AGREEMENTS.

Freeholds.

said (purchaser) [his heirs or assigns], for pro- PURCHASES. ducing the originals thereof. And it is also agreed that like copies of all such deeds and writings as shall relate to other property of the said (vendor) of inferior value, and shall be delivered to the said (purchaser) [his heirs or assigns], shall, if required by the said (vendor) [his heirs or assigns], be made and delivered to him or them, at his or their own expense, and a like covenant for the production of the originals thereof, [at his and their like expense,] be executed by the said (purchaser) [his heirs or assigns].

way of liqui

dated damages Payable by

by

either party on nonperformance

And for a due performance of the several sti- Sum of £ pulations and agreements, matters and things hereinbefore contained, on the part and behalf of the said (vendor) and (purchaser) respectively, of agreement. [and of their respective heirs, executors, and administrators,] each of them the said parties doth hereby bind himself, his heirs, executors, and administrators, unto the other of them, [his executors, administrators, and assigns], in the sum of £ , to be taken and considered as liquidated and settled damages (30) between them, and not as in terrorem, or by way of penalty.

and where not.

(30) It is usual to insert in contracts of an executory kind, Nomine pœnæ, a clause stipulating for the payment of a sum of money either where proper by way of penalty (or nomine pœnæ, as it is generally called), or for liquidated or acknowledged damages, in case of failure by either party in the performance of his part of the contract; but this should not be done indiscriminately, as it may impede instead of furthering the ends in view. It will be proper therefore to make some observations on this head, with a view of enabling the solicitor to judge in what cases the one, and in what the other is to be preferred.

PURCHASES.

AGREEMENTS

Freeholds.

Penalties considered in terrorem in equity, and specific performance decreed notwithstanding.

IN WITNESS whereof the said (vendor) and (purchaser) have hereunto interchangeably set

And first it is to be remarked, that penalties are in most cases considered by the courts of equity as inserted in terrorem only, and therefore those courts will, notwithstanding, decree a specific performance if applied to for that purpose, whenever the case is such as to authorize an equitable interference, and will not allow the party by forfeiture of the penalty to avoid performance of his agreement, Jenkyns v. Keymis, 1 Lev. 150, 237. 1 Ch. Ca. 103. Howard v. Hopkins, 2 Atk. 371. Hopson v. Trevor, 1 Stra. 533. 2 P. Wms. 191, and the cases to which the jurisdiction of the court of equity extends, are all those where the redress afforded by the courts of law (in the shape of damages or otherwise), is an inadequate remedy, and justice, according to the spirit of the agreement and the intention of the parties, can be administered only by a specific execution of the terms of the contract; and on the other hand, that court will stay proceedings on an action brought for damages, if the party is ready to perform the agreement in specie. See Hopson v. Trevor, 2 P. Wms. 191, and cases there cited, also Goring v. Nash, 3 Atk. 186. In these cases therefore, a penal or damnatus clause is unavailable; but where the subject of the agreement is such that damages would be an adequate compensation for the breach of contract, Buxton v. Lister, 3 Atk. 383. Underwood v. Kitchener, 1 Ves. 279. Nutbrowne v. Thornton, 10 Ves. 161. Mason v. Armitage, 13 Ves. 37, or where for any other cause the legal remedy is more effective or expeditious, Kent v. Brandon, 8 Ves. 163; either a penal sum or else a sum by way of ascertained damages will be proper. So when the party who may require redress for breach of contract, is a mere volunteer; i. e., when the agreement by the other party is not supported by any good or valuable consideration, or where the amount of damages sustained by nonperformance is wholly uncertain, (as in the refusal to refer a matter to arbitration,) a like clause will be proper, because in such cases a court of equity will not interfere, but on failure by either party will consider the option to pay the penalty as of the essence of the contract, Magrane v. Archbold, 1 Dowe 109; and the clause of penalty gives to the party an election to proceed either on the contract or for the penalty, See Lowe v. Pears, 4 Burr. 2228, where per Mansfield, Ch. J. "the difference

their respective hands, the day and year first PURCHASES. above written.

between covenants in general and covenants secured by a penalty or forfeiture is, that in the latter case the obligee has his election either to bring an action of debt for the recovery of the penalty (after which he cannot resort to the covenant, because the penalty is to be a satisfaction for the whole), or if he do not choose to go for the penalty, he may proceed upon the covenant and recover more or less than the penalty toties quoties." And see accord. Astley v. Waldon, 2 Bos. and Pul. 346. Harrison v. Wright, 13 East 343. And also Bird v. Randall, 1 Blac. 373.

