Workers Trust and Merchant Bank Ltd v Dojap Investments Ltd
| Workers Trust and Merchant Bank Ltd v Dojap Investments Ltd | |
|---|---|
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| Court | Judicial Committee of the Privy Council |
| Citation(s) | [1993] UKPC 7, [1993] AC 573, [1993] 2 All ER 370 |
| Case history | |
| Prior action(s) | Court of Appeal of Jamaica |
| Keywords | |
| Contract, remedies | |
Workers Trust and Merchant Bank Ltd v Dojap Investments Ltd [1993] UKPC 7 is a contract law case of the Judicial Committee of the Privy Council, on appeal from the Court of Appeal of Jamaica. The case concerns the dividing line between a penal requirement for a deposit and liquidated damages.
Facts
A contract for buying a house said time was of the essence. The sellers said the 25% deposit was forfeit after the buyers failed to pay the balance in 14 days as the contract required. The buyers tried to send the balance in a week later with interest. The deposit was a Jamaican $3m.
Judgment
The Privy Council advised that the sellers could not retain the deposit, and must return, subtracting any loss they could prove they suffered. Lord Browne-Wilkinson said it was "not possible for the parties to attach the incidents of a deposit to the payment of a sum of money unless such sum is reasonable as earnest money." A reasonable deposit would be 10 per cent, and if higher the seller "must show special circumstances which justify such a deposit." This was so even though 10 per cent in itself was "without logic", but it was a good benchmark. He said it was "not possible for the parties to attach the incidents of a deposit to the payment of a sum of money unless such a sum is reasonable as earnest money". A customary deposit for sale of land was 10 per cent and "a vendor who seeks to obtain a larger amount must show special circumstances which justify such a deposit". Ten per cent was "without logic" but still a good benchmark.
See also
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