liquidated damages clause in New York

2026"An enforceable liquidated damages clause is 'an estimate . . . of the extent of the injury that would be sustained as a result of breach of the agreement,' thereby embodying 'the principle of just compensation for loss'" ( 555 West John Street, LLC v Westbury Jeep Chrysler Dodge, Inc. , 149 AD3d 796, 797, quoting Truck Rent-A-Ctr. v Puritan Farms 2nd , 41 NY2d 420, 424). "'A liquidated damages clause is enforceable if the amount [*3] liquidated bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation'" ( Pool Doctor Mgt.

2026"An enforceable liquidated damages clause is 'an estimate . . . of the extent of the injury that would be sustained as a result of breach of the agreement,' thereby embodying 'the principle of just compensation for loss'" ( 555 West John Street, LLC v Westbury Jeep Chrysler Dodge, Inc. , 149 AD3d 796, 797, quoting Truck Rent-A-Ctr. v Puritan Farms 2nd , 41 NY2d 420, 424). "'A liquidated damages clause is enforceable if the amount [*3] liquidated bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation'" ( Pool Doctor Mgt.

2024Corp. , 4 NY3d at 379 ).

2020Corp. , 4 NY3d 373, 380 [2005], quoting Truck Rent-A-Ctr. v Puritan Farms 2nd , 41 NY2d 420, 425 [1977]; see also Addressing Sys. & Prods., Inc. v Friedman , 59 AD3d 359, 360 [1st Dept 2009] [liquidated damages provision negotiated at arm's length is entitled to deference where parties to agreement are sophisticated businesspeople represented by experienced counsel]).

2017A liquidated damages clause is enforceable “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” (Markham Gardens, L.P. v 511 9th, LLC, 143 AD3d 949, 952 [2016]; see also G3-Purves St., LLC v Thomson Purves, LLC, 101 AD3d 37 , 41 [2012]). “[T]he agreement should be interpreted as of the date of its execution” (Willner v Willner, 145 AD2d 236, 240 [1989]; see also J.

2015As a general rule, a liquidated damages clause is enforceable only if the stipulated amount of damages “bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation” (Truck Rent-A-Ctr. v Puritan Farms 2nd, 41 NY2d 420, 425 [1977]; see G3-Purves St., LLC v Thomson Purves, LLC, 101 AD3d 37 , 41 [2012]).

2025The liquidated damages clause in the lease expressly provided that plaintiff was under no duty to mitigate damages by re-letting the premises and further provided that, even if Levant was evicted, it was to remain liable for its monetary obligations under the lease ( see Holy Props. v Cole Prods. , 87 NY2d 130, 134 [1995]; 172 Van Duzer Realty Corp. v Globe Alumni Student Assistance Assn., Inc. , 24 NY3d 528, 536 [2014]).

2025The liquidated damages clause in the lease expressly provided that plaintiff was under no duty to mitigate damages by re-letting the premises and further provided that, even if Levant was evicted, it was to remain liable for its monetary obligations under the lease ( see Holy Props. v Cole Prods. , 87 NY2d 130, 134 [1995]; 172 Van Duzer Realty Corp. v Globe Alumni Student Assistance Assn., Inc. , 24 NY3d 528, 536 [2014]).

2024"A liquidated damages clause is enforceable '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'" ( Colacino v Colacino , 152 AD3d 486, 487 , quoting Markham Gardens, L.P. v 511 9th, LLC , 143 AD3d 949, 952 ; see Pool Doctor Mgt.

2023"A liquidated damages clause is enforceable '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'" ( Colacino v Colacino , 152 AD3d 486, 487 , quoting Markham Gardens, L.P. v 511 9th, LLC , 143 AD3d 949, 952 ; see United Tit.

2025USA, Inc. v. 498 Seventh, LLC , 7 NY3d 115, 120 [2006]; Truck Rent-A-Ctr. v Puritan Farms 2nd , 41 NY2d 420, 423-25 [1977]).

2018USA, Inc. v 498 Seventh, LLC , 7 NY3d 115 , 120 [2006]).

