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Contractual Penalties
For those with a common law background, the conclusions of the Australian High Court on what constitutes a 'penalty' will be of interest.
As many will know, common law does not typically allow enforcement of penalties. It expects damages to be reasonable and proportional. This case raises a further dimension – which is whether the charges beign imposed have adequate connection to teh event to which they are related. In some cases, it may be that contract authors need to consider replacing LDs with concepts such as ‘service charges’.
