Lloyd's Maritime and Commercial Law Quarterly


Moshood Abdussalam * and Charles Rickett

This paper critiques the prevailing conception of the legitimate interest criterion as a factor in assessing the validity of remedial clauses. Since the decisions in Cavendish and Paciocco reinvigorated the “legitimate interest” standard, there has been a general lowering of the bar in the enforcement of remedial clauses. This is particularly so in those situations where promisees can demonstrate that the object of the clause is to protect a commercial interest. This paper provides an exposition on the social disutility of the approach. It argues that the standard should not be so liberally defined. The time for assessing the strength of a supposed legitimate interest should be at the time of breach or enforcement. By evaluating the strength of a supposed legitimate interest at the time of breach or enforcement, it can be determined whether the risk feared as likely to result from contractual default is of an adequately critical nature.


Since the apex courts of the United Kingdom and Australia handed down their decisions in Cavendish 1 and Paciocco,2 respectively, in 2015 and 2016, academic and professional discussions of the legitimate interest criterion in controlling remedial terms have loomed large in common law jurisdictions. Many of those discussions have been largely descriptive of the state of the law.3 Some, however, have been prescriptive, specifying what the law should be.4 The relative profusion in commentaries on the subject compelled Professor Peel to observe: “This is an area about which a great deal has been written, especially of


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