Source: All England Reporter
Publisher Citation: [2006] All ER (D) 79 (Apr)
Neutral Citation: [2006] EWCA Civ 385
Court: Court of Appeal, Civil Division
Judge:

Chadwick, Moore-Bick LJJ and Lawrence Collins J
Representation John Pugh (instructed by Berkson & Berkson, Birkenhead) for the claimant.
  Russell Bailey (instructed by Downs, Dorking) for the defendant.
Judgment Dates: 6 April 2006

Catchwords

Contract - Penalty - Performance - Rule against penalties - Claimant's terms of business providing for entitlement to refund conditional on payment of fees due within seven days of invoice - Whether provision amounting to penalty clause or simple condition precedent to any right to refund.

The Case

The rule against penalties was an exception to the general principle of English law that a contract should be enforced in accordance with its terms. It was settled law that a penalty was a sum which, by the terms of the contract, a promisor agreed to pay to the promisee in the event of non-performance by the promisor of one or more of the obligations and which was excess of the damage caused by such non-performance. The rule against penalties had no wider reach than that. In the instant case, a clause within the claimant's terms of business providing for entitlement to refund conditional on payment of fees due within seven days of invoice did not amount to penalty a clause, but was a simple condition precedent to any right to refund.

Practice Areas

If you are a LexisLibrary subscriber you can read more about this case here.

Lexis®Library

  • An Official transcript is the final version of the judgment prepared by shorthand writers. LexisLibrary contains all judgments from the High Court and aboveView Judgment
  • The All England Law Reports comprises judgments with headnotes and catchwords indicating the area of law and key issues of the case prepared by legally qualified editorsFind AllER Reports
  • Cases related to this particular case that are related to, or discuss this caseView related cases
  • Commentary discussing this particular case from LexisLibrary's comprehensive range of titles including Butterworths, Halsbury's and TolleyView related commentary