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 the covenant for arbitration is not invalid as being a covenant for ousting the jurisdiction of the courts in advance,1 it is a valid contract between the parties if it possesses the sufficient elements, even though it is not a bar to an action upon the original cause of action. If one of the parties to the submission revokes it, such revocation leaves each party free to make use of the original cause of action or defense, as the case may be, but it also renders the person who breaks such contract of submission liable in damages to the adversary party.2 The difficulty in granting relief under this theory grows out of the fact that the judgment of the court in the litigation based on the original cause of action can not be attacked collaterally,3 and that it must be regarded as conclusive as between the parties.4 The injured party is therefore unable to show any damage arising out of the fact that the result reached by the court was erroneous and that a correct result would have been reached by arbitration. If the contract of submission has been performed in part and expenses have been incurred thereunder, the injured party may recover compensation for such expenses.5 If nothing has been done under the contract of submission, and no expenses have been incurred, only nominal damages can be recovered.6 In some jurisdictions, therefore, a demurrer to the declaration may be sustained, since only nominal damages are shown, though a cause of action is stated.7
14 Scott v. Scott, 183 Ky. 604, 210 S. W. 175.
15 Bradbury v. Insurance Co., - Me. - , 106 Atl. 862.
16 Frederick v. Margwarth, 221 Pa. St. 418, 18 L. R. A. (N.S.) 1246, 70 Atl. 797.
See also, McCune v. Lytle, 197 Pa. St. 404, 47 Atl. 190.
17 Frederick v. Margwarth, 221 Pa. St. 418, 18 L. R. A. (N.S.)' 1246, 70 Atl. 797.
18 This is especially true if a pending action has been discontinued in reliance on the covenant for arbitration. McCune v. Lytle, 197 Pa. St. 404, 47 Atl. 190.
19Aitken v. Fernando , A. C. 200; Zehner v. Lehigh, etc., Co., 187 Pa. St. 487, 67 Am. St. Rep. 586, 41 Atl.
464; Riley v. Jarvis, 43 W. Va. 43, 26 S. E. 366; Turner v. Stewart, 51 W. Va. 493. 41 S. E. 924.
20 Harrison v. Hartford Fire Ins. Co., 112 Ia. 77, 83 N. W. 820; Thomas W. Finucane Co. v. Rochester Board of Education, 190 X. Y. 76, 82 N. E. 737.
21 Thomas W. Finucane Co. v. Rochester Board of Education, 190 N. Y. 76, 82 N. E. 737.
22 Gregory v. Boston Safe-Deposit & Trust Co., 36 Fed. 408; Gregory v. Pike, 94 Me. 27, 46 Atl. 793; Farmer v. Frey, 4 McCord (S Car.), 160.
23 Freeborn v. Denman, 8 N. J. L. 116; Moore v. Webb, 53 Tenn. (6 Heisk.) 301; Wheatley v. Martin, 33 Va. (6 Leigh.) 62.
1 See Sec. 721.