2023Corp. v Pioneer Auto Parks, 46 NY2d 573, 576-577 [1979]; Hotel Cameron, Inc. v Purcell , 35 AD3d 153, 155 [1st Dept 2006]).

1991Corp. v Pioneer Auto Parks, 46 NY2d 573, 577 [1979]; see also, Wirth & Hamid Fair Booking v Wirth, 265 NY 214, 223 [1934].) The fixed sum of 10% of the purchase price contained in the liquidated damages clause at issue bears no relationship to defendant’s anticipated or actual loss.

2017A liquidated damages clause is enforceable “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” (Markham Gardens, L.P. v 511 9th, LLC, 143 AD3d 949, 952 [2016]; see also G3-Purves St., LLC v Thomson Purves, LLC, 101 AD3d 37 , 41 [2012]). “[T]he agreement should be interpreted as of the date of its execution” (Willner v Willner, 145 AD2d 236, 240 [1989]; see also J.

2008Here, the liquidated damages clause is unenforceable under any circumstances since the damages fixed are disproportionate to the injury, actual loss is susceptible of calculation and, as admitted by Lowe in his deposition, the sole purpose of the subject provision was to improperly secure J.C.’s performance of the agreement by compulsion (see Truck Rent-A-Ctr. v Puritan Farms 2nd, 41 NY2d at 425 ; Evangelista v Ward, 308 AD2d 504, 505 [2003]; Irving Tire Co. v Stage II Apparel Corp., 230 AD2d 772, 773-774 [1996]; Willner v Willner, 145 AD2d at 241 ).

2014As a general matter parties are free to agree to a liquidated damages clause “provided that the clause is neither unconscionable nor contrary to public policy” (Truck Rent-A-Ctr. v Puritan Farms 2nd, 41 NY2d 420, 424 [1977], citing Mosler Safe Co. v Maiden Lane Safe Deposit Co., 199 NY 479, 485 [1910]).

2004Mosler Safe Co. v Maiden Lane Safe Deposit Co. ( 199 NY 479 [1910]) established the general rule that where delays are caused by the mutual fault of the parties to a contract, a liquidated damages clause is abrogated and a claimant must resort to recovery for actual damages.

1989While there is no explicit language in this provision or any other clause of the contract that the liquidated damages was to be the sole remedy, the circumstances surrounding the contract’s execution, as elicited at the hearing, disclose that the parties intended that the liquidated damages clause would preclude specific performance (see, Rubinstein v Rubinstein, 23 NY2d 293 ; Karpinski v Ingrasci, 28 NY2d 45 ).

1988Furthermore, a liquidated damages clause does not bar the equitable relief of specific performance unless there is explicit language that it is to be the sole remedy for a breach (Rubinstein v Rubinstein, 23 NY2d 293 ; Barclay Arms Assocs. v Clemente, 98 AD2d 892 ).

2023Agency, LLC v Surfside-3 Mar., Inc. , 65 AD3d 1134, 1135 ).

2017Agency, LLC v Surfside-3 Mar., Inc., 65 AD3d 1134, 1135 [2009]).

2020SMD Capital Group LLC v EPR Capital LLC, 45 AD3d 314, 314 [1st Dept 2007] [applying the test to determine the enforceability of a liquidated damages clause in a settlement agreement related to defendant’s failure to produce the required books and records at the closing of a real estate transaction as required under a settlement agreement]; Quaker Oats - 11 - - 12 - No. 40 Co v Reilly, 274 AD2d 565, 566 [2d Dept 2000] [holding liquidated damages provision in settlement agreement regarding a mortgage foreclosure was unenforceable as grossly disproportionate and noting that “it is irrelevant that

2017The liquidated damages clause therefore is not “an estimate ... of the extent of the injury that would be sustained” (id. at 424), but rather an unenforceable penalty (see Lager Assoc. v City of New York, 304 AD2d 718, 721-722 [2003]; Quaker Oats Co. v Reilly, 274 AD2d 565, 565-566 [2000]; cf. 172 Van Duzer Realty Corp. v Globe Alumni Student Assistance Assn., Inc., 24 NY3d 528, 536-537 [2014]).

