The 'Legitimate Interest in Performance' in the Law on Penalties
This article is available in the Cambridge Law Journal doi:10.1017/S0008197318000958
Posted: 19 Aug 2019
Date Written: February 2019
The article focuses on the “legitimate interest in performance” requirement which is now at the heart of the new test on penalty clauses but which has been left undefined by the Supreme Court in Cavendish Square Holding BV v Talal El Makdessi and Parking Eye Ltd v Beavis . It seeks to bring clarity to what is meant by “legitimate interest in performance” by examining other areas of the law of remedies for breach of contract where concepts of legitimate interest have featured in the court’s reasoning. It also makes suggestions as to what considerations are or might be relevant in determining whether a contracting party has a legitimate interest in performance, in particular a legitimate interest that goes beyond compensation.
Keywords: penalty clauses, legitimate interest in performance, contractual remedies, breach of contract, compensation
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