This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
An alternative contract is one which gives to one of the parties the choice of doing one of two or more different acts as performance of the contract.1 If one of the alternatives is the payment of money, a contract of this type has some resemblance to a contract for a penalty or for liquidated damages, but it must be distinguished from both of them. The essential difference is that both penalties and liquidated damages are payable on breach of one or more covenants of a contract,2 whereas the payment provided for in the alternative contract is a performance of the contract - not a compensation for breach. The alternative contract is enforceable according to its terms, and if the contingencies have occurred on which the money is to be paid, such payment can be enforced.3 Thus under a contract for the sale of a medical practice, the vendor to have the right to resume practice after five years, on payment to the vendee of two thousand dollars, such payment was neither a penalty nor liquidated damages, but a covenant giving the vendor the right to make such election; and if he elects to resume the practice, he must pay such sum.4 If a contract for the sale of fruit trees provides that the seller will replace any trees which are not the kind specified in the contract or return the purchase price thereof, such provision does not prevent the buyer from recovering damages for loss and expense in case such trees are not of the kind specified.5 If machinery is sold under a warranty that it should be of good material and capable of doing good work, and certain parts of such machinery are found not to be of the material required by the terms of such, contract, the promise of the vendors to supply suitable parts, together with their act in sending parts which they claim to be suitable, prevents them from claiming that the sole right of the purchaser was to return such machinery within the time specified by the contract.6
2 Morris v. United States, 50 Ct. Cl.
154; Monmouth Park Association v.
Iron Works, 55 N. J. L. 132, 39 Am.
St. Rep. 626 [sub nomine, Wallis Iron Works v. Park Association, 19 L. R. A.
466, 26 Atl. 140]; Sheffield-King Milling
Co. v. Domestic Science Baking Co., 95 O. S. 180, 115 N. E. 1014.
3Joeckel v. Johnson, 178 Ia. 231, 159 N. W. 672.
1 Crouch v. Leake, 108 Ark. 322, 50 L. R. A. (N.S.) 774, 157 S. W. 390; Fred W. Wolf Co. v. Monarch Refrigerating Co., 252 111. 491, 50 L. R. A. (N.S.) 808, 96 N. E. 1063; Smith v. Bergengren, 153 Mass. 236, 10 L. R. A. 768, 26 N. E. 690.
2Grasselli v. Lowden, 11 O. S. 349; Dillon v. Ringleman, 55 Okla. 331, 155 Pac. 563.