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Equitable Lumber Corp. v. IPA Land Development Corp.

New York Court of Appeals

381 N.Y.S.2d 459 (1976)

Facts

Equitable Lumber Corporation (plaintiff) entered into a sales contract with the president of IPA Land Development Corporation (defendant). The president was also an experienced New York lawyer. The contract’s liquidated-damages clause stipulated, in italics, that if IPA defaulted on payments, IPA would pay damages equal to 30 percent of whatever a collections attorney managed to recover on Equitable’s behalf. IPA breached the contract, and Equitable successfully sued it for damages. However, the trial judge ruled that an unmodified award of liquidated damages would be disproportionate given the minimal work Equitable’s attorney actually performed. The judge lowered the damages award from 30 to 11 percent. On appeal, an intermediate court raised that amount somewhat but otherwise affirmed the trial court. Equitable appealed to the New York Court of Appeals.

Rule of Law

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Issue

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Holding and Reasoning (Gabrielli, J.)

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A "yes" or "no" answer to the question framed in the issue section;
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The procedural disposition (e.g., reversed and remanded, affirmed, etc.).

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