O.C.G.A. § 13-6-3 (2019)

Annotations

JUDICIAL DECISIONS Law specifically refers to penalties in bonds and is not applicable to rental contracts. Fulton County v. Atlanta Envelope Co., 90 Ga. App. 623, 83 S.E.2d 866 (1954). In doubtful cases, courts favor construction which holds stipulated sum to be a penalty, and limits recovery for breach to amount of damages actually shown, rather than a liquidation of damages. Southeastern Land Fund, Inc. v. Real Estate World, Inc., 237 Ga. 227, 227 S.E.2d 340 (1976). Test as to whether provision enforceable as liquidated damages. - In deciding whether a contract provision is enforceable as liquidated damages, the court makes a tripartite inquiry to determine if the following factors are present: first, the injury caused by the breach must be difficult or impossible of accurate estimation; second, the parties must intend to provide for damages rather than for a penalty; and third, the sum stipulated must be a reasonable preestimate of the probable loss. Thorne v. Lee Timber Prods., Inc., 158 Ga. App. 226, 279 S.E.2d 521 (1981). Distinction between penalty and liquidated damages. - See Sanders & Ables v. Carter, 91 Ga. 450, 17 S.E. 345 (1893); Heard v. Dooly County, 101 Ga. 619, 28 S.E. 986 (1897). When bond sets penalty below actual damages, surety not liable for more than amount

stipulated. - When penalty in bond is for certain sum, less than actual amount of damages, surety is not liable for more than that sum with interest. Westbrook v. Moore, 59 Ga. 204 (1877); Scarrat v. Cook Brewing Co., 117 Ga. 181, 43 S.E. 413 (1903). Award of damages by arbitrator equal to actual damages will be upheld although contract provided for penalty. Georgia Land & Cotton Co. v. Flint, 35 Ga. 226 (1866). Damages accurately expressed in monetary terms to be distinguished from those which are not. - In determining the validity of a liquidated damages provision in a contract, it is important to distinguish damages which are difficult to accurately determine in monetary terms from those damages which can be accurately established, albeit via a complicated procedure. Thorne v. Lee Timber Prods., Inc., 158 Ga. App. 226, 279 S.E.2d 521 (1981). Cited in Butler v. Moore, 68 Ga. 780, 45 Am. R. 508 (1882); Lytle v. Scottish Am. Mtg. Co., 122 Ga. 458, 50 S.E. 402 (1905); Martin v. Lott, 144 Ga. 660, 87 S.E. 902 (1916); Caldwell Lumber Co. v. Wright, 22 Ga. App. 411, 96 S.E. 391 (1918); Standard Motors Fin. Co. v. O’Neal, 35 Ga. App. 727, 134 S.E. 843 (1926); Martin v. Citizen’s Bank, 177 Ga. 871, 171 S.E. 711 (1933); National Manufacture & Stores Corp. v. Dekle, 48 Ga. App. 515, 173 S.E. 408 (1934); Miazza v. Western

Union Tel. Co., 50 Ga. App. 521, 178 S.E. 764 (1935); Sizemore v. Beeler, 94 Ga. App. 414, 94 S.E.2d 773 (1956); Sanders v. Carney, 118 Ga. App. 576, 164 S.E.2d 856 (1968); Concrete Materials of Ga., Inc. v. Smith & Plaster Co., 127 Ga. App. 817, 195 S.E.2d 219

(1973); Military Armament Corp. v. ITT Terryphone Corp., 134 Ga. App. 694, 215 S.E.2d 724 (1975); Hughes Motor Co. v. First Nat’l Bank, 136 Ga. App. 295, 220 S.E.2d 782 (1975); Gibson v. Sheriff, 155 Ga. App. 578, 271 S.E.2d 710 (1980).

RESEARCH REFERENCES Am. Jur. 2d. - 17 Am. Jur. 2d, Contracts, §§ 499, 500. C.J.S. - 25 C.J.S., Damages, § 195. ALR. - A provision in land contract for pecuniary forfeiture or penalty by a party in default as affecting the right of the other party to specific performance, 32 ALR 584; 98 ALR 877. Provision in land contract for pecuniary forfeiture or penalty upon default of the purchaser as affecting the vendor’s right to maintain an action for the purchase price, 32 ALR 617. Valuation clause in carrier’s contract as limit, or as ratio, of recovery in case of partial loss, 41 ALR 450. Measure of damages for purchaser’s breach of contract to buy real property, 52 ALR 1511. Stipulation as to amount recoverable for breach of contract against entering certain business or employment as a provision for liquidated damages or for a penalty, 59 ALR 1135. Stipulation as to damages in case of breach of contract for purchase of goods to be manufactured by other party, as penalty or liquidated damages, 79 ALR 188. Measure of damages for breach of contract for sale or purchase of equipment, supplies of gasoline, etc., used in operation of gasoline filling station, 81 ALR 99. Provisions by which upon breach of contract the entire amount remaining unpaid thereof shall become immediately due as

one for penalty or for liquidated damages, 104 ALR 223. Provision in lease for pecuniary forfeiture where lease is prematurely terminated as one for liquidated damages, 106 ALR 292. Liability of building or construction contractor for liquidated damages for breach of time limit where work is delayed by contractee or third person, 152 ALR 1349. Provision in land contract for forfeiture of payments as one for liquidated damages or penalty, 6 ALR2d 1401; 4 ALR4th 993. Validity and construction of provision for liquidated damages in contract with cooperative marketing association, 12 ALR2d 130. Allowance of attorneys’ fees over and above penal sum stated in private contractor’s bond, 59 ALR2d 469. Validity and construction of ‘‘no damage’’ clause with respect to delay in building or construction contract, 74 ALR3d 187. Contractual liquidated damages provisions under UCC Article 2, 98 ALR3d 586. Measure and elements of damages for breach of contract to lend money, 4 ALR4th 682. Modern status of defaulting vendee’s right to recover contractual payments withheld by vendor as forfeited, 4 ALR4th 993. Recovery based on tortfeasor’s profits in action for procuring breach of contract, 5 ALR4th 1276. Contractual provision for per diem payments for delay in performance as one for liquidated damages or penalty, 12 ALR4th 891.