Liquidated Damages

Hamish Lal

April 2009

A paper presented to a meeting of the Society of Construction Law at the University of Central Lancashire, Preston on 15th October 2008

Hamish Lal's paper looks at the extent to which English law allows parties to a contract to specify their own remedies in damages in the event of breach. It examines the so-called 'rule against penalties', that penalty clauses remedies are not allowed but liquidated damages clauses are. Hamish Lal explains that he seeks to address some of the many myths that abound in the context of liquidated damages. Part A considers whether the 'compensatory model' really is at play or if there is another test for the enforceability of liquidated damages that really determines the cases. Part B examines the fact that a sum of money payable otherwise than on a breach of contract cannot be a penalty, and Part C considers whether liquidated damages are always 'an exclusive remedy'.

Introduction - Summary of conclusions -A. The test for a penalty - Part A Conclusions - B. Sum must be payable on breach of contract - Part B conclusions - C. LADs as an exclusive remedy - Part C conclusions.

The author: Dr Hamish Lal is a Solicitor-Advocate and partner in Dundas & Wilson LLP, London.

Text 23 pages.

PDF file size: 180k