Penalty Clauses In Construction Contracts

Earlier this month the Supreme Court gave judgment in two combined cases concerning the law relating to contractual penalty clauses. In Cavendish Square Holdings BV v Talal El Makdessi and ParkingEye Ltd v Beavis [2015] UKSC 67, the Supreme Court had the opportunity to review the law on penalties for the first time since the House of Lords case of Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co. Ltd [1915] A.C. 847 a century ago. In both cases, the Supreme Court held that the clauses were valid and enforceable, overturning the Court of Appeal's decision in Cavendish (which was considered in a GD Online article of February 2014) and upholding the Court of Appeal's decision in ParkingEye.