No penalty clause

Euro London Appointments Ltd v Claessens International Ltd [2006] All ER (D) 79 (Apr)

An employment agency’s terms of business required payment within seven days and prescribed a scale of refunds where an employment was terminated within 42 days, but only if the invoice had been paid within the stipulated seven days. The Court of Appeal rejected the argument that this was a penalty clause. It was no more than a condition precedent. The link between the condition precedent and the obligation to pay within seven days did not bring the condition precedent within the rule against penalties.