Penal Agreed Remedies

Question 1

Agreed remedies

Answer 1

Parties to a contract may agree beforehand what sum shall be payable by way of damages in event of a breach. That agreed sum of damages cannot be penal

Question 2

ParkingEye v Beavis

Answer 2

• B parked in a private carpark and was fined 85 pounds for overstaying 56mins.

Not penal as Parking Eye had a legitimate interest beyond penalties (they were paid wholly on overstays). It did not impose a detriment out of proportion with their interest as the fee was not out of line with the standard across the country and it allowed for the mall to get customers

Question 3

Test in Parking eye v Beavis

Answer 3

Test: did they have a legitimate interest. Is the exercise of the clause out of all proportion with that legitimate interest

Question 4

HB Preschool v 127 Hobson Street (NZ test)

Answer 4

HB had a clause in their conduct that a second elevator would be added by a certain date which was not done by Hobson. There was an express remedy in their contract that HB would be free of obligation to pay rent if that happened. Hobson argued it was penal

Question 5

Test in NZ (HoneyBee’s Preschool

Answer 5

1. Is there a legitimate interest in assigning that consequences
   
   • Legitimate interest relating to performance of contract
   • Deterrence from breaching counts as a legitimate interest, but not to the extent where its punitive (HB)
2. Was the clause out of proportion to that interest
   
   • Objective test - weigh up all the circumstances and commercial interests
   • HB: second lift was important to the future business of the preschool (proportionate)