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.’
Blair J
[2010] EWHC 2234 (Comm), 132 Con LR 113, [2010] TCLR 7, [2010] CILL 2921
Bailii
England and Wales
Citing:
Cited – Murray v Leisureplay Plc CA 28-Jul-2005
The court considered the extent to which the content of negotiations leading up to the signing of a contract were admissible. Arden LJ said: ‘Lord Dunedin in the Dunlop case makes the point that, although the issue is one of construction, the court . .
Mentioned – General Trading Company (Holdings) Ltd v Richmond Corporation Ltd ComC 3-Jul-2008
. .
Cited – Dunlop Pneumatic Tyre Company Ltd v New Garage and Motor Company Ltd HL 1-Jul-1914
The appellants contracted through an agent to supply tyres. The respondents contracted not to do certain things, and in case of breach concluded: ‘We agree to pay to the Dunlop Pneumatic Tyre Company, Ltd. the sum of 5 l. for each and every tyre, . .
Cited – Lordsvale Finance Plc v Bank of Zambia QBD 20-Mar-1996
The court looked at a facility agreement opened by a bank in favour of the defendant which provided that in the event of default the defendant should pay interest during the period of default at an aggregate rate equal to the cost to the bank of . .
Cited – Cine Bes Filmcilik Ve Yapimcilik and Another v United International Pictures and Others CA 21-Nov-2003
The parties entered into agreements licensing the exclusive distribution of encrypted television channels within Turkey. A clause provided a calculation of damages for a breach amounting to the balance of licence fees due, and other penalties, . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 09 November 2021; Ref: scu.421760
