s. 3.

Part

CH. XXIV. upon a farm in the ordinary course of husbandry (o), but expenditure after being let into possession has been held performPerformance. ance (p), and in Nunn v. Fabian (q), the payment of one quarter's Payment of rent at an increased rate verbally stipulated, was held to be such part performance of a contract for a lease by a tenant as to entitle him to a decree for a lease at such increased rate.

rent. Nunn v. Fabian.

Enforcement
of negative
stipulation.'

Lumley v.
Wagner.

Whitwood

Chemical Co. v. Hardman.

SECT. 4.-Indirect Specific Performance.

It has been already observed, that specific performance will not be decreed of contracts for personal service on the ground that the Court is unable to supervise their execution. In one wellknown class of cases, however, the Court indirectly enforces specific performance of a contract to serve a particular person by restraining the party who has entered into such a contract from serving any one else. The party, of course, may refrain from negotiating again with his first intended employer, or such first intended employer may treat what has been done as a repudiation of the contract of employment, but, for practical purposes, the injunction would in most cases have the effect of a direct decree for specific performance of the original contract.

The leading case upon the subject is Lumley v. Wagner (r), in which case the defendant, Johanna Wagner, had agreed to sing at the plaintiff's theatre a certain number of nights, and not use her talent at any other theatre during that period, without the written authority of the plaintiff. Afterwards she agreed for a larger payment to sing during that period for Mr. Gye at Covent Garden, and abandon the agreement with the plaintiff. Lord St. Leonards, C., granted an injunction, restraining the defendant from singing for Mr. Gye, and there is no doubt that a similar negative stipulation against acting elsewhere than is promised is enforceable by injunction (s); but in the absence of a negative stipulation an injunction in this class of cases will not be granted. So it was laid down by the Court of Appeal in Whitwood Chemical Co. v. Hardman (t), where the manager of a manufacturing company

(0) See Brennan v. Bolton (1842), 2 Dr. & War. 349.

(p) See Williams v. Evans (1875), 32 L. T. 360.

(q) Nunn v. Fabian (1865), L. R., 1 Ch. 35, per Lord Cranworth, C.

(r) Lumley v. Wagner (1852), 1 De G. M. & G. 604, App.

(s) See, e.g., Grimston v. Cuningham, [1894] 1 Q. B. 125.

(t) Whitwood Chemical Co. v. Hardman, [1891] 2 Ch. 416, C. A., reversing Kekewich, J., and disapproving Montagu v. Flockton (1873), L. R., 16 Eq. 189, where Malins, V.-C., misapprehending Lumley v. Wagner, restrained an actor from performing otherwise than as under an engagement containing no negative stipulation.

agreed to give, during the specified term, "the whole of his time to the company's business," and it was held that the company were not entitled to restrain the manager from giving, during the term, part of his time to a rival company. Similarly, a stipulation which is negative merely in form, but affirmative in substance, will not be enforced by injunction (u).

But in very rare cases injunctions have been granted without negative words, as for instance to prevent the use of a ship for other purposes than those covered by a charter-party (x).

(u) Davis v. Foreman, [1894] 3 Ch. 654. In this case an employer had agreed not to require a manager to leave his employment except for misconduct or breach of the contract of employment, and the manager failed to obtain an injunction restraining the employer from

acting on a notice terminating the
employment.

(x) De Mattos v. Gibson (1859), 4
De G. & J. 276, cited without disapproval
by Kay, L.J., in Whitwood Chemical Co.
v. Hardman, ante (t).

CH. XXIV.

s. 4. Indirect Specifio Performance.

C.C.

45

CHAPTER XXV.

DAMAGES FOR BREACH OF CONTRACT.

[See also Mayne on Damages, 7th ed., A.D. 1903; Sedgwick on Damages (Amer.),

7th ed., A.D. 1880.]

Meaning of terms penalty and liquidated damages.

Rules as to what is a

penalty.

Astley v.
Weldon.

SECT. 1.-Penalty or Liquidated Damages.

(a) Meaning of Terms.

WHERE the parties to a contract mutually agree that, in the event of a breach, the one shall pay to the other a specified sum of money, it not unfrequently becomes a question of some difficulty whether such sum is to be considered as in the nature of a penalty-that is, merely as a sum intended to cover any damage which may be actually incurred by a breach of the contract; or as liquidated damages-that is as the sum to be paid in that event, without reference to the extent of the injury sustained.

(b) What is a Penalty.

It has been said to be very difficult to lay down any general principle in cases of this kind; but in Astley v. Weldon the rule was stated thus, viz., that where articles contain covenants for the performance of several things, and then one large sum is stated at the end, to be paid upon breach of performance, that must be considered as a penalty; but that where it is agreed that, if a party do such a particular thing, such a sum shall be paid by him, there the sum stated may be treated as liquidated damages (a).

