Jeancharm Ltd (t/a Beaver International) v Barnet Football Club Ltd.

Jeancharm Ltd (t/a Beaver International) v Barnet Football Club Ltd.

The 5% per week interest clause is a penalty because it is extravagant and unconscionable in amount compared to any conceivable loss from late payment, and is not a genuine pre-estimate of loss. It is therefore unenforceable.

Parties
Claimant/respondent: Jeancharm Limited t/a Beaver International; Defendant/appellant: Barnet Football Club Limited
Jurisdiction
England and Wales
Judgment Date
16 January 2003
Procedural Posture
Civil Appeal / Appeal From Leeds County Court
Outcome
Appeal allowed
Legal Topics
Penalty Clauses, Liquidated Damages, Freedom of Contract, Interest on Late Payment
Contract Law Penalty Clauses Liquidated Damages Freedom of Contract Interest on Late Payment

Case Brief

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Parties

Jeancharm Limited t/a Beaver International

Claimant/respondent

Barnet Football Club Limited

Defendant/appellant

Procedural Posture

Civil Appeal / Appeal From Leeds County Court

Legal Issues

  1. 1 Whether the 5% per week interest clause for late payment is an unenforceable penalty clause under common law.

Ratio Decidendi

The 5% per week interest clause is a penalty because it is extravagant and unconscionable in amount compared to any conceivable loss from late payment, and is not a genuine pre-estimate of loss. It is therefore unenforceable.

Court Disposition

Appeal allowed

Orders

  • The penalty interest clause is unenforceable.
  • Costs awarded to the appellant; costs below to be remitted to the Circuit Judge if not agreed.