Enforceability of ‘take or pay’ commitments

E-NIK v DEPARTMENT FOR LOCAL GOVERNMENT [2012]

As in this case, commercial contracts often contain a commitment by the customer to purchase on a ‘take or pay’ basis ie to buy a minimum quantity of goods and/or services within a defined period. When those commitments are not complied with, questions then arise as to what the supplier’s entitlement is and the extent to which the supplier is under an obligation to mitigate its loss.

Facts:

Decision:

The Court had to address a number of questions which arose out of the arrangements when DLG did not commission the minimum stated volume of services:

Points to Note:

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