Key Lessons from Recent Case Law
Liquidated Damages Provisions Likely to be Upheld
The Makdessi test as applied in Eco World suggests courts will be increasingly reluctant to invalidate liquidated damages provisions, especially between commercial entities with legal representation.
Partial Possession Requires Clear Mechanisms
Without express provisions for reducing liquidated damages upon partial possession, courts may enforce the full rate as drafted. Contractors should ensure appropriate reduction mechanisms are included.
Genuine Pre-estimate Still Best Practice
Though no longer the exclusive test, maintaining contemporaneous calculations demonstrating pre-estimates of loss provides a solid foundation for enforceable liquidated damages provisions.
Termination Position Now Clarified
The Supreme Court's Triple Point decision confirms the orthodox position that liquidated damages accrue until termination, after which general damages apply.