Co-authored by Christiaan A. Jordaan. (2008) 13:1 Commercial Litigation 684. Courts have historically shown reluctance to enforce contractual clauses that impose particularly onerous consequences on a party that breaches the contract. Two different streams of jurisprudence developed to address this issue: common law courts developed the "penalty" doctrine, while courts of equity developed the doctrine of relief from forfeiture. While closely related, the two doctrines would not necessarily lead to the same result in similar circumstances. Two recent decisions of the Ontario Court of Appeal suggest the possibility of a harmonization of these doctrines in a manner that would create greater predictability in the law and would better respect freedom of contract.
Please note that this publication presents an overview of notable legal trends and related updates. It is intended for informational purposes and not as a replacement for detailed legal advice. If you need guidance tailored to your specific circumstances, please contact one of the authors to explore how we can help you navigate your legal needs.
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