Where a settlement deed contains an express acknowledgement of a pre-existing debt, provisions making that debt immediately recoverable upon breach of conditions attached to an indulgence are not penalties, regardless of whether the underlying claim was in debt, quasi-contract or equity, and regardless of whether the debt would be discharged through performance of services rather than monetary repayment. The case confirms that the critical distinction is between an acknowledgement of an existing debt subject to an indulgence and provisions whose purpose is to compel performance of new obligations.
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