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.
If a stipulation is one for liquidated damages, the amount contracted for may be recovered.1 Proof of actual damage is unnecessary,2 since the object of such a provision is to prevent controversy over the amount of damages.3 A party who is in default can not show as a defense to an action to recover liquidated damages, the fact that the adversary party did not suffer actual damage.4 It has been said that there must, nowever. be at least more than nominal damages.5
4 United States. Watts v. Camors, 115 U. S. 353, 29 L. ed. 406.
Minnesota. Williston v. Mathews, 55 Minn. 422, 56 N. W. 1112.
New Hampshire. Morrill v. Weeks, 70 N. H. 178, 46 Atl. 32.
New Jersey. Gloucester City v. Esch-bach, 54 N. J. L. 150, 23 Atl. 360.
Pennsylvania. Moore v. Colt, 127 Pa. St. 289, 14 Am. St. Rep. 845, 18 Atl. 8.
Texas. Commerce, etc., Co. v. Morris, 27 Tex. Civ. App. 553, 65 S. W. 1118.
5 Wilson v. Dean, 10 Ia. 432; Johnson v. Cook, 24 Wash. 474, 64 Pac. 729.
6 Eva v. McMahon, 77 Cal. 467, 19 Pac. 872; O'Keefe v. Dyer, 20 Mont. 477, 52 Pac. 196; Johnson v. Cook, 24 Wash. 474, 64 Pac. 729.
7Elston v. Roop, 133 Ala. 331, 32 So. 129. (It was not clear whether this provision was for a penalty or for liquidated damages.)
8 Kuter v. State Bank, 96 Kan. 485, 152 Pac. 662 [order modified, Kuter v. State Bank, 97 Kan. 375, 154 Pac. 1009]. See Sec. 1035 et seq.
9 Illinois Surety Co. v. United States. 229 Fed. 527, 143 C. C. A. 595.
1 United States. Sun, etc., Association v. Moore, 183 U. S. 642, 46 L. ed. 366 [affirming, Moore v. Publishing Association, 101 Fed. 591, 41 C. C. A. 506]; Illinois Surety Co. v. United States, 229 Fed. 527 (obiter); Pacific Hardware & Steel Co. v. United States, 49 Ct. Cl. 327; Morris v. United States, 50 Ct. Cl. 154 (obiter).
Connecticut. Rabinowitz v. Apter, 90 Conn. 1, 96 Atl. 157.
Minnesota. Nostdal v. Morehart, 132 Minn. 351, 157 N. W. 584.
New Jersey. Ferber Construction Co. v. Board of Education, 90 N. J. L. 193, 100 Atl. 329.
Ohio. Van Tuyl v. Young, 23 Ohio C. C. 15; Sheffield-King Milling Co. v. Domestic Science Baking Co., 95 O. S. 180, 115 N. E. 1014.
Pennsylvania. Pittsburgh, etc., Co. v. Tube Works Co., 184 Pa. St. 251, 39 Atl. 76.
Washington. Drumheller v. Surety Co., 30 Wash. 530, 71 Pac. 25.
2 United States. Clark v. Barnard, 108 U. S. 436, 27 L. ed. 780.
Indiana. Jacqua v. Headington, 114 Ind. 309, 16 N. E. 527.
Ohio. Sheffield-King Milling Co. v. Domestic Science Baking Co., 95 O. S. 180, 115 N. E. 1014.
