by reason of such breach...are extinguished and no action can be brought for the return of the
deposit" (id).
He goes on to state that "...if a deposit is determined to be a penalty, rather than liquidated
[*5]damages, then it is merely security, or indemnity, for
performance" and in the event a tenant "breaches his agreement, the landlord is not confined to
the deposit for his remedy" (id. p. 573).
The commentary observes that when determining the nature of the deposit as either a penalty
or liquidated damages "the Courts will invariably interpret the lease as of its date, and notice of
its breach" (id. p. 754).
In Pattern Jury Instructions, 2d Edition, 2008, Vol. 2, at the chapter concerning
landlord-tenant at PJI 6:2 dealing with liquidated damage clauses the commentary stated "...a
lease provision fixing damages in the event of a breach is enforceable...a landlord is precluded
from recovering actual and compensatory damages sustained as a result of the breach of the
lease, even though the stipulated sum may be less than the actual damages" (id. pps. 1156-1157).
In LeRoy v. Sayers, 217 AD2d 63, the Court stated at pages 69-70:
On the issue of the enforceability of the lease's liquidated damages clause, we agree with the
IAS Court's determination that the clause provides for a penalty. As the Court of Appeals has
noted, "[l]iquidated damages constitute the compensation which, the parties have agreed, should
be paid in order to satisfy any loss or injury flowing from a breach of their contract. (Wirth &
Hamid Fair Booking v. Wirth, 265 NY 214, 223.) In effect, a liquidated damage provision is
an estimate, made by the parties at the time they enter into their agreement, of the extent of the