CUMMINGS PROPERTIES, LLC v. DARRYL C. HINES., 201 N.E.3d 295 (2022)

Citation: CUMMINGS PROPERTIES, LLC v. DARRYL C. HINES., 201 N.E.3d 295 (2022)
Parent Document: CUMMINGS PROPERTIES, LLC v. DARRYL C. HINES., 201 N.E.3d 295 (2022)
Jurisdiction: Massachusetts (state)
Effective Date: 2022-12-05
Original Source: https://www.courtlistener.com/opinion/10271850/cummings-properties-llc-v-darr... ↗

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Liquidated damages that are "'grossly disproportionate to a reasonable estimate of actual damages' made at the time of contract formation" are invalid on grounds of public policy. Id. at 880, quoting Lynch v. Andrew, 20 Mass. App. Ct. 623, 628 (1985). Even where the stipulated sum is "designated in the contract as liquidated damages," "[i]f from the nature of the transaction and the attending circumstances it appears that the contract is a cloak to hide a sum of money out of proportion to and differing greatly from the actual damages ordinarily arising from a breach, then the sum named . . . is a penalty." A-Z Servicenter, Inc. v. Segall, 334 Mass. 672, 675 (1956). See Restatement (Second) of Contracts § 356(1) (1981) ("A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty").

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