Truck Rent-A-Center, Inc. v. Puritan Farms 2nd, Inc.
| Truck Rent-A-Center, Inc. v. Puritan Farms 2nd, Inc. | |
| Court | |
|---|---|
| Citation | 41 N.Y.2d 420, 393 N.Y.S.2d 365, 369, 361 N.E.2d 1015, 1018 (1977) |
| Date decided | |
Facts: Defendant leased trucks from Plaintiff. K had a liquidated damages clause. The amount awarded by the clause was more than the remaining value of the lease.
Issue: Is the clause enforceable?
Holding: Held for the Plaintiff. The clause is enforceable.
Rule: "A contractual provision fixing damages in the event of breach will be sustained if the amount liquidated bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation. . . . If, however, the amount fixed is plainly or grossly disproportionate to the probable loss, the provision calls for a penalty and will not be enforced."
If the three conditions are not all satisfied, a liquidated damages clause will not be enforced.
- Actual damages are difficult to estimate at the time the K was made.
- Liquidated damages are a reasonable estimate of the anticipated loss.
- Liquidated damages are not grossly disproportionate to the probable loss (No Punitive Damages)
