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Case law

In the 2015 case of Unaoil Ltd v Leighton Offshore PTE Ltd., a Memorandum of Understanding (MoU) between the two parties detailed plans for Leighton to sub-contract work to Unaoil if they won a bid for a construction and engineering contract. The MoU included an agreement on liquidated damages. The MoU was amended on two occasions after it had been agreed, including an amendment to the amount to be paid to Unaoil. The court found that although the liquidated damages clause may have been based on a genuine pre-estimate of loss at the time the MoU was agreed, it had not been reviewed or amended at the times when the agreement was amended and therefore was unenforceable. The ruling means that when a contract is being amended, particularly if the amendment is relevant to the value of the contract, any liquidated damages clauses should be reviewed and amended if necessary.