is plain from the whole instrument that the real intention was different (d). (c) What are Liquidated Damages. CH. XXV. s. 1. Penalty or Liquidated Damages. not to marry any other But if the agreement provide, that a certain sum shall be paid What are in the event of the performance or non-performance of a particular damages. liquidated specified act, with regard to which, in case of default, damages in nature uncertain may arise; and there be no words evincing an intention that the sum reserved shall be viewed as a penalty only, such sum may be recovered as liquidated damages (e). Thus, if Agreement a sum named in respect of the non-performance of one covenant only, be expressly declared to be reserved as liquidated damages person. and not as a penalty, the Court will hold it to be the former (ƒ). So, in Lowe v. Peers (g), where the defendant gave to the plaintiff Lowe v. Peers. the following memorandum: "I do hereby promise Mrs. Catherine Lowe, that I will not marry with any other person besides herself; if I do, I agree to pay the said Catherine Lowe 1,000l., within three months next after I shall marry anybody else;" it was held that the sum specified formed the sole measure of damages. Ploughing up pasture, &c., by tenant of farm. Birch v. In cases between landlord and tenant, a sum reserved annually, for any specific act of mismanagement of the land, has been, at common law, regarded as liquidated damages, even although it be termed a penalty (h). Thus in Birch v. Stephenson (i)-where the lessee covenanted to pay "the rent or sum of 5l. per acre, for every acre of meadow or pasture ground" which he should plough or convert into tillage during the term--it was unsuccessfully con- Ag. Hold. tended that this reservation was in the nature of a penalty, against Act, 1900, s. 6. which the tenant might be relieved (k); and there are other cases to the same effect (k). The matter is now dealt with by sect. 6 of the Agricultural Act, 1900 (), by which, "notwithstanding any provision" making the tenant farmer "liable to pay a higher rent or other liquidated damages" for breach of covenant, &c., the landlord may not recover for any such breach any sum "in excess of the damage actually suffered "; but "breaking up permanent pasture, grubbing underwoods, and felling, cutting, lopping, or (d) Per Cur., Price v. Green (1847), 16 M. & W. 346, Ex. Ch. 354; and see Wallis v. Smith (1882), 21 Ch. D. 243, and p. 710, post, in which, however, the payment of liquidated damages was held to be enforceable; Sparrow v. Paris (1862) 31 L. J. Ex. 137. (e) See Lea v. Whitaker (1872), L. R., 8 C. P. 70; Hinton v. Sparkes (1868), L. R., 3 C. P. 161; Reilly v. Jones (1823), 1 Bing. 302. (f) Price v. Green (1847), 16 M. & W. 346, Ex. Ch. ; 13 M. & W. 695; Rawlinson v. Clarke (1845), 14 M. & W. 187. (g) Lowe v. Peers (1768), 4 Burr. 2225. (h) Rolfe v. Peterson (1772), 2 Bro. P. C. 436; per Alexander, C.B., Jones v. Green (1829), 3 Y. & J. 298, 304, Ex. Ch. (i) Birch v. Stephenson (1811), 3 Taunt. 469; and see Woodfall, L. & T., 17th ed., at p. 143; Lely and Aggs' Agricultural Holdings, at p. 133. (k) See, e.g., Jones v. Green (1829), 3 Y. & J. 298-sowing more than a fixed quantity of a particular kind of seed; Massey v. Goodall (1851), 20 L. J. Q. B. 259-removal of produce from the farm. (7) 63 & 64 Vict. c. 50, p. 332, ante, CH. XXV. Penalty or Contract for payment of money treated as contract for liquidated damages. Wallis v. Smith. Law of Lord Elphin- injuring trees, and regulating the burning of heather," are excluded from the application of this enactment. In Law v. Local Board of Redditch (n), a contract for the construction of sewerage works provided that the works should be completed in all respects by a specified date, and that, in default of such completion, the contractor should forfeit 100l., and 5l. for every seven days during which the works should be incomplete after the said date as and for liquidated damages. It was held by the Court of Appeal that, inasmuch as the sums agreed to be paid were payable on a single event only, viz. non-completion of the works, they were to be regarded as liquidated damages and not penalties. It appears to have been previously laid down in Wallis v. Smith (o)-to the elaborate review of the authorities in which, by Jessel, M.R., the reader is referred-that where a contract contains a condition for payment of a sum of money as liquidated damages for the breach of stipulations of various importance, none of which is for payment of an ascertained sum of money, the general rule is, that the sum named is not to be treated as a penalty, but as liquidated damages, as they were in that somewhat complicated case treated accordingly and it is submitted that, although Astley v. Weldon and even Kemble v. Farren will be still adhered to, the artificial rules of construction introduced by those cases and followed by others will in future be followed only where exactly binding. The law of Scotland is similar to that of England as to penalty and liquidated damages; and where lessees had covenanted to pay 100l. an acre for all land, on which they were allowed to place slag, not restored, the House of Lords held this to be liquidated damages, although the sum was described in one part of the lease as "the penalty herein stipulated" (p). Rules as to. SECT. 2.