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An agreement for liquidated damages can only be when there is an engagement for the performance of certain acts, the not doing of which would be an injury to one of the parties; or to guard against the performance of acts which, if done, would also be injurious. In such cases an estimate of the damages may be made by a jury, or by a previous agreement between the parties, who may foresee the consequences of a breach of the engagement, and stipulate accordingly. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v.) It differ from a penalty, because the latter is a forfeiture from which the defaulting party can be relieved. Where it is doubtful whether it was intended as a penalty or not, and a certain debt or damages, less than the penalty, is made payable on the face of the instrument. Where the agreement was made, evidently, for the attainment of another object, to which the sum specified is wholly collateral. The civil law appears to agree with these principles. It is to be observed, that the sum fixed upon will be considered as liquidated damages, or a penalty, according to the intent of the parties, and the more use of the words "penalty," &c "forfeiture," or "liquidated damages," will not be regarded is at all decisive of the question, if the instrument discloses, upon the whole, a different intent.
Where the agreement contains several matters, of different degrees of importance, and yet the sum named is payable for the breach of any, even the least. Where the contract is not under seal, and the damages are capable of being certainly known and estimated.