Private Law Theory

ABSTRACT
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.

Abdussalam, Moshood, A restatement of the legitimate interest criterion in the law of remedial contractual terms (August 1, 2023), [2023] Lloyds Maritime and Commerial Law Quarterly 355.