-Proceeding for a Penalty, or more. In all articles guarded by penalties, there are two remedies which may be pursued at the option of the party injured: either he may have, as often as the articles are broken, equitable relief upon the footing of the articles themselves, for a partial breach of contract ; (n) Law v. Local Board of Redditch, [1892] 1 Q. B. 127, C. A., affirming Hawkins, J. (0) Wallis v. Smith (1882), 21 Ch. D. 243, C. A. In Willson v. Love, [1896] 1 Q. B. 626, C. A., it was held that where a contract contains a condition for pay ment of a sum of money to secure the performance of several stipulations of varying degrees of importance, such sum is prima facie a penalty, and not liquidated damages. (p) Lord Elphinstone, app., Monkland Iron Co., resps. (1886), 11 App. Cas. 332. s. 2. or more. or he may take the penalty:-that is to say, where there is a CH. XXV. penalty and a covenant in the same deed, the party has his election Proceeding either to sue for the penalty, or to bring an action on the covenant for a Penalty, for damages. But, in the former case, the contract is rescinded and the penalty becomes the debt in law :-subject, of course, to relief in equity, and to the restrictions imposed by the mode of proceeding under 8 & 9 Will. 3, c. 11, s. 8. And if the penalty be paid according to the stipulation of the articles, or be recovered as the debt in law, the party cannot afterwards have an action for breach of the contract, or obtain an injunction to restrain such breach (g). He may, however, elect to bring his action on the contract; and, according to the nature of the case, he may recover in damages even beyond the amount of the penalty (r). An action for damages falls within R. S. C., 1883, Order XXXVI., Right to jury. r. 6, so that a demand for a jury is of right (s). Where there is judgment by default on the claim to damages, but the amount is not admitted, there is a writ of inquiry before the sheriff (t), or when it is a matter of calculation, there may be an inquiry before an officer of the Court under Order XXXVI., rr. 56-58. SECT. 3. Of the Amount Recoverable Generally. (a) Nominal Damages. Wherever a party is liable for a breach of contract, either express Nominal damages. or implied, the plaintiff is, in general, entitled to nominal damages although no action be framed in tort for such breach of contract, and no actual damage be proved (u). But in an action on a promissory note, to which payment is pleaded, the jury are not bound to give the plaintiff nominal damages, although it may appear that the money was not paid until some time after the maturity of the note (x). (b) Claim for fixed Sum. In an action for the recovery of a sum certain, which the defen- When claim dant has not shown any ground for reducing-e.g., by proving a (a) Sainter v. Ferguson (1849), 1 M'N. & G. 286; Carnes v. Nesbitt (1862), 7 H. & N. 778; and see Holt, N. P. C. 46, n. (7). (r) Winter v. Trimmer (1762), 1 W. Bl. 395; Harrison v. Wright (1811), 13 East, 343; Holt, N. C. P. 46, n. (7); 12 R. R. 369. (s) Per Kay, J., Fennessy v. Rabbitts (1887), 56 L. T. 138. (t) Chitty's Archbold, pp. 1331-1340. (u) Rolin v. Steward (1854), 14 C. B. 595; Marzetti v. Williams (1830), 1 B. & Ad. 415; per Tindal, C.J., Godefroy v. Jay (1831), 7 Bing. 413, 419. (x) Beaumont v. Greathead (1846), 2 C. B. 494; and see Thame v. Boast (1848), 12 Q. B. 808, 515. is for a fixed sum. 8. 3. generally. Claim for fixed sumcontd, CH. XXV. partial failure of consideration or the like-it is obviously the Of the Amount duty of the jury to give the plaintiff neither more nor less than Recoverable the specified sum (y). Thus, in Lethbridge v. Mytton (z), it appeared that the defendant, by a settlement made upon his marriage, conveyed estates upon certain trusts, and covenanted with the trustees to pay off incumbrances on the estates to the amount of 19,000l. within a year; and it was held that, on his failure to do so, the trustees were entitled to recover the whole 19,000l. in an action of covenant, although no special damage was laid or proved; and an inquisition on which nominal damages had been given was set aside, and a new writ of inquiry awarded. Where the claim is for unliquidated damages. Consequential And where A. and S. sold their business to the defendant, on condition that he would pay certain debts owing by them; but the defendant failed to