An acceptance of an offer could be complete even if accompanied by a request for an indulgence. The request for such an indulgence delivered with an unequivocal acceptance of the offer made was not sufficient to make the acceptance conditional. If the request for an indulgence fell short of the addition of a new term then it did not reduce the effect of the acceptance.
Sir Richard Scott VC said: ‘In considering whether a provision is a penalty, the law will look at the substance not to the form. The substance of the Settlement Agreement is that the Name is offered a benefit, namely, the settlement credits, as an offset against his underwriting liabilities, provided he pays the balance by a specified date. If he does so, he discharges his liability. If he does not, his original liability revives. This is the reverse of a penalty. It is a conditional benefit. If, of course, the sum specified in the finality statement as the amount of the Name’s underwriting liabilities were an arbitrary sum, the conclusion might be otherwise. It is clear, however, and the contrary has not been suggested, that the underwriting liabilities sum specified in the finality statement was a bona fide calculation of the amount of the Name’s underwriting liabilities to Lloyd’s. Whether or not the sum was agreed by the Name as being correct, it was the result of a genuine attempt by Lloyd’s to quantify the Name’s current liabilities. The question of a penalty simply does not arise’.
Judges:
Sir Richard Scott VC
Citations:
Times 04-Apr-2000, Gazette 14-Apr-2000
Jurisdiction:
England and Wales
Contract
Updated: 11 May 2022; Ref: scu.89380
