Flynn & Anor v Breccia [2018] IECA 273; Sheehan v
Breccia & Ors [2018] IECA 286
In the recent linked decisions of Sheehan v Breccia and Flynn and Benray v Breccia the Court of Appeal
upheld the High Court's finding that a surcharge interest
provision in a loan agreement was a penalty clause. In doing so it
followed the established caselaw on what constitutes a penalty
clause in this jurisdiction.
Penalty Clauses
If a clause in a contract provides for the payment of a sum of
money in the case of a breach of that contract, the courts may deem
that clause to be a penalty clause. In Ireland the test is whether
the amount payable is a genuine pre-estimate of the probable loss
of the innocent party caused by the breach of the contract. If it
is not, the clause is a penalty and is unenforceable.
