Default interest provision meaning

Practice Note: Contract interpretation—distinguishing between liquidated damages and penalty clauses As highlighted in this Practice Note, working out whether a liquidated damages provision will be struck down as a penalty is seldom straightforward and often demands careful judgment. Although each dispute turns on the court’s construction of the contract, there are several points to weigh when examining the ambit of a supposed liquidated damages term and its potential exposure to a penalty challenge, both in substance and effect. When you are drafting such a clause, it is vital to keep these considerations in view, and to think about how it sits alongside connected provisions, including any related terms that operate with it. See: Drafting and negotiating a liquidated damages clause—checklist Precedent: Liquidated damages clause For targeted analysis of the way authorities have treated provisions in commercial agreements that stipulate ‘default interest’, see the following materials: Penalty interest rates in commercial contracts Contract interpretation—distinguishing between liquidated damages and penalty...

In this issue: Advertising, marketing and sponsorship Contracts International Public procurement Supply chain Supply of services LexTalk®Commercial: a Lexis®Nexis community Daily and weekly news alerts New and updated content Dates for your diary Trackers Advertising, marketing and sponsorship The Advertising Standards Authority (ASA) has confirmed that the Committee of Advertising Practice (CAP) and the Broadcast Committee of Advertising Practice (BCAP) will delete energy labelling requirements from their Codes and related guidance following a review and public consultation. The rules being withdrawn are CAP Code 11.8 and 11.9, and BCAP Code 9.9 and 9.10, which were added in 2011 to align with legal obligations to include energy labels and product fiche details in specified ads. CAP and BCAP consulted from 3 February to 4 March 2025 and received no objections. See: LNB News 27/10/2025 20. ASA rulings—29 October 2025: The ASA considered a single complaint about an in‑app advert by WHG (International) Ltd...

Lamesa Investments Ltd v Cynergy Bank Ltd [2019] EWHC 1877 (Comm) What did the court decide? Judge Mark Pelling held that Cynergy Bank was entitled to rely on a provision in its agreement with Lamesa Investments that allowed it to withhold payments without falling into default if any law, regulation or court order prevented the transfer of the sums. At the core of the dispute was a £30m loan that Cynergy Bank, then known as Bank of Cyprus UK, obtained from Lamesa Investments in December 2017, under which interest was contractually due to Lamesa Investments twice a year. The ruling records that in April 2018 the US Department of the Treasury Office for Foreign Assets Control placed Viktor Vekselberg (Vekselberg), the owner of Lamesa Investments’ parent company, on its list of 'specially designated nationals' as part of a drive against Russian oligarchs and their companies. The sanctions barred US citizens from dealing with Vekselberg, and, as a consequence of his indirect ownership, Lamesa Investments then became a 'blocked person',...

Banking & Finance—February 2025 case round-up Tactus Holdings Ltd (in administration) v Jordan and others [2025] EWHC 133 (Comm) Assignment of rights—permitted assignment—champerty rules The Commercial Court refused an attempt to replace the existing claimant, finding the alleged transfer of rights was invalid due to contractual bars and was champertous. Reading the SPA’s assignment provision strictly, the court concluded that the applicant, Chillblast Ltd, was not a permitted assignee. It also determined that Chillblast lacked a sufficient legitimate interest to support the transfer. The judgment offers clear guidance on the construction of anti-assignment provisions, the contemporary application of champerty principles, and the procedural hurdles for a ‘change of party’ in commercial litigation. For further detail, see News Analysis: Court construes contractual restrictions on assignment and considers champerty in refusing substitution of a claimant (Tactus Holdings Ltd (in liquidation) v Jordan)...

Who may be beneficiaries Any individual who would be capable of holding property if of full age and sound mind can be a beneficiary under a trust, even where they are not presently of full age or sound mind. Identifying the beneficiaries To establish a valid trust, the three certainties must be satisfied. The three certainties certainty of intention certainty of subject-matter certainty of objects Charitable trusts are not required to meet certainty of objects provided there is a general charitable intention. Certainty of objects—named beneficiaries Every trust deed must set out who the beneficiaries are. In a straightforward life interest trust, there are usually few beneficiaries and they may be identified in the clause that specifies the beneficial interests. For example: ‘The Trustees shall distribute the income of the Trust Fund to [X] for their lifetime and, on their death, shall transfer the capital to [Y].’ Beneficiaries may alternatively be defined in the definitions clause...

