It may not be worth mentioning, given it was a bit of a no-brainer, but Larsol’s obstinacy in challenging the validity of a penalty clause has merited an otherwise underserved publication.

The particular clause was a classic client-pitching enticement to lure fresh money into their accounts. It stipulated, on the Larsol-Estepona contracts, that if the development was not built, a 50% penalty refund (calculated on the deposit paid) was inmediately available to clients.

Larsol fought back stating that the works had not been completed due to delays attributable to “third parties”, even if these were not identified nor proof put forward to substantiate the claim. 

The judge stipulated that the clause was fully valid insofar as the works had not been finished on time, irrespective of whether those third parties were at fault.

Zurich had already repaid the capital previously, via enforcement of the developer’s insurance policies, and this was further used as proof of Larsol’s contractual default.