AGRI ENERGY v. IAN LOGAN McCALLION [2014] ScotCS CSOH_13 (28 January 2014)

AGRI ENERGY v. IAN LOGAN McCALLION [2014] ScotCS CSOH_13 (28 January 2014)

Clause 3.7.2 is not a penalty clause under Scots law because the rules on penalties do not apply to forfeiture of deposits or sums already paid. The parties expressly agreed to the consequences of breach, and the provision maintains the link between payment and performance.

Citation
[2014] ScotCS CSOH_13
Parties
Pursuer: AGRI ENERGY; Defender: IAN LOGAN McCALLION
Jurisdiction
Scotland
Judgment Date
28 January 2014
Procedural Posture
Civil / Opinion on Preliminary Issue
Outcome
Defender's challenge fails; pursuer entitled to decree of payment.
Legal Topics
Penalty Clauses, Forfeiture, Restrictive Covenants, Sale of Business
Contract Law Commercial Law Penalty Clauses Forfeiture Restrictive Covenants Sale of Business

Case Brief

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Parties

AGRI ENERGY

Pursuer

IAN LOGAN McCALLION

Defender

Procedural Posture

Civil / Opinion on Preliminary Issue

Legal Issues

  1. 1 Whether clause 3.7.2 of the amended sale agreement is a penalty clause and therefore unenforceable under Scots law.

Ratio Decidendi

Clause 3.7.2 is not a penalty clause under Scots law because the rules on penalties do not apply to forfeiture of deposits or sums already paid. The parties expressly agreed to the consequences of breach, and the provision maintains the link between payment and performance.

Court Disposition

Defender's challenge fails; pursuer entitled to decree of payment.

Orders

  • Matter put out for a hearing to determine further procedure in both actions.
  • All questions of expenses reserved.