to pay damages for his breach of contract; it was held that, according to the rule laid down in Hadley v. Baxendale, he could not recover such damages against the defendant (a). It has been suggested, as an addition to the rule laid down in Hadley v. Baxendale, that after the contract has been made, but in the course of the performance of it and before it is actually broken, one of the parties may give notice to the other of the special consequences which will happen upon his breach of contract, and so fix him with the damages which he may occasion by persisting in breaking the contract after such notice (b). An agreement may contain a promise or undertaking of a Contracts with liquicertain act or matter, and also an express stipulation that in dated dacase of a breach of the promise or undertaking a fixed sum mages and penalties. of money shall be payable; which sum will be considered in law, according to the nature of the case, either as liquidated damages recoverable in full, or as a penalty imposed to secure the performance of the contract. Familiar instances of liquidated damages occur in building contracts in which the builder contracts to complete the building in an appointed time or to pay a stipulated daily or weekly sum for delay beyond the time appointed (c); and in charterparties in which a certain sum is agreed to be paid daily for demurrage (d). A familiar use of a penalty occurs in bonds, in which instruments the penalty to be forfeited upon a breach is generally fixed at double the amount of the sum secured by the condition of the bond (e). A contract may merely stipulate that in case of one of the parties doing a certain act he shall pay a fixed sum of money, without any absolute promise on his part respecting such act; the act in question is then not in itself a breach of the contract, but merely the condition precedent on which the money becomes payable, and the only breach of such con (a) Portman v. Middleton, 4 C. B. N. S. 322; 27 L. J. C. P. 231. (b) Per Bramwell, B., Gee v. Lancashire and Yorkshire Ry. Co., 30 L. J. Ex. 11, 16; and see Bramley v. Chesterton, 27 L. J. C. P. 23. (c) Fletcher v. Dyche, 2 T. R. 32; (d) See per Buller, J., Fletcher v. Liquidated tract is in not paying the money (a). A farming lease condamages and penal- tained a covenant that the lessee would not sell or carry ties. away from the demised premises any hay, straw, or manure, without the consent of the lessor, under the increased rent of £10 for every ton so sold or carried away; in an action upon that covenant it was alleged as a breach that the lessee, without the consent of the lessor, did sell and carry away hay and straw from the demised premises; it was held that the breach was not well assigned because the lessee had a right so to carry away the hay and straw upon payment of the increased rent, and the claim of the lessor was not for unliquidated damages for a breach of covenant, but only for the increased rent (b). The above distinctions in contracts with a stipulated sum payable on doing a certain act have been pointed out by Bramwell, B., as follows :-"There are three classes of covenants of this sort: first, covenants not to do particular acts, with a penalty for doing them ;-secondly, covenants not to do an act, with liquidated damages to be paid if the act is done;—and, thirdly, covenants that acts shall not be done, unless subject to a certain payment" (c). Where the contract contains an absolute covenant or promise respecting a certain matter, together with a stipulation for a fixed sum to be paid on a breach, as a penalty or liquidated damages according to the nature of the case, upon a breach of the contract the plaintiff, in general, has an election; he may either bring an action for the fixed sum stipulated for in that event, or bring an action for the specific breach of the covenant or promise without reference to the sum stipulated for, and in the latter form of action the plaintiff may recover the damages assessed by the jury, which may be greater or less than the stipulated sum (d). A lessee covenanted that he would not lop any tree and if he did that (a) Legh v. Lillie, 6 H. & N. 165; Peers, 4 Burr. 2225, 2228; Harrison 30 L. J. Ex. 25. (b) Legh v. Lillie, supra. (c) Legh v. Lillie, 6 H. & N. 165, 171; 30 L. J. Ex. 25, 28. (d) Per Lord Mansfield, Lowe v. v. Wright, 13 East, 343; Pinkerton v. Caslon, 2 B. & Ald. 704; Winter v. Trimmer, 1 W. Bl. 395; and see per Sir E. Sugden, L. J. C.; French v. Macale, 2 Dru. & W. 269, 274. he would pay a penalty of £20 besides the value of the tree; in an action on that covenant it was charged as a breach that the lessee lopped the trees, but no breach was charged in non-payment of the stipulated money; it was held that under the breach as framed the plaintiff was seeking to recover unliquidated damages, and that, upon a verdict in his favour, he was not entitled to recover the stipulated amount, but only the damages found by the jury (a). By the common law a sum of money contracted to be paid Relief upon a breach of the contract was recoverable in full accord- against penalty. ing to the terms of the contract, whether it was in the nature of liquidated damages or of a penalty, and no distinction was made between them; but in the case of a penalty, the Courts of Equity have always exercised a jurisdiction to relieve against the judgment at law upon payment to the plaintiff of the sum really due, or the amount of damages actually sustained by the breach of contract; and the statute law has placed a similar restriction upon the claim of