
Blair J said: ‘the evidence clearly shows that the purpose of the clause was not deterrent, and that it was commercially justifiable as providing a balance between the parties upon lawful termination by the builder. I do not accept the defendant’s submission that the court has to form a view as to the maximum possible loss that the parties would have expected to flow from any determination of the contract and the extent to which the stipulated figure for liquidated damages exceeded that maximum possible loss, and that since it cannot do so without extensive disclosure, and factual and expert evidence, the defendant must be permitted to defend the claim. This was a contract for the construction and sale of a very expensive yacht, aptly described in the evidence as a ‘super-yacht’. Both parties had the benefit of expert representation in the conclusion of the contract. The terms, including the liquidated damages clause, were freely entered into. As the authorities referred to above show, in a commercial contract of this kind, what the parties have agreed should normally be upheld.’
Date: 03-Sep-2010
Judges: Blair J
Links: Bailii,
References: [2010] EWHC 2234 (Comm), 132 Con LR 113, [2010] TCLR 7, [2010] CILL 2921
Cases Cited:
- Murray -v- Leisureplay Plc, CA, Cited, (Bailii, [2005] EWCA Civ 963, [2005] IRLR 946)
- General Trading Company (Holdings) Ltd -v- Richmond Corporation Ltd, ComC, Mentioned, (Bailii, [2008] EWHC 1479 (Comm), [2008] 2 Lloyd's Rep 475)
- Dunlop Pneumatic Tyre Company Ltd -v- New Garage and Motor Company Ltd, HL, Cited, ([1915] AC 67, Bailii, [1914] UKHL 1, (1904) 12 SLT 498, (1904) 7 F (HL) 77)
- Lordsvale Finance Plc -v- Bank of Zambia, QBD, Cited, (Times 08-Apr-96, [1996] QB 752)
- Cine Bes Filmcilik Ve Yapimcilik & Another -v- United International Pictures and Others, CA, Cited, ([2003] EWCA Civ 1669, Bailii, [2004] 1 CLC 401)
