Court Opinion

ID: 9624931
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:22:12.138036+00
Date Added: 2024-06-11T12:06:03.203237
License: Public Domain

LENT, J.,
specially concurring.
I concur in the result; furthermore, I concur in the observation that a majority of the members of the court now believe that the defendant should have the burden to plead and prove the invalidity of an agreement made in advance of breach fixing the damages for breach.1
The trial judge instructed the jury that plaintiff had the burden of proof to establish the amount of damages.2 The trial judge then charged the jury that it could award the $17,500 specified in the contract only if the jury found both elements described in Restatement of Contracts § 339(1) (1932):
"(1) An agreement, made in advance of breach, fixing the damages therefor, is not enforceable as a *252contract and does not affect the damages recoverable for the breach, unless
"(a) the amount so fixed is a reasonable forecast of just compensation for the harm that is caused by the breach, and
"(b) the harm that is caused by the breach is one that is incapable or very difficult of accurate estimation.”
We used somewhat different language to describe these two elements in Layton Manufacturing v. Dulien Steel, 277 Or 343, 346-47, 560 P2d 1058 (1977):
"A contract provision which presets the amount to be paid to a damaged party will not be construed as an enforceable provision for liquidated damages unless (1) the actual damages resulting from a breach are difficult or impossible to ascertain, and (2) the damages agreed upon had a reasonable relationship to probable losses. Medak v. Hekimian, supra [241 Or 38, 404 P2d 203 (1965)]; Secord v. Portland Shopping News, supra [126 Or 218, 269 P228 (1928)]; Restatement of Contracts, § 339.”
This language, although purporting to rely upon the Restatement actually shifts the focus slightly from estimation of the "harm” in § 339 (1) (b) to estimation of the monetary amount necessary to compensate for the harm and from "reasonable forecast” in § 339 (1) (a) to "reasonable relationship” between the agreed amount and probable losses. I submit that the language from Layton Manufacturing comes closer to describing how we actually apply the test for validity of the contractual provision because of the description of that process in my concurring opinion in Layton Manufacturing. I would, therefore, advocate the use of that language rather than that of § 339 (1) in charging the jury.
One other matter deserves attention with respect to our decision today. Both in Medak v. Hekimian, 241 Or 38, 404 P2d 203 (1965), and in Layton Manufacturing v. Dulien Steel, supra, we stated that whether the contractual provision is designed to operate as a penalty is a question "of law” for decision of the court. *253If that were actually true, we should have no need to concern ourselves with assignment of the burden of proof (risk of non-persuasion of the trier of fact). The statement is true only in the sense that the judge tells the jury the legal effect of the establishment (or want thereof) of the two factual elements whether as described in Restatement of Contracts § 339 (1) or in Layton Manufacturing v. Dulien Steel, supra, as did the trial judge in this case. I believe, therefore, the court should discard the concept that we are dealing with a question of law rather than of fact.
I would conclude by again commending to the court adoption of the procedure for trying this kind of case described in my concurring opinion in Layton Manufacturing. That procedure denies to the injured party the benefit of the contractually fixed amount of damages only when the party at fault convinces the trier of fact that the damages actually sustained are less than the amount fixed by the contract. Where the party at fault is successful in that endeavor, the injured party is made whole, which I conceive to be the aim of the law. Where the endeavor is unsuccessful, I submit the situation will be one in which the contract would be enforced under our present approach. Following the procedure I advocate would give full credit to the freedom of the parties to contract while limiting the injured party to his actual damages where they are capable of ascertainment. For the reasons supporting this approach, see my concurring opinion in Layton Manufacturing v. Dulien Steel, supra.

 The opinion of the court observes that a majority of the court now believes the court should adopt the " 'modem view’ to the effect that parties who negotiate the terms of a contract may properly include a provision for liquidated damages and that, in the absence of proof of oppression or 'adhesive’ circumstances, the defendant should have the burden to both plead and prove that such a contract provision is invalid for failure to satisfy the two requirements of the rule as stated in Restatement of Contracts § 339, supra [Comment c (1932)], and as previously adopted by the court.” I quote the exact language because, among other things, I believe the defendant should have the burden both to plead and to prove invalidity for oppression, adhesion or unconscionability as well as invalidity as a penalty.

 That, of course, is erroneous under the holding of this case.