Contractual drafting in the post-Makdessi world While Makdessi promised to do away with the uncertainty that has come to dog the penalty rule, as can be seen from the cases above, significant questions remain. These include when an obligation will be found to be primary, what is a "legitimate commercial interest", from whose perspective is 'legitimate commercial interest' to be judged, and where to draw the line for something to be exorbitant or unconscionable. Contractual drafters and their clients can be forgiven for bemoaning the lack of certainty, although some comfort can be taken that the decision marks a trend, reflected in the other cases described above, towards respecting party autonomy when it comes to sophisticated commercial agreements. A number of important lessons can be taken away. First, drafters should consider whether there is a way to structure the agreement such that exchanges of funds or property are primary obligations. If a clause is to be effective as a primary obligation, it must be drafted carefully, bearing in mind that there is always a risk that a court will look past the drafting if the clause is in substance a secondary obligation. Courts are alert to the fact that the focus on primary obligations opens them up to abuse.
Second, given the newfound focus on the innocent party's 'legitimate business interests', careful consideration must be given to the commercial justifications for each obligation, particularly where they are secondary or at risk of being seen as such. These justifications should be recorded, either in a side-letter or a clause or the recitals of the contract itself. At the least, such recording should describe the legitimate business interests that led to the obligation being negotiated, for example setting out how the quantum of payments was calculated and what consideration was given in return. It is important that these facts are recorded when the agreement was made, as it is at this point that the impugned clauses will be judged. Third, while contractual language declaring the quantum of an obligation to be a reasonable pre-estimate of a loss such as that found in BHL is no longer likely to be helpful, a mutual recognition of the proportionality of the clause is worth including. Finally, perhaps the most consistent thread between the different opinions in Makdessi and the cases that have followed is the focus on the commercial sophistication of the parties and the fact that they were well advised when negotiating the agreements. Drafters should consider the parties' bargaining power and, where it is uneven, take particular care in drafting contingent or secondary obligations for the benefit of the stronger party.