Recent Contract Law Cases

Makdessi Case

In the Supreme Court consolidated appeals of Cavendish Square Holding BV v Talal El Makdessi (Cavendish) and Parking Eye Limited v Beavis (Parking Eye), a more flexible test on whether a contract term is considered penal and thus unenforceable was introduced.

The traditional English law test on penalty clauses centred on whether a clause that takes effect on breach of contract is a "genuine pre-estimate of loss" and therefore compensatory or whether it is aimed at deterring a breach and therefore penal. This penalty rule has been around for over 100 years and in the words of Lord Sumption had become, "an ancient, haphazardly constructed edifice which [had] not weathered well".