Yockey v. Horn
880 F.2d
945 (7th Cir.1989).
Facts: The defendant made a contract with the plaintiff with
a provision not to participate in any litigation against the plaintiff. The fixed damages for breaking this provision
were set at $50,000. The defendant
subsequently participated in a third party’s litigation against the plaintiff. The plaintiff sued the defendant for the
$50,000 and won at trial.
Issue: Is the liquidated damages clause enforceable?
Rule: A liquidated damages clause is enforceable if the
damage amount is “reasonable either at the time of contracting” or, if the
injured party suffers actual damages, “at the time of injury”.
Analysis: The court finds that the damages estimated in the contract
were reasonable at the time of contract formation and would be difficult to
evaluate in the event of a breach.
Conclusion: The judgment was affirmed.