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Kopie von FCL Week 10
1
Dunlop Pneumatic Tyre
v
New Garage and Motor
Facts
Facts
- clause: 5₤ if sold for less than the list price
99%
Legal issue
Is the clause to pay 5 ₤ for each item that is sold for a lower price than the list price a void penalty or a valid liquidated damages clause?
Legal issue
penalties
liquidation of damages
legally enforceable
void
Criteria
Criteria
1. Expression used in the contract
2. Is the sum unconscionable?
3. Single firm sum as an indicator for a penalty
4. It does not matter whether the potential loss can be calculated
Legal reasoning
Legal reasoning
The indirect damage is in this case vital and does not correlate with the direct damage
a firm sum has to be paid regardless of the degree of violation: indicator for a unconscionable penalty clause
What the court held
what the court held
The clause has to be construed as liquidated damages.