injury that would be sustained as a result of breach of the agreement." (Truck Rent-A-Ctr. v
Puritan Farms 2d, 41 NY2d 420, 423-424.) Contracting parties may agree to such clauses
provided they are neither unconscionable nor contrary to public policy. (Supra, at 424;
Mosler Safe Co. v Maiden Lane Safe Deposit Co., 199 NY 479, 485.) The utility of
liquidated damages clauses is manifest in those cases where calculation of the amount of actual
loss is difficult, if not impossible; in such case, the parties may agree in advance of the breach or
default as to the amount of damages to be paid thereupon, rather than requiring proof and an
assessment thereof in some future proceeding. (Truck Rent-A-Ctr. v Puritan Farms 2d, supra
, at 424.) In determining the enforceability of a liquidated damages clause, courts should
consider "the surrounding circumstances and the apprehension of damage that existed in the
minds of the parties at the time the contract was made." (36 NY Jur 2d, Damages, Section 156, at
267.)
A liquidated damages provision "will not be enforced if it is against public policy to do so
and public policy is firmly set against the imposition of penalties or forfeitures for which there is
no statutory authority." (Truck Rent-A-Ctr. v Puritan Farms 2d, 41 NY2d , supra
, at 424). "Generally whenever the damages flowing from a breach of a contract can be
easily established or where the damages fixed are plainly disproportionate to the injury the
stipulated sum will be treated as a penalty." (Seidlitz v Auerbach, 230 NY 167,
173-174.) The purpose of such a clause is not to provide just compensation but, rather to secure
performance "by the compulsion of the very disproportion." (Truck Rent-A-Ctr. v Puritan