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For example, Article 1226 of the French Civil Code provides for clause pénale, a variant of liquidated damages which combines compensatory and coercive elements. Judges may adjust excessive contract penalties, but such clauses are not generally void as a matter of French law. [19]
Many clauses which are found to be penal (i.e. "penalty clauses") are expressed as liquidated damages clauses but have been seen by courts as excessive and thus invalid. [2] The judicial approach to penal damages is conceptually important as it is one of the few examples of judicial paternalism in contract law. Even if two parties genuinely and ...
The oldest reported case relating to penalties appears to date from 1720, [2] but even that case is decided on the basis that penalties were already generally considered unenforceable. In their decision in Makdessi the Supreme Court reviewed the historical origins of the rule against penalty clauses in contracts. [5]
Although an innovation in its structure, the conditional penal bond was not the first English attempt to impose “fixed monetary penalties” for failure to perform on an agreement. [6] Penalty clauses inserted into written contracts, a mainstay in civil law jurisdictions, as well as penal bonds with separate indentures of defeasance were ...
A take-or-pay contract, or a take-or-pay clause within a contract, is a payment obligation agreed between a business customer and its supplier. With this kind of contract, the customer either takes the product from the supplier or pays the supplier a penalty. For any product the company takes, it agrees to pay the supplier a certain price, say ...
Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67, together with its companion case ParkingEye Ltd v Beavis, are English contract law cases concerning the validity of penalty clauses and (in relation to ParkingEye Ltd v Beavis) the application of the Unfair Terms in Consumer Contracts Directive (as implemented in the UK by, at the time, the Unfair Terms in Consumer Contracts ...