Jobson v Johnson, [1989] 1 WLR 1026
Citation:Jobson v Johnson, [1989] 1 WLR 1026
Link to case on WorldLII (reference).
Rule of thumb:How can you escape a liquidated damages clause? If the party seeking to escape can provide prima facie evidence that it is grossly excessive then it does not have to be paid; if the party with clause can provide accounting evidence to justify how the figure has been calculated then it has to be paid.
Judgment:
In this case the Court set the test that the amount claimed must be objectionable, unconscionable and excessive in order to be considered a “penalty”, ‘a transaction must be just as objectionable and unconscionable in the eyes of equity if it requires a transfer of property by way of penalty on a default in paying money as if it requires payment of an extra, or excessive, sum of money’, Lord Justice Dillon at 1034
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