was enforceable. "Liquidated 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,
192 N.E. 297, 301.) 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 injury that would
be sustained as a result of breach of the agreement. (5 Williston, Contracts (3d ed.),
§776, [*19]p. 668.) Parties to a contract have the
right to agree to such clauses, provided that the clause is neither unconscionable nor
contrary to public policy. (Mosler Safe Co. v. Maiden Lane Safe Deposit Co.,
199 NY 479, 485, 93 N.E. 81, 83.) Provisions for liquidated damage have value in those
situations where it would be difficult, if not actually impossible, to calculate the amount
of actual damage. In such cases, the contracting parties may agree between themselves as
to the amount of damages to be paid upon breach rather than leaving that amount to the
calculation of a court or jury. (14 NY Jur., Damages, s 155, pp. 4—5.)"
On the other hand, "liquidated damage provisions 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. (City of Rye v. Public
Serv. Mut. Ins. Co., 34 NY2d 470, 472—473, 358 N.Y.S.2d 391,
392—393, 315 N.E.2d 458, 459.) It is plain that a provision which requires, in the
event of contractual breach, the payment of a sum of money grossly disproportionate to
the amount of actual damages provides for penalty and is unenforceable. (e.g.,
Equitable Lbr. Corp. v. IPA Land Dev. Corp., 38 NY2d 516, 521—522,