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Don’t get stung with penalty contracts
Article date: 20/02/2015
News this week that drivers could get refunds totalling millions of pounds over fines for 'illegal' parking on private land could have a very real impact on commercial law.
Jane Rudge, a specialist in all aspects of commercial law at Higgs & Sons in Brierley Hill, was left furious when hit with a £75 fine for being just 10 minutes late. She appealed the fine and failed.
"You might wonder what the relevance is of this to commercial contracts," asks Jane.
"This is a perfect illustration of what we commercial lawyers would class as an unenforceable penalty.
"In English law, a breach of contract should naturally lead to a claim for damages to reflect the losses suffered. Damages should not be punitive and therefore penalty clauses which are not reflective of the amount of loss actually suffered, will not be upheld by the courts.
"Businesses need to consider whether or not their commercial contracts contain any such terms. Common areas include fixed payments for late delivery, or for overstepping a restriction such as supplying goods or services in restricted areas or to certain customers.
"I appealed the fine and failed," added Jane. "There seems to be no proportionality between the amount you overstay, and the amount of the fine. Needless to say I have never used that particular car park again!"
For advice and guidance on whether your contracts are at risk, Jane and her team can be contacted on 0845 111 5050.
Higgs & Sons is based in the heart of the Black Country at the Waterfront Business Park in Brierley Hill. The growing team now boasts 100 plus specialist lawyers available to support clients in a comprehensive range of business and private sectors.