Supreme Court ruling awaited (2015) 26 6 Cons.Law 6 [Archived]
Supreme Court ruling awaited (2015) 26 6 Cons.Law 6 [Archived]

The following Construction guidance note provides comprehensive and up to date legal information covering:

  • Supreme Court ruling awaited (2015) 26 6 Cons.Law 6 [Archived]
  • The facts in the case
  • The classic approach

This article appears as originally published in Construction Law on 1 July 2015 and is not maintained.

We can only really hope to guess at the savings experienced by the construction industry’s use of liquidated damages clauses. Very typically the contractual nexus of construction projects and the idiosyncratic nature of the losses to which parties are exposed can mean that the costs of unravelling the quantum of damages claimed in circumstances of delayed or under performance can be colossal.

It has, for many years, been the position that to be enforceable, a liquidated damages clause must not be a penalty but instead a genuine pre estimate of loss. The sum sought must not be an unconscionable bargain. Do we still, in fact did we ever, want the courts to get involved in the bargains made by well advised parties of equal strength?

This summer the Supreme Court will review the law again in the Makdessi appeal arising from the Court of Appeal decision in 2013. (Talal El Makdessi v Cavendish Square Holdings BV [2013] EWCA Civ 1539.)

The facts in the case

The facts of this case are worth repeating here. Makdessi was a seasoned and wealthy businessman who had established a number of enterprises. He had agreed to sell part of his advertising group to Cavendish for a sum payable in