With respect to where a sum by way of nomine pœnæ, and where a sum by way of liquidated damages is proper, the following distinctions are to be taken, viz. where the nature of the contract is such as to admit of successive breaches, as to pay a sum of money by periodical payments, or to perform any other acts from time to time or at different periods, there a nomine pœnæ seems the proper clause, because on the first breach, judgment is recoverable for the whole of the penal sum, upon which execution may be issued from time to time on any subsequent breach, Harrison v. Wright, 13 East 347, without the necessity of resorting to a fresh action for every successive breach, which the aggrieved party would otherwise be driven to if his remedy were confined to the covenant of the other party.

But where the nature of the agreement is such that it can admit of but one breach, as to pay a sum in the gross or do any other thing at any one time or within a given period, then a sum by way of liquidated damages is most proper, as it prevents the necessity of a reference to a jury to ascertain the amount of the damages actually sustained, this having been previously done by the mutual agreement of the parties, in which case a court of equity will not in general relieve him against the payment, Small v. Fitzwilliam, Prec. Ch. 102. Woodward v. Giles, 2 Vern. 119. Roy v. Duke of Bedford, 2 Atk. 194. Rolfe v. Patison, 6 Brow. P. C. 470. Ponsonby v. Adams, ib. 417. Street v. Rigby, 6 Ves. 818. But when the sum is stipulated to be paid by way of liquidated damages, care must be taken to avoid mentioning it as a "penal sum," for the word "penalty" precludes the court from considering it as an VOL. I.

C

AGREEMENTS.

Freeholds.

Where nomine pœnæ proper,

and where a

sum by way of liquidated damages.

PURCHASES. acknowledged debt.

AGREEMENTS.

Freeholds.

Where in the case of a purchase.

632.

Smith v. Dickenson, 3 Bos. and Pul.

With respect to the present case, i. e., an agreement for the purchase of an estate, the clause for liquidated damages seems to be most proper on the part of the vendor, as it prevents the difficulty he might have in proving the sustension of any actual loss by a failure on the part of the purchaser to complete his purchase; but on behalf of the purchaser there seems to be this distinction, that if his object in making the purchase is for his own residence, to procure himself a qualification, or if, for any other reason, the particular estate in question would be intrinsically valuable to him, a simple nomine pœnæ clause is preferable, as it enables him either to compel a specific performance of the contract against the vendor, or proceed for damages as he may think proper, whereas the liquidated damage clause would preclude him from calling for a specific performance; but where his only object is to invest his money in land generally, or to sell again at an increased price, the nomine pœnæ clause may be equally adequate to his purpose, as enabling him to recover such actual damages as he may have sustained.

* * As to what it behoves the solicitors of the vendor and purchaser respectively to do on behalf of their clients from the commencement of the contract to its completion or abandonment, See ante, INTRODUCTION, Sec. I. and II.

PURCHASES.

AGREEMENTS.

No. II.

A shorter Form of an Agreement for the Purchase of a Freehold Estate of Inheritance.

Variations where the Timber upon the Estate is to be separately valued.

Where the Consideration for the Purchase is an Annuity.

Where it is a transfer of Money in the Funds.

Where part of the Purchase-money is to remain on the security of the Premises.

Where a Moiety or other portion only of the Estate is purchased.

Where the Premises are subject to a Mortgage or other Incumbrance.

Where the Contract is entered into by an Agent on behalf of either Party.

Freeholds, short form.

(1) If the contract be entered into by the attorney, or other Purchase, &c. agent of the vendor or purchaser, say,

"BETWEEN (the vendor) for himself, his heirs, executors, and administrators, by A. B. of &c. his attorney or agent lawfully constituted in this behalf."

by an agent.