Construction practitioners regularly deal with claims for liquidated damages and opposing claims that they constitute a penalty. For many years, the question of whether liquidated damages constituted a penalty was generally determined by the application of the “genuine pre-estimate of loss” test. While the test remains applicable in Hong Kong, the UK Supreme Court’s decision in Cavendish Square Holding BV v Talal El Makdessi and ParkingEye Limited v Beavis  UKSC 67 clarifies (possibly liberalises) the legal position on penalty clauses.
King & Wood Mallesons review the decisions and note some practical steps to take when seeking to avoid an unenforceable penalty. … READ MORE
See also “Penalty Clauses Revisited by the UK Supreme Court”, a case note authored by Phillip Rompotis in December 2015.