Massman Construction Co. v. City Council of Greenville
Citation
147 F.2d 925 (5th Cir. 1945)
Facts
Stub — to be completed.
Issue
Stub — to be completed.
Holding
Stub — to be completed.
Rule
A liquidated damages clause is enforceable if: (1) damages were difficult to estimate at the time of contracting, and (2) the amount stipulated was a reasonable forecast of compensatory damages, not a penalty; the clause is judged at the time of contract formation, not after breach.
Significance
Classic formulation of the two-part test for enforcing liquidated damages clauses; emphasizes prospective analysis at contracting time rather than comparing the clause amount to actual damages suffered.