do so; and A. and S. became bankrupt, there being then a sum of 1,750l. remaining unpaid in respect of the said debts; it was held that the trustee of A. and S., having sued the defendant for breach of his contract, was entitled to recover in that action the whole sum of 1,750l., and not merely nominal damages (a). (c) Unliquidated Damages. But where the amount agreed to be paid is uncertain, e.g., where the contract is a contract to indemnify, the plaintiff will be entitled to recover, as damages, only the actual loss which he has sustained by reason of the defendant's breach: and the amount of such damages is purely a question of fact for the judge or jury (b). (d) Consequential Damages. Where an action is brought, to recover general damages for a breach of contract, any consequential damages, which the plaintiff has sustained by reason of such breach, may be considered; provided such damages may fairly and reasonably be considered, either as arising naturally-i.e., according to the usual course of things, including reasonable human conduct (c)—from the breach of the contract itself (d); or may reasonably be supposed to have been in the contemplation of both parties, at the time of contract, as the probable result of breach (e). CH. XXV. s. 3. Of the Amount Recoverable generally. Communica tion of special circum stances. Hadley v. As to the second point, the rules are, that if the special circumstances under which the contract was made, were communicated by the one party to the other, so as to be known to both, the damages which they would reasonably contemplate, as being likely to result from the breach of such a contract, would be the amount of injury which would ordinarily follow, from a breach of contract under those special circumstances, so known and communicated: but that, if the special circumstances were wholly unknown to the party break- Baxendale. ing the contract, he can be supposed to have had in his contemplation, only the amount of injury which would arise from such a breach of contract generally, and in the great multitude of cases not affected by such special circumstances (f). Thus, it was laid Carriers. down in Hadley v. Baxendale (g), in which it was held that damages could not be recovered by a miller for loss of profits arising from the stoppage of his mill occasioned by delay of a carrier in delivering to a consignee a pattern for a new shaft to replace a broken one; the ground of the decision being that the carrier had no notice that the profits of the mill would be stopped by the delay (g); and except where there is either a special or implied Loss of contract accepted by the carrier (), he is rarely liable to damages for loss of market (i). Hadley v Baxendale, market. In an action for breach of contract in not properly repairing Detention of ship. a ship, the plaintiff's may recover damages, for loss sustained by the detention of the ship, while the improper repairs are being replaced (k), and where plaintiff agreed with defendant to take a lease of premises, for the purpose, as the defendant knew, of carrying on therein a trade which the plaintiff was about to commence ; and, in consequence of the defendant's refusal to perform his agreement, the plaintiff was unable, for fifteen weeks, to commence his trade, he was held to be entitled to damages, in respect of his loss of profits during those fifteen weeks (1). (f) Per Cur. (Alderson, Parke, and Martin, BB., after C. A. V.), Hadley v. Baxendale (1854), 9 Exch. 341, 354; and see Fisher v. Val de Travers Asphalte Co. (1876), 1 C. P. D. 511 (costs of litigation consequent on breach); Cory v. Thames Iron Works Co. (1868), L. R., 3 Q. B. 181, 188 (liabilities as for general and not for special user of a hull); Prehn v. Royal Bank of Liverpool (1870), L. R., 5 Ex. 92 (notarial and telegraphic expenses recoverable in action for nonacceptance of bill of exchange); and see infra, p. 716. (g) Hadley v. Baxendale (1854), 9 Ex. 341. (h) As in Simpson v. London and North Western Rail. Co. (1876), 1 Q. B.D. 274; Jameson v. Midland Rail. Co. (1884), 50 L. T. 426. (i) The Parana (1877), 2 P. D. 118, C. A.; The Notting Hill (1884), 9 P. D. 105, C. A.; Hawes v. South Eastern Rail. Co. (1884), 54 L. J., Q. B. 174. (k) Per Cockburn, L.C.J., Wilson v. General Iron Screw Collier Co. (1877), 47 L. J., Q. B. 239. (2) Per Fry, J., Jaques v. Millar (1877), 6 Ch. D. 153 (awarding_2507.), overruled on another point in Marshall v. Berridge (1881), 19 Ch. D. 233; and see Royal Bristol, &c., Society v. Bomash (1887), 35 Ch. D. 390, per Kekewich, J., awarding 1107. for loss of rent of house agreed to be sold from a day 5 days later than the day fixed for the completion of its purchase, but not vacant for a month from that day, with resulting loss of a tenant, although at date of purchase the contract for lease, Delayed possession of premises. |