381 N.Y.S.2d 459, 462—463, 344 N.E.2d 391, 395—396, supra;
Wirth & Hamid Fair Booking v. Wirth, 265 NY 214, 223, 192 N.E. 297,
301, supra; Mosler Safe Co. v. Maiden Lane Safe Deposit Co., 199 NY 479, 485,
93 N.E. 81, 83, supra.)
As was stated eloquently long ago, to permit parties, in their unbridled discretion, to
utilize penalties as damages, "would lead to the most terrible oppression in pecuniary
dealing"'. (Hoag v. McGinnis, 22 Wend. 163, 166; see also 425 Matter of
Associated Gen. Contrs., NY State Ch. (Savin Bros.), 36 NY2d 957, 961—962,
373 N.Y.S.2d 555, 558—559, 335 N.E.2d 859, 861—862, (dissenting
opn.).)"
The rule is now well established. "A contractual provision fixing damages in
the event of breach will be sustained 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. (City of Rye v. Public Serv. Mut. Ins. Co., 34 NY2d 470, 473,
358 N.Y.S.2d 391, 393, 315 N.E.2d 458, 459, supra; Wirth & Hamid Fair
Booking v. Wirth, 265 NY 214, 223, 192 N.E. 297, 301, supra; Curtis v.
Van Bergh, 161 NY 47, 55 N.E. 397; Ward v. Hudson Riv. Bldg. Co., 125
NY 230, 26 N.E. 256, supra; Restatement, Contracts, s 339.) If, however, the
amount fixed is plainly or grossly disproportionate to the probable loss, the provision
calls for a penalty and will not be enforced. (Equitable Lbr. Co. v. IPA Land Dev.
Corp., 38 NY2d 516, 521—522, 381 N.Y.S.2d 459, 461—462, 344
N.E.2d 391, 394—395, supra; Seidlitz v. Auerbach, 230 NY 167,
172—173, 129 N.E. 461, 462—463; 14 N.Y.Jur., Damages, s 155.)
In interpreting a provision fixing damages, it is not material whether the parties
themselves have chosen to call the provision one for liquidated damages', or have styled