17 April 2008
M & J Polymers Ltd v Imerys Minerals Ltd [2008] EWHC 344 (Comm), [2008] All ER (D) 445 (Feb)
As a matter of principle, the rule against penalties might apply to a “take or pay” clause. It is not, however, the ordinary candidate for the rule (which applies where, for example, a sum specified was not a genuine pre-estimate of damage).
The rule against penalties does not apply where there was no oppression, as where the term was commercially justifiable, was negotiated and freely entered into between parties of comparable bargaining power, and did not have the predominant purpose of deterring a breach of contract.
