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

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posted on 2023-06-09, 00:25 authored by Sirko HarderSirko Harder
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.

History

Publication status

  • Published

File Version

  • Published version

Publisher

Hart Publishing

Page range

135-157

Pages

392.0

Book title

Divergences in Private Law

Place of publication

Oxford

ISBN

9781782256601

Department affiliated with

  • Law Publications

Full text available

  • No

Peer reviewed?

  • No

Editors

Michael Tilbury, Andrew Robertson

Legacy Posted Date

2016-03-03

First Compliant Deposit (FCD) Date

2016-03-22

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