The parties to a contract often agree that in the event of a breach or non-performance, a certain sum should be payable by one party to the other. These clauses generally fall into one of two categories:-
- Penalty clauses, which are unenforceable; or
- Liquidated damages, which are enforceable.
The use of standard terms in business to business contracts has become increasingly commonplace. They offer certainty as to a party’s rights, obligations and potential liability under a commercial contract. However, where both parties to a commercial transaction try to contract by reference to their standard terms of business, a situation can arise which is commonly known as a ‘battle of the forms’.