- Damages and contract — Liquidated or agreed damages — Penalty clauses and damages
This chapter first examines the provisions that operate in a similar way to a stipulated damages clause. These include advance payments, forfeiture clauses, and deposits. As these analogous provisions are either subject to a different, or no, regulatory regime they are often the basis of ‘avoidance techniques’ used deliberately to evade the restrictions of the penalty rule. These techniques are examined in the second part of the chapter. The final section outlines some general guidance about the drafting of clauses which will be subject to review. The general points discussed are supported by reference to the relevant case law considered elsewhere in this book that inform, or are essential background to, the guidance offered.