Contract

As a matter of principle, the rule against  penalties might apply to a “take or pay” clause. It is not, however, the ordinary candidate for the rule (which applies where, for example, a sum specified was not a genuine pre-estimate of damage).

The rule against penalties does not apply where there was no oppression, as where the term was commercially justifiable, was negotiated and freely entered into between parties of comparable bargaining power, and did not have the predominant purpose of deterring a breach of contract.