DT Digest Publishes Akin Gump Article on “Take or Pay” Clauses
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“Take or pay: Does the law of penalties apply?,” an article by Akin Gump litigation partner Hamish Lal and associates Josephine Kaiding and Léa Defranchi that originated as a client alert, has been published by Driver Trett Digest.
The article discusses the burgeoning topic of the enforceability of “take or pay” clauses in supply agreements and notes as the key issue “whether take or pay clauses can be an unenforceable penalty.” The authors note that English law will often govern international supply agreements, but that, while English case law may be typically consulted on take or pay clauses, the question of whether the law of penalties applies to such provisions “also opens a wider generic debate in other jurisdictions, including whether the sums payable can be reduced commensurate with the actual harm to the supplier.”
The article examines the nature of take or pay clauses and the applicability of the law of penalties, taking recent English High Court judgements as examples, as well as the nature of penalties under English law and liquidate damages under civil codes.
To read the full article, click here.