(a) Per Heath, J., Astley v. Weldon (1801), 2 B. & P. 346, 353; 5 R. R. 618. The distinction is between a sum payable on one event, and a sum intended to

secure the performance of several matters. See per Cur., Sparrow v. Paris (1862), 7 H. & N. 599.

CH. XXV.

s. 1. Penalty or Liquidated Damages.

Astley

Weldon.

In that case it appeared, that the parties had entered into an agreement, by which the defendant engaged to perform at the plaintiff's theatres for a term of years; that the plaintiff agreed to pay a weekly salary and the defendant's travelling expenses; that the defendant agreed to attend rehearsals, and to pay such ev. fines as should be inflicted for non-observance of the regulations of the theatres, &c.; "and lastly, it was thereby agreed between the parties, that either of them neglecting to perform that agree. ment according to the tenor and effect, and true intent and meaning thereof, should pay to the other of them the full sum of 2001. of lawful money of Great Britain, to be recovered in any of his Majesty's Courts of Record at Westminster." And the Court held, that the sum mentioned in the agreement was in the nature of a penalty, and was not liquidated damages.

contract for

Kemble v.

Furren.

In Kemble v. Farren (b), the Court went so far as to treat an Contract for liquidated express general stipulation for liquidated damages as a stipulation damages for a penalty only, and to apply the rule of Astley v. Weldon to construed as it. There the defendant engaged to act as principal comedian penalty. at Covent Garden Theatre for four seasons, commencing with October, 1828; and in all things to conform to the regulations of the theatre. The plaintiff agreed to pay the defendant 31. 6s. 8d. every night on which the theatre should be open for theatrical performances during the ensuing four seasons; and that the defendant should be allowed one benefit night during each season, on certain terms therein specified. And the agreement contained a clause, that if either of the parties should neglect or refuse to fulfil the said agreement or any part thereof, or any stipulation therein contained, such party should pay to the other the sum of 1,000l., to which sum it was thereby agreed that damages sustained by any such omission, neglect, or refusal, should amount; which sum was thereby declared by the said parties to be liquidated and ascertained damages, and not a penalty or penal sum, or in the nature thereof. The breach alleged was, that the defendant refused to act during the second season: and, at the trial, the jury gave a verdict for the plaintiff for 7501. damages, subject to a motion for increasing them to 1,000l. if the Court should be of opinion that, upon this agreement, the plaintiff was entitled to the whole sum claimed, as liquidated damages. The Court decided that the verdict should stand, and the rule for increasing the damages be discharged; and Tindal, C.J., in delivering judgment, said: "It is, undoubtedly, difficult to suppose any words more precise and explicit than those used in the agreement; the same declaring not only (b) Kemble v. Farren (1829), 6 Bing. 141.

s. 1.

Penalty or Liquidated Damages.

Contract for liquidated damages

construed as contract for penalty. Kemble v. Farren.

CH. XXV. affirmatively that the sum of 1,000l. should be taken as liquidated damages, but negatively also, that it should not be considered as a penalty, or in the nature thereof. And if the clause had been limited to breaches which were of an uncertain nature and amount, we should have thought it would have had the effect of ascertaining the damages upon any such breach at 1,000l.; for we see nothing illegal or unreasonable in the parties, by their mutual agreement, settling the amount of damages, uncertain in their nature, at any sum upon which they may agree. In many cases, such an agreement fixes that which is almost impossible to be accurately ascertained; and, in all cases, it saves the expense and difficulty of bringing witnesses to that point. But, in the present case, the claim is not so confined; it extends to the breach of any stipulation by either party. If, therefore, on the one hand, the plaintiff had neglected to make a single payment of 31. 6s. 8d. per day; or, on the other hand, the defendant had refused to conform to any usual regulation of the theatre, however minute or unimportant, it must have been contended that the clause in question, in either case, would have given the stipulated damages of 1,000l. But that a very large sum should become immediately payable, in consequence of the non-payment of a very small sum, and that the former should not be considered as a penalty, appears to be a contradiction in terms; the case being precisely that in which Courts of Equity have always relieved, and against which Courts of Law have, in modern times, endeavoured to relieve, by directing juries to assess the real damages sustained by the breach of the agreement. It has been argued at the bar, that the liquidated damages apply to those breaches of the agreement only, which are in their nature uncertain, leaving those which are certain to a distinct remedy, by the verdict of a jury. But we can only say, if such is the intention of the parties, they have not expressed it; but have made the clause relate, by express and positive terms, to all breaches of every kind. We cannot, therefore, distinguish this case, in principle, from that of Astley v. Weldon."

Rule deducible

therefrom.

The above was about twenty years afterwards stated to be a correct exposition of the law on this subject (c); and the settled rule with reference thereto, pronounced by the Exchequer Chamber, to be:-that the Courts will hold that the words "liquidated damages" are not to be taken according to their obvious meaning, in any case where the doing or omitting to do several things of various degrees of importance is secured by the sum named; and where, notwithstanding the language used, it (c) Per Parke, B., Galsworthy v. Strutt (1848), 1 Exch. 659, 665.