Penalty

contr., is a clause in an agreement, by which the obligor agrees to pay a certain sum of money, if he shall fail to fulfil the contract contained in another clause cult, in many cases to distinguish between a penalty and liquidated damages. In general, the courts have inclined to consider the sum reserved by such agreement to be a penalty, rather than as stipulated damages, (q. v-) When from the form of the instrument, as the case of a money bond, or when the parties agreed not to do a particular act under “a penalty of 100 dollars,” it is sufficiently clear a penalty was intended. But in a case where a party binds himself to pay a certain sum of money, if he should violate his agreement, which “sum mentioned is to be considered as liquidated damages, such sum will not be considered as a penalty.”

1 Holt N. P.C. 43; 1 Bingh. R. 302; S.C. 8 Moore, 244; 4 Burr. 2229. Vide 3 John. Cas. 297; 1 Pick. R. 451; 15 Mass. 488; 7 John. 72; 4 Mass. 433; 8 Mass. 223; 8 Com. Dig. 846; 16 Vin. Ab. 301; 1 Vern. 83, n.; 1 Saund. 58,n.; 1 Swans. 318.