162 THE LAW AFFECTING ENGINEERS 



is of more interest to the lawyer than the engineer. Never- 

 theless the engineer may be asked by his employer to fix the 

 amounts which are to be inserted in the penalty clause, and it 

 is therefore important that he should know the way in which 

 the Court will construe the clause in case of a dispute. 



3. Penalty or liquidated damages. In the ordinary case, a 

 contract for large works stipulates for a fixed sum to be paid 

 daily or weekly for delay in completion. This sum may be 

 described as a " penalty " or as " liquidated damages " ; but the 

 use of the term " liquidated damages " is not conclusive, for if 

 the Court is of opinion that the sum stipulated for is unreason- 

 able it will grant relief (Wallis v. Smith, 1882, 21 Ch. D. 243). 

 Nevertheless, it is always prudent in drawing the clause to 

 insert the words : " The same to be regarded as liquidated 

 damages and not as a penalty"; for the term used by the 

 parties is not altogether disregarded (Willson v. Love,'l896, 

 1 Q. B. 626. See also the cases cited, 5, post). (For the 

 definition of " liquidated damages," see Chap. VI., 34, ante.) 



Where a contract for an electric lighting installation pro- 

 vided that the work should be " completed in all respects on 

 or before the 26th November, 1898, subject to a penalty of 15 

 per day, and the plant by the 10th December subject to a 

 penalty of 3 per day for every day the work remains un- 

 finished to the satisfaction of the authorities or engineers," 

 it was held that, although the word "penalties" was used, 

 the amounts accrued owing to the default of the contractor 

 were in fact liquidated damages. (White v. Arthur, 1901, 84 

 L. T. 594.) 



4. Danger of imposing too large a penalty. It is dangerous 

 to provide for the forfeiture of too large a sum ; for if it is so 

 large as to make it absurd for the Court to hold that it was to 

 be liquidated damages for quite a small breach of contract, the 

 clause will be altogether disregarded, and the contractor will 

 only be made to pay what is fair and equitable. (See Law v. 

 Local Board of Redditch, 1892, 1 Q. B. 127, at p. 130.) 



The danger of imposing the same penalty for each of a 

 number of distinct breaches is well illustrated by the case of 

 In re Newman, Ex p. Capper (1876, 4 Ch. D. 724). There the 

 contractors were under contract to complete certain works by 

 a day certain. In default they were to forfeit 10 to the 



