Court Opinion

ID: 9543205
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:43:12.140667+00
Date Added: 2024-06-11T15:09:57.431859
License: Public Domain

ON PETITION FOR REHEARING
*821James J. Damis, Portland, for the petition.
No appearance contra.
*822DENECKE, J.
We affirmed a judgment for a real estate commission against the defendant seller. Defendant filed a petition for rehearing pointing out that in our opinion we had not discussed two substantial contentions that it had made.
The parties entered into an exclusive, listing agreement. We affirmed the trial court’s, decision that during the exclusive period the defendant had “sold” the property through another broker. The listing agreement provided that in the event the property was sold during the exclusive period, the defendant would pay the plaintiff broker the same $10,000 commission that the broker would have received if it had sold the property for defendant. The defendant contended this provision was unenforceable as it was a penalty and not a provision for liquidated damages.
 One argument defendant made in support of its contention was that this was a penalty clause because the harm that was caused by the breach is not one that is incapable or very difficult of accurate estimation. § 339(b), 1 Restatement, Contracts. We previously adopted this as part of the standard to determine when an agreement is a penalty. Medak v. Hekimian, 241 Or 38, 44, 404 P2d 203 (1965).①
What we should have added in our original opinion was that this standard contemplates a situation in which either the amount of harm or that any harm occurred, or both, is difficult or impossible to determine. The difficulty or impossibility is to be viewed as of the time of the making of the contract. Medak v. Hekimian, supra (241 Or at 44). Whether the realtor suffered any harm because of the defend*823ant’s breach would depend upon whether the realtor would have secured a buyer during the exclusive period. Particularly at the time of the entering into the listing agreement, it would be reasonable to believe that this could be difficult to prove.
Atkinson v. Pacific Fire Extinguisher Co., 40 Cal2d 192, 253 P2d 18 (1953), is illustrative. The defendant sold a fire detection system to plaintiff. The system failed and plaintiff’s mill was destroyed. The contract of sale contained a provision fixing the amount of damages to be awarded in the event of breach. The court held it was a valid liquidated damage provision. The court pointed out that the system was intended to provide protection from a wide variety of fires:
“* * * Some of them would be slow burning, as in a bed of sawdust, where a loss resulting from the failure of the detection system might be negligible. Other fires might result only in a pitted floor. Still others would immediately envelop the buildings in flames and result in a very substantial loss. Looking ahead the parties had no way of knowing what type of fire might occur after a particular failure of the detection system. The merit in the defendant’s contention lies in the argument that in no event could the parties have predicted what portion of the loss in any particular fire would be the proximate result of the failure of the detection svstem.. * * 40 Cal2d at 195-19G.
Better Food Markets v. American Dist. Tel. Co., 40 Cal2d 179, 253 P2d 10 (1953), involved the same problem. There, a burglar alarm supplied by the defendant failed and plaintiff’s store was burglarized.
Defendant also contends that if we do not require plaintiff to prove that it probably would have *824been able to secure a purchaser, we are overruling Brady v. East Portland Sheet Metal Wks., 222 Or 584, 352 P2d 144 (1960). That is not correct. In Brady the broker was suing for damages; however, there was no liquidated damage provision in the exclusive listing agreement. We held that in order to prove actual damages the plaintiff broker had to prove that she probably would have secured a purchaser.
Petition denied.

 Forty years ago McCormick made what appears to be a compelling argument against the necessity of this part of the standard, McCormick, Damages § 148, 606-606 (1935), but we will continue to accept it in this case.