Aishwarya Karunakaran

Sep 19, 2024 | lexology.com | George Hoare |James Stockman |Natalie Hendy |Aishwarya Karunakaran

Key takeawaysThe Court of Appeal in Houssein v London Credit Limited ("LCL") [2024] has recently reiterated the test for determining whether default interest should be construed as a penalty clause. The threefold test is:First, as a threshold question, is the default rate of interest in substance a secondary obligation engaged upon breach of a primary obligation? Second, if it is, what is the extent and nature of the legitimate interest of the promisee in having the primary obligation performed?