26 BULLBTIlSr 1106, U. S. DEPARTMENT OF AGRICULTURE. 



point,^^ although the term used by the parties has been held to have 

 some weight.^'' 



In a certain case the defendant hired a yacht for four months for 

 $10,000 and agreed in the event he failed to return it to pay $75,000, 

 which was stated to be the value of the yacht for the purpose of 

 the contract. The yacht was destroyed, and suit was brought for 

 the recovery of the $76,000. The Supreme Court affirmed a judg- 

 ment for this amount, and in doing so said in part : 



Whether a particular stipulation to pay a sum of mouey is to be treated 

 as a penalty or as an agreed ascertainment of damages, is to be determined by 

 the contract, fairly construed, it being the duty of the court always, where 

 the damages are uncertain and have been liquidated by an agreement, to 

 enforce the contract.^ 



In 1904 an agreement was entered into for the erection of two 

 laboratory buildings for the Department of Agriculture in Wash- 

 ington. The contract called for the completion of the buildings in 

 30 months, and for a delay of 101 days beyond the contract period 

 the Government deducted $200 a day, the amount stipulated in the 

 contract as liquidated damages, a total of $20,200. Later suit was 

 brought against the Government for the recovery of this amount. 

 In holding that no recovery could be had, the Supreme Court of the 

 United States said:^^ 



Courts will endeavor, by a construction of the agreement which the parties 

 have made ,to ascertain what their intention was when they inserted such a 

 stipulation for payment, of a designated sum or upon a designated basis, 

 for a breach of a covenant of their contract, precisely as they seek for the 

 intention of the parties in other respects. When that intention is clearly 

 ascertainable from the writing, effect will be given to the provision, as freely 

 as to any other, where the damages are uncertain in nature or amount or are 

 diffiGult of ascertainment, or lohere the amount stipulated for is not so ex- 

 travagant, or disproportionate to the amount of property loss, as to show 

 that compensation was not the object aimed at or as to imply fraud, mistake, 

 circumvention or oppression. There is no sound reason why persons competent 

 and free to contract may not agree upon this subject as fully as upon any 

 other, or why their agreement, when fairly and understandingly entered into 

 with a view to just compensation for the anticipated loss, should not be en- 

 forced. 



The number of cases relative to liquidated damage provisions in- 

 volving cooperative associations is not large. In a California case ®° 

 the by-laws of the association, which were signed by the members, 

 provided that members should pay 50 cents per box as liquidated 

 damages for every box of fruit which was not marketed through the 

 association. The defendant marketed 568 boxes outside the asso- 



8" Northwestern Terra Cotta Co. v. Caldwell, 234 Fed. 491, 496. 

 "Tayloe v. Sandiford, 7 Wheat. 13. 



88 Sun Printing & Publishing Ass'n v. Moore, 183 U. S. 642. 



89 Wise V. United States, 249 U. S. 361. 



»" Anaheim Citrus Fruit Ass'n v. Yeoman, (Calif.) 197 Pac. 959. 