2015Defendant offered no evidence in support of those conclusory assertions, and therefore failed to meet his initial burden of proof (see generally Zuckerman v City of New York, 49 NY2d 557, 562 [1980]).

2015Defendant offered no evidence in support of those conclusory assertions, and therefore failed to meet his initial burden of proof (see generally Zuckerman v City of New York, 49 NY2d 557, 562 [1980]).

2013Moreover, the liquidated damages clause here eliminates the balance due under the Agreement based on minor breaches of the covenant not to compete such that it is an “unconscionable penalty and should not be enforced” (Clubb v ANC Heating & A.C., 251 AD2d 956, 958 [1998]).

2013Moreover, the liquidated damages clause here eliminates the balance due under the Agreement based on minor breaches of the covenant not to compete such that it is an “unconscionable penalty and should not be enforced” (Clubb v ANC Heating & A.C., 251 AD2d 956, 958 [1998]).

2026Serv., Inc. v Board of Mgrs. of the Meadowlands Estates Condominium, Inc. , 216 AD3d at 1119; Ames Linen Service v Katz , 8 AD3d 945, 947).

2026Serv., Inc. v Board of Mgrs. of the Meadowlands Estates Condominium, Inc. , 216 AD3d at 1119; Ames Linen Service v Katz , 8 AD3d 945, 947).

2023Corp. v Pioneer Auto Parks, 46 NY2d 573, 576-577 [1979]; Hotel Cameron, Inc. v Purcell , 35 AD3d 153, 155 [1st Dept 2006]).

2023Corp. v Pioneer Auto Parks, 46 NY2d 573, 576-577 [1979]; Hotel Cameron, Inc. v Purcell , 35 AD3d 153, 155 [1st Dept 2006]).

2022On the contrary, the parties acknowledged in the agreement that it was difficult to quantify damages and that plaintiff could assess a cancellation fee against defendant "as liquidated damages and not as a penalty" ( compare Turner-Schraeter v Brighton Travel Bur ., 258 AD2d 393, 393 [1st Dept 1999] ["the nature of this kosher Passover vacation at a resort hotel in Puerto Rico, including two complete Seders, was such as to justify a liquidated damages clause based on a sliding scale culminating in forfeiture of 100% of the purchase price for cancellations made, as here, within 14 days of depar

2022On the contrary, the parties acknowledged in the agreement that it was difficult to quantify damages and that plaintiff could assess a cancellation fee against defendant "as liquidated damages and not as a penalty" ( compare Turner-Schraeter v Brighton Travel Bur ., 258 AD2d 393, 393 [1st Dept 1999] ["the nature of this kosher Passover vacation at a resort hotel in Puerto Rico, including two complete Seders, was such as to justify a liquidated damages clause based on a sliding scale culminating in forfeiture of 100% of the purchase price for cancellations made, as here, within 14 days of depar

2017On a prior appeal, we affirmed Supreme Court’s order denying that motion, concluding that “defendant failed to meet his initial burden of establishing as a matter of law that the amount of liquidated damages does not bear a reasonable relation to plaintiff’s actual damages” (Great Lakes Motor Corp. v Johnson, 132 AD3d 1390, 1391 [4th Dept 2015]).

2017Such a clause is enforceable if, at the time the agreement is made, “the amount of actual loss is incapable or difficult of precise estimation” and the stipulated amount of damages “bears a reasonable proportion to the probable loss” (Truck Rent-A-Ctr. v Puritan Farms 2nd, 41 NY2d 420, 425 [1977]; see Great Lakes Motor Corp. v Johnson, 132 AD3d 1390, 1391 [4th Dept 2015]).

2017Contrary to the Supreme Court’s conclusion, this rule applies even in the absence of a liquidated damages clause in the contract (see Palmiotto v Mark, 145 AD2d 549 [1988]; see also Collar City Partnership I v Redemption Church of Christ of Apostolic Faith, 235 AD2d 665, 665-667 [1997]; Chateau D’ If Corp. v City of New York, 219 AD2d 205, 208-209 [1996]; Fingerhut v Kralyn Enters., 71 Misc 2d 846 [Sup Ct, NY County 1971], affd 40 AD2d 595 [1972]), and does not require a showing of actual damages (see Maxton Bldrs. v Lo Galbo, 68 NY2d at 378 ).

