Penalty Clauses After Makdessi

Introduction

The Supreme Court’s decision in Cavendish Square v Makdessi revolutionised nearly a century of thinking on the validity and effect of penalty clauses in English law.

Once thought of strictly in terms of liquidated damages provisions, it is now clear that penalties can extend to many other contractual provisions, but that the mere fact that the sums recoverable are ‘extravagant and unconscionable’ does not necessarily mean they are void as a penalty.

This webinar will examine the progress of legal thinking regarding penalty provisions, the court’s rationale in the Makdessi case and how the courts have subsequently applied the new principles. It will also look at the critical question of whether it is possible to avoid the risk of penalty provisions altogether by the form and drafting of the relevant provisions.

The webinar will be of benefit both to lawyers drafting and advising on commercial contracts, but also to litigators faced with trying to attack or defend penalty provisions. It will also be of interest to corporate lawyers considering the implications of penalties for deferred consideration provisions and for ‘bad leaver’ provision in articles and shareholders’ agreements.

What You Will Learn

This webinar will cover the following:

• The background and history of penalty clauses
• What the Supreme Court actually said in Makdessi
• Identifying and valuing ‘the legitimate interest’
• What are ‘primary obligations’? Holyoake v Candy
• What are ‘secondary obligations’? Vivienne Westwood v Conduit Street Holdings
• Penalties and the bad leaver
• Drafting your way out of trouble

This webinar was recorded on 7th November 2018