Opinion ID: 885593
Heading Depth: 1
Heading Rank: 5

Heading: issues

Text: ¶ 19 Did the District Court err when it concluded the contract remedy provision was an unenforceable liquidated damages provision? ¶ 20 The District Court first concluded that the twenty-acre parcel was not transferable because of the Montana Subdivision and Platting Act. Given that conclusion, the District Court then reexamined the contract for another possible method to determine the appropriate amount of damages. Upon that examination, the Court noted the following language in Paragraph 6: The parties hereto agree that Seller's [Canton's] completion of said state and county requirements and the requirements contained in this agreement shall be valued at Two Hundred Thousand Dollars ($200,000.00). It then concluded: This would appear to constitute a contractual provision by which the amount of damage to be paid for breach of Canton's obligations was determined in anticipation of his possible breach, i.e., a liquidated damages provision. Given that determination, the District Court analyzed the provision as a liquidated damages provision in light of § 28-2-721, MCA. Section 28-2-721, MCA, provides: When provision fixing liquidated damages valid. (1) Every contract by which the amount of damage to be paid or other compensation to be made for a breach of an obligation is determined in anticipation thereof is to that extent void, except as expressly provided in subsection (2). (2) The parties to a contract may agree therein upon an amount which shall be presumed to be an amount of damage sustained by a breach thereof when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage. [Emphasis added.] ¶ 21 Riverview contends that the provision in Paragraph 6 is not a liquidated damages provision, because the parties did not agree on the amount of compensation or damages to be paid by Canton to Riverview. Therefore, § 28-2-721(1), MCA, does not apply. We agree. The provision sets forth a value for Canton's completion of certain tasks, it does not give Riverview the right to collect $200,000 from Canton. However, neither did Riverview contend that it should be awarded the $200,000 amount set forth in Paragraph 6. Therefore, the District Court's discussion regarding liquidated damages was not essential to the resolution of the parties' claims and we move on to its actual award of damages.