The scope of the rule against contractual penalties: a new divergence

Harder, Sirko (2016) The scope of the rule against contractual penalties: a new divergence. In: Robertson, Andrew and Tilbury, Michael (eds.) Divergences in Private Law. Hart Publishing, Oxford, pp. 135-157. ISBN 9781782256601

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All major common law countries have a judge-made rule according to which a contractual stipulation of a penalty is unenforceable or void. During the 20th century, it became widely accepted that this rule applies only where the impugned obligation is triggered by a breach of contract or by an event that cannot occur without breach. In Andrews v Australia and New Zealand Banking Group Ltd, the High Court of Australia departed from the common understanding by holding that the penalty doctrine may apply where the event triggering the impugned obligation is not a breach of contract and may occur without breach. This has created a divergence in the common law world. This article discusses the decision and its possible impact in other common law countries.

Item Type: Book Section
Keywords: Australia, breach, contract, penalty
Schools and Departments: School of Law, Politics and Sociology > Law
Subjects: K Law > K Law in General. Comparative and uniform Law. Jurisprudence > K0520 Comparative law. International uniform law > K0600 Private law
Depositing User: Sirko Harder
Date Deposited: 03 Mar 2016 12:53
Last Modified: 03 Mar 2016 12:53

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