The Validity of Liquidated Damages Clauses: Eco World – Ballymore Embassy Gardens Company Limited v Dobler UK Limited [2021] EWHC 2207 (TCC; O’Farrell J)

Articles Juan Lopez 13th August 2021

A liquidated damages clause is, shortly put, one stipulating the money payable as damages for loss caused by a breach of contract, irrespective of loss suffered. Practitioners will be aware also that albeit a liquidated damages clause, by definition, may not amount to an exclusion clause or limitation of liability clause (see e.g.: K Line Pte Ltd v Priminds Shipping (HK) Co Ltd[1]), its particular drafting may nonetheless indicate an intention of the parties for a provision to function both as a liquidated damages clause and also a limitation of liability clause.

The certainty and enforceability (as opposed to penal, uncertain and inoperable) of liquidated damages clauses in principle, has commonly been the subject of elaborative discussion by the courts, see e.g.: Bramall & Ogden v Sheffield City Council[2]; Taylor v Woodrow Holdings Limited v Barnes & Elliott Limited[3]; and De Havilland Aircraft of Canada Ltd v SpiceJet Ltd[4]. The circumstances in Eco World however concerned the operability of such as clause, viewed specifically in the context of a part take-over of contract works and part performance. …

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Juan Lopez