Signed an agreement with recruitment agency and rejected an offer of job after that (before sign company offer letter). Recruitment agency now asked to pay 100% of offered salary as liquidated damages as stated in agreement. Is this enforceable?

Answer :



    answered on 02/08/2017

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    Since both you and the recruitment agency have mutually agreed on the clause providing for payment of liquidated damages as stated in the agreement, and that specific breach has occurred thereby triggering the operation of the clause, it is likely to be enforceable if the court deems the sum of 100% of offered salary as a “genuine pre-estimate of loss” caused to the recruitment agency, as assessed at the time of contract formation. It will not be enforceable if found to be a “penalty”. Some situations where it will be held to be a penalty include: 1) Where the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach. 2) If the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid.

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  • Hi, i think the question is incomplete and ambiguous. i believe the likely scenario is that of a person using the services of a recruitment agency to look for a job. The contract offered by the agency's customer (i.e the employer) was not accepted by the candidate (i.e "before sign company offer letter"). In this case, no contract was likely formed between the recruiter and candidate since no contract was formed between the employer and candidate. qth7317 14/09/2017