1996(Supra, at 550; see, Fingerhut v Kralyn Enters., 71 Misc 2d 846, 857-858 , af fd 40 AD2d 595 , lv denied 31 NY2d 644 .) Here, the case for denying the defaulting vendee a recovery is even more compelling since the parties did not eliminate the liquidated damages clause from the contract.

2020The lease also contains an integration clause stating that the lease is "the entire and only agreement between the parties." Thus, because the lease specifically provides that plaintiff is entitled to certain money damages in the event that defendants vacate the premises in breach of the agreement—the very injury that serves as the predicate for plaintiff's action—we conclude that plaintiff has an adequate remedy at law and, moreover, that plaintiff has not suffered irreparable harm because the liquidated damages clause was intended as the sole remedy for such a breach ( cf. Karpinski v Ingras

1989While there is no explicit language in this provision or any other clause of the contract that the liquidated damages was to be the sole remedy, the circumstances surrounding the contract’s execution, as elicited at the hearing, disclose that the parties intended that the liquidated damages clause would preclude specific performance (see, Rubinstein v Rubinstein, 23 NY2d 293 ; Karpinski v Ingrasci, 28 NY2d 45 ).

2024"A liquidated damages clause is enforceable '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'" ( Colacino v Colacino , 152 AD3d 486, 487 , quoting Markham Gardens, L.P. v 511 9th, LLC , 143 AD3d 949, 952 ; see Pool Doctor Mgt.

2023"A liquidated damages clause is enforceable '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'" ( Colacino v Colacino , 152 AD3d 486, 487 , quoting Markham Gardens, L.P. v 511 9th, LLC , 143 AD3d 949, 952 ; see United Tit.

2025The liquidated damages clause in the lease expressly provided that plaintiff was under no duty to mitigate damages by re-letting the premises and further provided that, even if Levant was evicted, it was to remain liable for its monetary obligations under the lease ( see Holy Props. v Cole Prods. , 87 NY2d 130, 134 [1995]; 172 Van Duzer Realty Corp. v Globe Alumni Student Assistance Assn., Inc. , 24 NY3d 528, 536 [2014]).

2025The liquidated damages clause in the lease expressly provided that plaintiff was under no duty to mitigate damages by re-letting the premises and further provided that, even if Levant was evicted, it was to remain liable for its monetary obligations under the lease ( see Holy Props. v Cole Prods. , 87 NY2d 130, 134 [1995]; 172 Van Duzer Realty Corp. v Globe Alumni Student Assistance Assn., Inc. , 24 NY3d 528, 536 [2014]).

2020Corp. , 4 NY3d 373, 380 [2005], quoting Truck Rent-A-Ctr. v Puritan Farms 2nd , 41 NY2d 420, 425 [1977]; see also Addressing Sys. & Prods., Inc. v Friedman , 59 AD3d 359, 360 [1st Dept 2009] [liquidated damages provision negotiated at arm's length is entitled to deference where parties to agreement are sophisticated businesspeople represented by experienced counsel]).

2016Further, the fact that, approximately two years after the date of the breach, the plaintiff ultimately sold the certificates to a third party for a higher price than the amount set forth in the purchase agreement does not bar the plaintiff from recovering under the liquidated damages clause (see Addressing Sys. & Prods., Inc. v Friedman, 59 AD3d at 359-360 ; see also White v Farrell, 20 NY3d 487, 499 [2013]).

2017Contrary to the Supreme Court’s conclusion, this rule applies even in the absence of a liquidated damages clause in the contract (see Palmiotto v Mark, 145 AD2d 549 [1988]; see also Collar City Partnership I v Redemption Church of Christ of Apostolic Faith, 235 AD2d 665, 665-667 [1997]; Chateau D’ If Corp. v City of New York, 219 AD2d 205, 208-209 [1996]; Fingerhut v Kralyn Enters., 71 Misc 2d 846 [Sup Ct, NY County 1971], affd 40 AD2d 595 [1972]), and does not require a showing of actual damages (see Maxton Bldrs. v Lo Galbo, 68 NY2d at 378 ).

