Case ID: ohio-law-abs_3/html/0164-01.html
Source: Caselaw Access Project
Author: {"author": "DAY, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

No. 18470
    William F. Jones v. Harry J. Stevens.
    Error to the Court of Appeals of Cuyahoga County.
    297. CONTRACTS—1. What points must be considered in determining whether sum named in, for its breach, is intended as a penalty, or as liquidated damages.
    2. When amount so fixed should be treated as damages and not as penalty.
   DAY, J.

1. To determine whether a sum named in a contract is intended as a penalty, or as liquidated damages, it is necessary to look to the whole instrument, its subject-matter, the ease or difficulty of measuring the breach in damages, and the' amount of the stipulated, sum, not only as compared with the value of the subject of the contract, but in proportion to the probable consequences of the breach, and also to the intent of the parties ascertained from the instrument itself in the light of the particular facts surrounding the making and execution of the contract.

2. Where the parties have agreed on the amount of damages, ascertained by estimation and adjustment, and have expressed this agreement in clear and unambiguous terms, the amount so fixed should be treated as liquidated damages and not as a penalty if the damages would be (1) uncertain as to amount and difficult of proof, and if (2) the contract as a whole is not so manifestly unconscionable, unreasonable and disproportionate in amount as to justify the conclusion that it does not express the true. intention of the parties, and if (3) the contract is consistent with the conclusion that it was the intention of the parties that damages in the amount stated should follow the breach thereof.

Judgment of the Court of Appeals reversed and that of the Court of Common Pleas affirmed.

Marshall, C. J. Jones, Matthias, Allen, Kin-kade and Robinson, JJ., concur.