Damages, Liquidated * contracts. When the parties to a contract stipulate for the payment of a certain su, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v.) It differ from a penalty, becasue the latter is a forfeiture from which the defaulting party can be relieved. An agreement for liquidated damages can only be when there is an engagement for the performance of certain acts, the not doing of which would be an injury to one of the parties; or to guard against the performance of acts which, if done, would also be injurious. In such cases an estimate of the damages may be made by a jury, or by a previous agreement between the parties, who may foresee the consequences of a breach of the engagement, and stipulate accordingly. 1 H. Bl. 232; and vide 2 Bos. & Pul. 335, 350-355; 2 Bro. P. C. 431; 4 Burr, 2225; 2 T. R. 32. The civil law appears to agree with these principles. lnst. 3, 16, 7; Toull. liv. 3, n. 809; Civil Code of Louis. art. 1928, n. 5; Code Civil, 1152, 1153.

2. It is to be observed, that the sum fixed upon will be considered as liquidated damages, or a penalty, according to the intent of the parties, and the more use of the words - "penalty," &c "forfeiture," or "liquidated damages," will not be regarded is at all decisive of the question, if the instrument discloses, upon the whole, a different intent. 2 Story, Eq. §1318; 6 B.& C. 224; 6 Bing. 141; 6 Iredell, 186; 3 Shepl. 273; 2 Ala. 425; 8 Misso. 467.

3. Rules have been adopted to ascertain whether such sum so agreed upon shall be considered a penalty or liquidated damages, which will be here enumerated by considering, first, those cases where it has been considered as a penalty - and, secondly, where it has been considered as liquidated damages.

4. - 1. It has been treated as penalty, 1st. where the parties in the agreement have expressly declared the sum intended as a forfeiture or a penalty, and no other intent can be collected from the instrument. 2 B. & P, 340, 350, 630; 1 Mcmullan, 106; 2 Ala. 425; 5 Metc. 61; 1 H. Bl. 227; 1 Campb. 78; 7 Wheat. 14; 1 Pick. 451; 4 Pick. 179; 3 Johns. Cas. 297. 2d. Where it is doubtful whether it was intended as a penalty or not, and a certain debt or damages, less than the penalty, is made payable on the face of the instrument. 3 C. & P. 240; 6 Humph. 186. 3d. Where the agreement was made, evidently, for the attainment of another objeet, to which the sum specified is wholly collateral. 11 Mass. 76; 15 Mass. 488; 1 Bro. C. C. 418. 4th. Where the agreement contains several matters, of different degrees of importance, and yet the sum named is payable for the breach of any, even the least. 6 Bing. 141; 5 Bing. N. C. 390; 7 Scott, 364; sed vide, 7 John. 72; 15 John. 200. 5th. Where the contract is not under seal, and the damages are capable of being certainly known and estimated. 2 B. & Al. 704; 6 B. & C. 216; 1 M. & Malk. 41; 4 Dall. 150; 5 Cowen, 144.

5. - 2. The sum agreed upon has been considered as liquidated damages, 1st. Where the damages are uncertain, and are not capable of being ascertained by any satisfactory and known rule. 2 T. R. 32; 1 Alc. & Nap. 389; 2 Burr, 2225; 10 Ves. 429; 3 M. & W. 545; 8 Mass. 223; 3 C. & P. 240; 7 Cowen 307; 4 Wend. 468. 2d. Where, from the tenor of the agreement, or from the nature of the case, it appears that the parties have ascertained the amount of damages by fair calculation and adjustment. 2 Story, Eq. Juris. §1318; 10 Mass. 459; 7 John. 72; 15 John. 200; 1 Bing. 302; 7 Conn. 291; 13 Wend. 507; 2 Greenl. Ev. §259; 11 N. H. Rep. 234; 6 Blackf. 206; 26 Wend. 630; 17 Wend. 447; 22 Wend. 201; 7 Metc. 583; 2 Ala. 425; 2 Shepl. 250. Vide, generally, 7 Vin. Ab. 247; 16 Vin. Ab. 58; 2 W. Bl. Rep. 1190;. Coop. Just. 606; 1 Chit. Pr. 872; 2 Atk. 194; Finch. 117; Prec. in Ch. 102; 2 Bro. P. C. 436; Fonbl. 151, 2, note; Chit. Contr. 836; 11 N. Hamp. Rep. 234.

* From Bouvier's Law Dictionary, 1856 Edition. Please see Bouvier's Legal Abbreviations & Abbreviated References for help with obscure nomenclature & references.

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