Kvassay v. Murray
Kansas Court of Appeals
808 P.2d 896 (1991)
Michael Kvassay (plaintiff) contracted to sell 24,000 cases of baklava exclusively to the Murrays (defendants), with a clause entitling Kvassay to $5.00 in liquidated damages per undelivered case if the Murrays repudiated or refused delivery - a figure based on Kvassay's pre-contract calculation that he'd profit $3.55 to $4.29 per case. After only 3,000 cases were delivered, the Murrays refused to accept any more, and Kvassay sued for $105,000 under the liquidated-damages clause. The trial court voided the clause as an unreasonable penalty, reasoning Kvassay had only earned about $20,000 the year before and awarding him a windfall five times that seemed disproportionate.
Whether a liquidated damages clause is void as an unreasonable penalty because it would award the claimant far more than his typical annual income.