This Practice Note reviews the provisions of the Protection of Trading Interests Act 1980 (PTIA 1980) that limit the enforcement of certain foreign judgments. Those provisions operate as an exception to the doctrine of obligation or comity, under which the courts of England and Wales would ordinarily recognise a competent foreign court’s decision imposing a liability on a defendant to pay the adjudged sum. Background to the act The PTIA 1980 was prompted by UK opposition to the US approach to anti-trust enforcement, where courts may award multiple damages. When introducing the legislation, the Secretary of State for Trade stated that it was ‘to reassert and reinforce the defences of the UK against attempts by other countries to enforce their economic and commercial policies unilaterally on us’. Remit of the act As to scope, the act applies to any judgment delivered by an overseas court that satisfies the criteria stated within that judgment. This is broader...

What are CCPs and what do they do? A central counterparty (CCP) is a form of financial institution, often called a clearing house, that enables the clearing of both over-the-counter (OTC) derivatives and exchange-traded derivatives (ETDs). CCPs are recognised as financial market infrastructures (FMIs). A derivative is a financial instrument whose value is set by reference to, and therefore derived from, an underlying asset, index, rate, reference point or risk (known as the underlying asset or simply the underlying). Derivatives are bi-lateral agreements that shift some or all of the risk and reward linked to the underlying from one party to another, without any immediate delivery of the underlying item. The terms of OTC derivatives are negotiated directly between the counterparties, or in certain instances arranged via a broker. OTC derivatives are distinct from derivatives, typically futures or options, that are traded on public exchanges (called exchange-traded derivatives or ETDs). For ETDs, contract terms are defined by the exchanges on which they trade, not by the contracting parties. ETDs...

£ [ insert number ] [ insert rate ]% convertible [ subordinated ] redeemable loan notes 20[ insert year ] [ insert name of issuer ] Dated [ insert day and month ] 20[ insert year ] Parties [ Insert name of issuing company ], incorporated in England and Wales under number [ insert company number ], whose registered office is at [ insert address ] (the Issuer) Background The Issuer has determined to create up to a maximum nominal amount of £[ insert number ] [ insert rate ]% convertible [ subordinated ] redeemable loan notes, to be constituted as set out in this document...

£[ insert number ] [ insert rate ]% convertible [ subordinated ] redeemable loan notes 20[ insert year ] [ insert name of issuer ] This Instrument bears the date [ insert day and month ] 20[ insert year ]. Parties [ Insert name of issuing company ], incorporated in England and Wales under number [ insert company number ], whose registered office is at [ insert address ] (Issuer) background The Issuer has determined to establish up to a maximum nominal amount of £[ insert number ] [ insert rate ]% convertible [ subordinated ] redeemable loan notes, which shall be constituted in accordance with the provisions set out in this document...

This Deed of guarantee and indemnity is executed on [ insert day and month ] 20[ insert year ] Parties 1 [ Insert name of Guarantor ], a company incorporated in England and Wales with registered number [ insert company number ], having its registered office at [ insert address ] ( Company A ); 2 [ Insert name of Guarantor ], a company incorporated in England and Wales with registered number [ insert company number ], having its registered office at [ insert address ] ( Company B ); Company A and Company B together (the Obligors ), and 3 [ Insert name of Lender ], of [ insert address ] (the Lender ). bACKGROUND (A) The Lender has extended facilities to the Obligors under a range of financing arrangements. (B) The Lender’s provision of those facilities to the Obligors, or to any of them, is conditional upon the Obligors executing this Deed for the benefit of the Lender...

Interest on judgment debts Judgment debts accrue simple interest at 8% per annum until paid, unless the court decides otherwise. By default, interest runs from the date judgment is given, unless the court, a rule or a Practice Direction provides differently. The court may order interest to run from a date before judgment. For further guidance, see Practice Note: Interest on judgment debts, together with the following Practice Notes: County Court judgments and orders—additional matters Which enforcement of judgment method should I choose?—in particular, the section: Which enforcement of judgment method should I choose?—In which court should you enforce your judgment—practical considerations Transferring a judgment from the High Court to a Country Court CPR 70.3 makes provision for transfer of proceedings in question, and states that an application must be made to the High Court before an order permitting the transfer of the proceedings will be granted by the court...