City of Rye v. Public Serv. Mut. Ins. Co.
Court of Appeals of New York
315 N.E.2d 458 (1974)
Rye (plaintiff) required developer Public Service Mutual Insurance Co. (defendant) to post a $100,000 bond and pay $200 per day for each day past an April 1971 deadline that six luxury apartment buildings remained incomplete, despite lacking any statutory authority for imposing such a bond. Public Service could not secure financing due to market changes and finished 500 days late; when Rye sued for the bond's full value, the trial court denied summary judgment and the appellate court affirmed, finding the bond penal in nature.
Whether, when damages flowing from a breach of contract are difficult to ascertain, a provision in the contract fixing damages in advance will be upheld if the amount is a reasonable measure of the anticipated probable harm.