Furthermore, if the actual damages exceed those contracted for, the injured party is bound by the stipulation of the contract, and can not recover the actual amount of damages.6 If a construction contract contains a provision for avoiding it and recovering liquidated damages in case the contractor fails to commence work at a certain time, and advantage is taken of such provision, no recovery can be had thereafter for the difference between the contract price and the price at which such contract was relet.7 If a provision for forfeiting payments as liquidated damages, is treated as a covenant for liquidated damages, the vendor who has retained such payments can not recover damages for the failure of the purchaser to perform other covenants requiring him to do certain work upon the property which was sold to him.8 A covenant for liquidated damages in case of breach of a specified kind, does not prevent recovery for damages for a breach of a different kind.9 A provision for paying a certain amount per day as liquidated damages for delay in the performance of a building or construction contract, does not apply to a case in which the contractor abandons the contract altogether.10 In such case the contractor can not be compelled to pay the stipulated rate per day indefinitely.11 It is therefore held that a stipulation for liquidated damages applies to cases in which there has been a bona fide attempt to perform the contract, but does not apply to wilful and deliberate injury, if the damages arising therefrom exceed those stipulated for.12 Such a provision in case of failure of water supply does not apply where such failure is due to defendant's failure to make repairs stipulated for.13 To prevent recovery of actual damages, the provision claimed to be for liquidated damages must furthermore be exclusive. If the party, not in default is merely given an election on default to be exercised at his option, he is not thereby precluded from recovering damages.14 Thus in a subcontract for building an ore dock, it was provided that if a materialman did not furnish timber according to contract, the contractor might buy it in open market and charge the necessary expense to the subcontractor's account. This provision was held to be merely optional with the contractor, and not a stipulation for an exclusive measure of damages.15 A provision for a deposit as security is not a contract for liquidated damages so as to prevent the recovery of actual damages.16 So a provision in a lease for the deposit by the lessee with the lessor of a certain sum as security for performance and in case the tenancy is not sooner terminated, that it is to be applied on the rent for the last three months of the term, is not intended as liquidated damages if the lessee makes default before the end of the term.17
Oregon. Salem v. Anson, 40 Or. 339, 56 L. R. A. 169, 67 Pac 190.
Pennsylvania. Kelso v. Reid, 145 Pa. St 606, 27 Am. St. Rep. 716, 23 Atl. 323.
Washington. American, etc., Works v. Malting Co., 30 Wash. 178, 70 Pac. 236.
3 Cowan v. Meyer, 125 Md. 450, 94 Atl. 18.
4 Cowan v. Meyer, 125 Md. 450, 94 Atl. 18.
5 Hathaway v. Lynn, 75 Wis. 186, 6 L. R. A. 551, 43 N. W. 956.
6 United States. Stone, Sand & Gravel Co. v. United States, 234 U. S. 270, 58 L. ed. 1308.
Illinois. Hennessy v. Metzger, 152
111. 505, 43 Am. St. Rep. 267, 38 N. £. 1058.
Montana. O'Keefe v. Dyer, 20 Mont. 477, 52 Pac. 196.
Vermont. Jackson v. Hunt, 76 Vt. 284, 56 Atl. 1010.
Utah. K. P. Mining Co. v. Jacob-son, 30 Utah 115, 4 L. R. A. (N.8.) 755, 83 Pac. 728.
7 Stone, Sand & Gravel Co. v. United States, 234 U. S. 270, 58 L. ed. 1308.
8 K. P. Mining Co. v. Jacobson, 30 Utah 115, 4 L. R. A. (N.S.) 755, 83 Pac. 728.
9 Rainier v. Masters, 79 Or. 534, L. R. A. 1916E, 1175, 154 Pac. 426.
10Rainier v. Masters, 79 Or. 534, L. R. A. 1916E, 1175, 154 Pac. 426.
If a contract contains two or more covenants for liquidated damages, they will be construed so as to prevent the recovery of damages under each covenant for a single breach.18 If a contract contains a provision for the payment of liquidated damages in case of delay in performing the first half of the contract, and also a provision for liquidated damages in case of delay in performing the entire contract, the contractor is not liable under the second covenant for a delay, all of which occurred in the performance of the first half of the task.19
11 Rainier v. Masters, 79 Or. 534, L. R. A. 1916E, 1175, 154 Pac. 426.
12 West Chicago, etc., Ry. Co. v. Morrison, etc., Co., 160 111. 288, 43 N. E. 393.
13Pengra v. Wheeler, 24 Or. 532, 21 L. R. A. 726, 34 Pac. 354.
14 Williston v. Mathews, 55 Minn. 422, 56 N. W. 1112.
15 Williston v. Mathews, 55 Minn. 422, 56 N. W. 1112.
16Chaude v. Shepard, 122 N. Y. 397, 25 N. E. 358.
17Chaude v. Shepard, 122 N. Y. 397, 25 N. E. 358.
18Cowan v. Meyer, 125 Md. 450, 94 Atl. 18.
19 Cowan v. Meyer, 125 Md. 450, 94 Atl. 18.