the plaintiff in the Common Law Courts (b). money bonds. Common money bonds are now regulated, in this respect, Common by the statute 4 & 5 Anne, c. 16. By s. 12 of that Act a payment made post diem may be pleaded in bar to an action on such bond, and is as effectual a bar thereof as if the money had been paid at the day and place according to the condition of the bond; and by s. 13 of that Act combined with the Common Law Procedure Act, 1860, 23 & 24 Vict. c. 126, s. 25, payment into Court of the principal and interest due may be made and pleaded in any action upon such bonds (c). Bonds with special conditions, and all agreements and Bonds with covenants with a penal sum to be forfeited on breach, are conditions special (a) Hurst v. Hurst, 4 Ex. 571; 19 L. J. Ex. 410, explained in Legh v. Lillie, 6 H. & N. 165; 30 L. J. Ex. 25. (b) Per Lord Mansfield, Lowe v. Peers, 4 Burr. 2225, 2228; Wyllie v. Wilkes, 2 Doug. 519, 522; see Seton v. Slade, 7 Ves. 265, 274; Astley v. Weldon, 2 B. & P. 346, 350, 354; per Littledale, J., Davies v. Penton, (c) See ante, p. 473. and agree regulated by the statute 8 & 9 Wm. III. c. 11 (a). By that ments with penalty. statute, s. 8, it is enacted "that in all actions upon any bond, or on any penal sum for non-performance of any covenants, or agreements, in any indenture, deed, or writing contained, the plaintiff may assign as many breaches as he shall think fit, and the jury, upon trial of such action, shall assess not only such damages and costs of suit as have heretofore been usually done in such cases, but also damages for such of the said breaches so to be assigned, as the plaintiff upon the trial of the issues shall prove to have been broken, and that the like judgment shall be entered on such verdict as heretofore hath been usually done in such like actions; and if judgment shall be given for the plaintiff on a demurrer, or by confession, or nihil dicit, the plaintiff upon the roll may suggest as many breaches of the covenants and agreements as he shall think fit, upon which shall issue a writ to the sheriff of that county where the action shall be brought, to summon a jury to appear before the justices or justice of assize or nisi prius of that county (or now by the 3 & 4 Wm. IV. c. 42, s. 16, before the sheriff), to "inquire of the truth of every one of those breaches, and to assess the damages that the plaintiff shall have sustained thereby." The section then provides, that in case the defendant shall pay into Court the damages assessed for the breaches, together with the costs of suit, a stay of execution of the said judgment shall be entered upon record; or if the plaintiff shall be paid or satisfied by execution all such damages so assessed together with his costs, the defendant shall be thereupon discharged from the said execution, which shall likewise be entered upon record; "but, notwithstanding, in each case such judgment shall remain as a further security to answer to the plaintiff such damages as may be sustained for further breach of any covenant in the same indenture, deed or writing contained, upon which the plaintiff may have a scire facias upon the said judgment.” Accordingly the judgment is entered in the usual form for the whole penalty and costs, with the addition "that the (a) 1 Wms. Saund. 58; per Bramwell, B., Betts v. Burch, 4 H. & N. 506, 510; 28 L. J. Ex. 267, 269. plaintiff have execution against the defendant of the damages aforesaid to £by the jury assessed according to the statute" (a). But the obligee of a bond cannot recover more than the amount of the penalty upon a breach of the condition of the bond (b). At the common law, the plaintiff, in claiming the penalty, could only assign a single breach, otherwise his pleading was open to the objection of duplicity, because he claimed the same thing, namely, the penalty in respect of each breach (c); but the above statute, 8 & 9 Wm. III. c. 11, enables him to assign as many breaches as he shall think fit. The proceeding under the statute is compulsory; the plaintiff must either assign or suggest breaches, as the case may be, and can recover damages only for the breaches assigned or suggested (d). Where the sum fixed as payable upon breach of the agreement is in its nature a penalty, the parties cannot evade the operation of the statute by calling it “liquidated damages," or by any expression of intention that it should be recovered in full (e). perform ance of con tract with Courts of Equity will, in general, enforce a contract by Specific specific performance or injunction, notwithstanding it is by the same contract agreed that a fixed sum shall be paid upon a breach, unless it appears to be the intention of the penalty. contract that the party is to be at liberty to do the act if he pays the money (ƒ). Thus, Courts of Equity will enforce specifically an agreement embodied in a penal bond, conditioned to make a settlement of land (g); and a contract for the sale of land, with a stipulation that if either party break the contract he shall pay £100 (h); and a covenant not to (a) See Chitty's Forms, 10th ed., 544. (b) Wilde v. Clarkson, 6 T. R. 303; Branscombe v. Scarbrough, 6 Q. B. 13; (c) Manser's case, 2 Co. Rep. 4 a; Cornwallis v. Savery, 2 Burr. 772. (d) Roles v. Rosewell, 5 T. R. 538; Hardy v. Bern, 5 T. R. 636; Walcot v. Goulding, 8 T. R. 126. (e) See Davies v. Penton, 6 B. & C. 216; per Bramwell, B., Betts v. Burch, 4 H. & N. 506, 511; 28 L. J. Ex. 267, 269; Kemble v. Farren, (f) Per Sir E. Sugden, L.C., French (g) Hobson v. Trevor, 2 P. Wms. (h) Howard v. Hopkyns, 2 Atk. 371. |