1996(Supra, at 550; see, Fingerhut v Kralyn Enters., 71 Misc 2d 846, 857-858 , af fd 40 AD2d 595 , lv denied 31 NY2d 644 .) Here, the case for denying the defaulting vendee a recovery is even more compelling since the parties did not eliminate the liquidated damages clause from the contract.

2017Contrary to the Supreme Court’s conclusion, this rule applies even in the absence of a liquidated damages clause in the contract (see Palmiotto v Mark, 145 AD2d 549 [1988]; see also Collar City Partnership I v Redemption Church of Christ of Apostolic Faith, 235 AD2d 665, 665-667 [1997]; Chateau D’ If Corp. v City of New York, 219 AD2d 205, 208-209 [1996]; Fingerhut v Kralyn Enters., 71 Misc 2d 846 [Sup Ct, NY County 1971], affd 40 AD2d 595 [1972]), and does not require a showing of actual damages (see Maxton Bldrs. v Lo Galbo, 68 NY2d at 378 ).

1996(Supra, at 550; see, Fingerhut v Kralyn Enters., 71 Misc 2d 846, 857-858 , af fd 40 AD2d 595 , lv denied 31 NY2d 644 .) Here, the case for denying the defaulting vendee a recovery is even more compelling since the parties did not eliminate the liquidated damages clause from the contract.

2005In any event, the liquidated damages clause is enforceable, since the provision represented a bargained-for element in a multi-faceted agreement, the amount of actual loss was difficult, if not impossible to calculate, and the damage amount fixed (the equivalent of one month’s rent under the lease) was not unreasonable in view of “ ‘the surrounding circumstances and the apprehension of damage that existed in the minds of the parties at the time the contract was made.’ (36 NY Jur 2d, Damages, § 156, at 267.)” (LeRoy v Sayers, 217 AD2d 63, 69 [1995]; see also Parsons & Whittemore v 405 Lexington

2002The liquidated damages clause was not an unenforceable penalty since the damages could not be anticipated in 1983, when the lease was executed (see LeRoy v Sayers, 217 AD2d 63, 69 ; Vernitron Corp. v CF 48 Assoc., 104 AD2d 409 ), and the amount fixed is not “plainly or grossly disproportionate to the probable loss” (see Truck Rent-A-Ctr. v Puritan Farms 2nd, 41 NY2d 420, 425 ).

2026Serv., Inc. v Board of Mgrs. of Meadowland Estates Condominium, Inc. , 216 AD3d 1117, 1119; JMD Holding Corp. v Congress Fin.

2026Serv., Inc. v Board of Mgrs. of Meadowland Estates Condominium, Inc. , 216 AD3d at 1119, quoting Colacino v Colacino , 152 AD3d 486, 487 [internal quotation marks omitted]).

2017Contrary to the Supreme Court’s conclusion, this rule applies even in the absence of a liquidated damages clause in the contract (see Palmiotto v Mark, 145 AD2d 549 [1988]; see also Collar City Partnership I v Redemption Church of Christ of Apostolic Faith, 235 AD2d 665, 665-667 [1997]; Chateau D’ If Corp. v City of New York, 219 AD2d 205, 208-209 [1996]; Fingerhut v Kralyn Enters., 71 Misc 2d 846 [Sup Ct, NY County 1971], affd 40 AD2d 595 [1972]), and does not require a showing of actual damages (see Maxton Bldrs. v Lo Galbo, 68 NY2d at 378 ).

2004It does not follow, though, that if the liquidated damages clause is unenforceable the down payment must be returned.” ( 219 AD2d at 209 .) Significantly, in its holding the Court in Chateau D’lf also recognized the unique nature of a real estate down payment and the vitality of the Maxton/Lawrence rule.