liquidated damages

the liquidated damage provision is not penal in its nature but constitutes compensation for the retention of a workman's pay which might result in damages too obscure and difficult of proof for estimate other than by liquidated damages. It constitutes a Congressional recognition that failure to pay the statutory minimum on time may be so detrimental to maintenance of the minimum standard of living 'necessary for health, efficiency, and general well-being of workers' and to the free flow of commerce, that double payment must be made in the event of delay in order to insure restoration of the worker to that minimum standard of well-being.

Liquidated damages are ascertained damages. 48 III. 408.

Damages the amount of which has been determined by agreed upon as part of a contract, as the amount to be paid to a party who alleges and proves a breach of it. Where there is an agreement between parties for the doing or hot doing particular acts, the parties may, if they please, estimate beforehand the damages to result from a breach of the agreement, and prescribe in the agreement itself the suip to be paid by either by way of damages for such breach. See 2 B. & P. 335, 350; 2 Bro. P. C. 431; 4 Burr. 2225. The civil law appears to recognize such stipulations; Inst. 3. IG. 7; Toullier 1. 3, n. 800; La. Civ. Code Art. 1928, n. 5; Code Civile 1152, 1153. The parties may bona fide, where the damages are of an uncertain nature, estimate and agree upon the measure of damages upon a breach. The intention of the parties is arrived at by a proper constniction of their agreement. It is the duty of the court, when the damages are uncertain and have been liquidated by agreement, to enforce the contract; Sun Printing & Pub. Ass’n v. Moore, 183 U. S. 642, 22 Sup. Ct. 240, 46 L. Ed. 366, a fully considered case. A court will not substitute its judgment for that of the parties; Schell v. Plumb, 55 N. Y. 592. Such a stipulation on the subject of damages differs from a penalty in this, that the parties are holden by it; whereas a penalty is regarded as a forfeiture, from which the defaulting party can be relieved. It is settled both at law and in equity that the courts will not go behind an agreement for liquidated damages, but that a penalty is only security for the sum due or damages actually sustained; 1 Sedgw. Dam. § 394. The word penalty in this contradistinction is not used according to its exact detinitlon, but has acquired a settled technical meaning; id. note. The sum named in an agreement as damages to be paid in case of a breach will, in general, be considered as liquidated damages, or as a penalty, according to the intent of the parties; and the mere use of the words “penalty” or “liquidated damages” will not be decisive of the question, if on the whole the instrument discloses a different intent; 6 B. & C. 216; Maxwell v. Allen, 78 Me. 32, 2 Atl. 386, 57 Am. Rep. 783; Kemp v. Ice Co., 69 N. Y. 45; 4 H. & N. 511; Condon v. Kemper, 47 Kan. 126, 27 Pac. 829, 13 L. R. A. 671; Pennsylvania R. Co. v. Reichert, 58 Md. 261; Houghton V. Pattee, 58 N. H. 326; Lansing V. Dodd, 45 N. J. L. 525. See Ward v. Building Co., 125 N. Y. 230, 26 N. E. 256. It has been said, however, that if the parties use the word “penalty,” it will control the interpretation of the contract; 3 B. & P. 630; Tayloe v. Sandiford, 7 Wheat. (U. S.) 13, 5 L. Ed. 384; Colwell v. Lawrence, 38 N. Y. 75; Brewster v. Edgerly, 13 N. H. 275; but in Bagley v. Peddle, 16 N. Y. 469, 09 Am. penalty. Whether the sum mentioned in the agreement to be paid for a breach is to be treated as a penalty or as liquidated damages is a question of lajy, to be determined by the court upon a consideration of the whole instrument; 7 0. B. 716. The construction must be the same in law and equity; 6 H. L. C. 105. The tendency of the court is to regard the sum named as a penalty rather than liquidated damages; 2 B. & P. 346; Cushing v. Drew, 97 Mass. 445; yet courts seek to ascertain the Intent and are governed by it; id. As to the distinction, see also Jackson v. Baker, 2 Edw. Ch. (N. Y.) 471, 30 Am. Rep. 28, n. Such a stipulation in an agreement will be considered as a penalty, in the following ca.se.s; Where the parties in the agreement have expressly declared it or described it as a “penalty,” and no other intent is clearly to be deduced from the instniment; 2 B. & P. 340, 350, 630; Tayloe v. Sandiford, 7 Wheat. (U. S.) 14, 5 L. Ed. 384; Dennis v. Cummins, 3 Johns. Cas. (N. Y.) 207, 2 Am. Dec. 160; Meyer v. Estes, 164 Mass. 457, 41 N. E. 683, 32 L. R. A. 283. Where it is doubtful from the language of the Instrument whether the stipulation was Intended as a penalty or as liquidated damages; 3 C. & P. 240; Bagley v, Peddie, 5 Sandf. (N. Y.) 192; Low v. Nolte, 16 111. 47.5. Where the agreement was evidently made for the attainment of another object or purpose, to which the stipulation is wholly collateral; Wood V. Partridge, 11 Mass. 488; 1 Bi'o. C. C. 418; Mc Cann v. City of Albany, 11 App. Div. 378, 42 N. Y. Supp. 94. Where the agreement imposes several distinct duties, or obligations of different degrees of Importance, and yet the same sura is named as damages fur a breach of either indifferently; 7 Scott 364; Bagley v. Peddie, 5 Sandf. (N. Y.) 192; Wilhelm v. Eaves, 21 Or. 194, 27 Pac. 1053, 14 L. R. A. 297; Trower V. Elder, 77 111. 452; Carter v. Strom, 41 Minn..522, 43 N. W. 394; Lyman v. Babcock, 40 W’is. 503. But see Cotheal v. Talmage, 9 N. Y. 551, 61 Am. Dec. 716; Trower V. Elder, 77 111. 4,52; L. R. 4 Ch. Div. 731; and see 19 Centr. L. J. 282, 302, where many authorities are collected. Where the agreement is not under seal, and the damages are capable of being certainly known and estimated; 2 B. & Aid. 704; 6 B. & 0. 216; Graham v. Blckham, 4 Dali. (U. S.) 150, 1 L. Ed. 778; Spencer v. Tilden, 5 Cow. (N. Y.) 144; Squires v. Elwood, 33 Neb. 126, 49 N. W. 989. See Scofield V. Tompkins, 95 111. 190, 85 Am. Rep. 160; Grand Tower Min. Mfg. & Transp. Co. V. Phillips, 23 Wan. (U. S.) 471, 23 L. Ed. 71. Where the instrument provides that a larger sum shall be paid upon default to Beale v. Hayes, id. 640; Peine v. Weber, 47

See Damages.

Defined under Liquidated in Black's Law Dictionary.