Lord Elphinstone v Monkland Iron and Coal Co: HL 1886

Lord Herschell LC examined the validity of a covenant by which lessees who had been given a right to place slag on the land leased to them covenanted to pay the lessor andpound;100 per acre for all land not levelled and soiled within a particular period. He said: ‘The agreement does not provide for the payment of a lump sum upon the non-performance of any one of many obligations differing in importance. It has reference to a single obligation, and the sum to be paid bears a strict proportion to the extent to which that obligation is left unfulfilled. There is nothing whatever to shew that the compensation is [inordinate] or extravagant in relation to the damage sustained.’ There is a presumption (but no more) that a provision 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 serious and others but trifling damage.’


Lord Watson, Lord Herschell LC


(1886) 11 AC 332


England and Wales

Cited by:

CitedDunlop 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, . .
Lists of cited by and citing cases may be incomplete.

Contract, Damages

Updated: 11 May 2022; Ref: scu.440841