2015 NY Slip Op 50089

Citation: 2015 NY Slip Op 50089
Jurisdiction: New York (state)
Source: Official source
Original Source: https://www.nycourts.gov/reporter/3dseries/2015/2015_50089.htm ↗

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it as a penalty. (Wirth & Hamid Fair Booking v. Wirth, 265 NY 214, 225,
192 N.E. 297, 302, 1019, supra; Ward v. Hudson Riv. Bldg. Co., 125 NY 230,
234, 26 N.E. 256, supra.) Such an approach would put too much faith in form
and too little in substance; and should be interpreted as of the date of its making and not
as of the date of its breach. (e.g., Seidlitz v. Auerbach, 230 NY 167, 172, 129
N.E. 461, 462, supra.)"

In enforcing the liquidated damages clause, the Court found "no significance to the
fact that the liquidated damages clause appears on the preprinted form portion of the
agreement. The agreement was fully negotiated and the provisions of the form, in many
other respects, were amended. There is no indication of any disparity of bargaining
power or of unconscionability. The provision for liquidated damages related reasonably
to potential harm that was difficult to estimate and did not constitute a disguised
penalty". Id at 427.

In the commercial context, in Pryamid Centres and Co., v. Kenny Shoe Corp., 244
AD2d 625, 663 N.Y.S.2d 711 (AD3d Dept., 1997) it was held that a commercial lease
that provides that the [*20]landlord is entitled to double
the fixed rent or the average annual percentage rent, whichever is greater, was
unenforceable. According to the court, the provision was intended to coerce defendant's
performance rather than compensate plaintiff's for breach of contract. As such, "we agree
with Supreme Court that the liquidated damages provisions of paragraph 6.02 is an
unreasonable penalty that was disproportionate to any subsequent loss suffered by the
plaintiffs." See also an interesting case, namely, Babylon Village Equities v.
Mitchell, 11 Misc 3d 84, 816 N.Y.S.2d 279 (AT, 2d & 11th Jud. Dist., 2006) in