Court Opinion

ID: 5073997
Source: CourtListenerOpinion
Date Created: 2021-10-01 11:07:20.99124+00
Date Added: 2024-06-11T08:19:56.525155
License: Public Domain

FENNER, Judge
concurring.
I concur with the majority opinion but believe that the issue of whether or not the liquidated damages clause of the contract is a penalty requires further comment.
Liquidated damages clauses in contracts are valid and enforceable provided they do not constitute a penalty. Whether a liquidated damages clause should be enforced depends upon the reasonableness of the agreed damage amount, in light of the anticipated loss in the event of a contract breach and, in light of the difficulties of proving such loss. Highland Inns Corp. v. American Landmark Corp., 650 S.W.2d *193667, 674 (Mo.App.1983); Restatement (Second) of Contracts, § 366(1). As long as the amount is not an unreasonable forecast of probable damages and is not disproportionate to the amount of damages which could probably result, liquidated damages should be enforced. Carmel v. Dieckmann, 617 S.W.2d 459, 461 (Mo.App.1981). An amount used as liquidated damages must bear some relationship to a reasonable forecast of probable damages or to the amount of damages which would likely result from breach. Goldberg v. Charlie’s Chevrolet, Inc., 672 S.W.2d 177, 180 (Mo.App.1984).
In order to invoke the liquidated damages clause in a contract, a plaintiff need not prove the actual dollar amount of damages caused by the defendant’s breach. All that is necessary is a showing that some harm or damage has occurred. Grand Bissell Towers, Inc. v. Joan Gagnon Enterprises, Inc., 657 S.W.2d 378, 379 (Mo.App.1983); Goldberg v. Charlie’s Chevrolet, Inc., supra at 179. In the case at bar there is no dispute but that Standard Improvement Company suffered some actual damages.
The record reflects that the estimator for Standard Improvement Company spent between fifteen and twenty hours on the appellants’ contract. The estimate is free but the estimator is paid a commission on work that is contracted. Additionally, appellants desired to finance the cost of the project with Standard Improvement Company. In making arrangements for appellants to be approved for financing by Standard Improvement Company, the Company incurred expenses in determining who had title to the property, having prepared and recording a deed of trust, hiring an independent appraiser to establish a value for the property and all of their other overhead expenses in arranging the financing as requested by appellants. The fact that Standard Improvement Company proved that it suffered some actual damage is sufficient to invoke the liquidated damages clause of the contract.
When an owner wrongfully breaches a construction contract, the contractor is entitled to the benefit of his bargain, that is whatever net gain he would have made under the contract. Artcraft Cabinet, Inc. v. Watajo, Inc., 540 S.W.2d 918, 924 (Mo.App.1976). An approved method of measuring damages is to award the contractor the contract price less the costs and expenses the contractor is saved from having to incur because of the breach. Statler Manufacturing, Inc. v. Brown, 691 S.W.2d 445, 451 (Mo.App.1985).
In the case at bar the uncontroverted evidence was that the probable cost of labor and materials which would have been needed to perform the job was estimated at approximately $16,000. The contract price for the complete job was $24,000. Thus, under the measure of contract damages as set forth above, Standard Improvement Company would be entitled to damages in the amount of $8,000.
The liquidated damages clause entitled Standard Improvement Company to recover $7,200 and therefore, is a reasonably accurate forecast of their lost profits under the contract and not a penalty.