Facts
An employment contract said ‘in the event of wrongful termination by way of liquidated damages the company shall forthwith pay to the Executive a sum equal to one year’s gross salary, pension contributions and other benefits in kind.’ Leisureplay plc claimed that the bonus should be void as a penalty clause. In the High Court, Burnton J held it was penal because no account was taken of the Executive’s duty to mitigate his loss.Judgment
The Court of Appeal held that the bonus was valid. Arden LJ held the clause was ‘generous’ but still liquidated damages, as it was not ‘extravagant or unconscionable’.See also
*English contract lawNotes
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* English contract case law 2005 in United Kingdom case law Court of Appeal (England and Wales) cases