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A cautionary tale: English courts further depart from a traditional approach to liquidated damages in Unaoil v Leighton

by Jenna Sturrock

In September 2014, the Commercial Court handed down an unprecedented decision, finding that a liquidated damages (“LD”) clause in a contract was a “genuine pre-estimate of loss” at the time the parties entered into the contract, but later became a penalty upon amendment to reduce the contract price. The decision of Mr. Justice Eder in Unaoil Ltd v. Leighton Offshore Pte Ltd [2014] EWHC 2965 (Comm) (“Unaoil v Leighton”) breaks new ground, departs from previously well-established rules of interpretation, and may have a number of practical implications on contract amendments governed by English law.

Source: King & Spalding LLP, Laura N Kane and Alex Blomfield. For more information click here , Lexology

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