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Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd

Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1914] UKHL 1 is an English contract law case, concerning the extent to which damages may be sought for failure to perform of a contract when a sum is fixed in a contract. It held that only if a sum is of an unconscionable amount will it be considered penal and unenforceable. The legal standing of this case has been superseded by the Supreme Court's 2015 ruling in the combined cases of Cavendish Square Holding BV v Talal El Makdessi and ParkingEye Ltd v Beavis.

Facts
Dunlop sued its tyre retailer, New Garage, for breaching an agreement to not resell Dunlop tyres at a price lower than that listed in the contract. The agreement then said if that did happen, New Garage would pay £5 per tyre 'by way of liquidated damages and not as a penalty'. The judge held the £5 sum was liquidated damages and enforceable. The Court of Appeal held by a majority that the clause was a penalty and Dunlop could only obtain nominal damages. Dunlop appealed. ==Judgment==
Judgment
The House of Lords held the clause was not a penalty, and merely a genuine pre-estimate of Dunlop’s potential loss, and so Dunlop could enforce the agreement. Lord Dunedin set out the following principles. ==Legal overhaul==
Legal overhaul
The "leading case" status of this ruling was superseded by the Supreme Court of the United Kingdom in a 2015 ruling in the combined cases of Cavendish Square Holding BV v Talal El Makdessi and ParkingEye Ltd v Beavis. These appeals, which raised similar legal issues, gave the Supreme Court an opportunity to review the law on penalties based on Dunlop. Lord Neuberger, President of the Supreme Court, observed at the commencement of his joint judgment with Lord Sumption, a justice of the court: ==See also==
Source: Wikipedia ↗
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