## Facts

- Monument builders contracted with a widow to improve a cemetery lot, including an imported marble monument, for approximately $18,788.
- The contract required completion of non-monument work within four months and the entire project within twelve months.
- The contract stated completion within the time limits was required “under a forfeiture of ten dollars per day for each and every day’s delay.”
- The contractors timely ordered and purchased the Italian marble, but shipment was delayed for nearly two years due to transportation constraints, without bad faith.
- After the monument arrived, the contractors installed it according to specifications; no quality defects were claimed.
- The delay totaled about 782 days, and the widow withheld payment, seeking to deduct $7,820 under the $10-per-day clause from the remaining balance (about $11,887).
- The contractors sued to recover the unpaid contract price.

## Issues

1. Whether a contract term imposing a “forfeiture of ten dollars per day” for delayed completion is enforceable as liquidated damages or void as a penalty under California law.

## Decision

- The California Supreme Court affirmed judgment for the contractors.
- The Court held the $10-per-day “forfeiture” clause was a penalty, not liquidated damages.
- Because the clause was unenforceable, the widow could not deduct the asserted amount from the contract price, and the contractors could recover the unpaid balance.

## Legal Principles

- A stipulated-sum provision is unenforceable if it operates as a penalty rather than a reasonable pre-estimate of compensation for breach.
- Contract language characterizing a charge as a “forfeiture” supports finding the provision was intended to compel performance, not to estimate loss.
- Liquidated damages are more likely to be enforced when actual damages from breach are impracticable or extremely difficult to ascertain and the amount is reasonably related to anticipated harm.
- Where no compensable monetary loss from delay is shown and the daily amount is disproportionate to any probable injury, the provision is treated as punitive and void.

## Conclusion

The court held that the contract’s $10-per-day “forfeiture” for late completion functioned as a punitive measure rather than compensation for measurable loss, so it was an unenforceable penalty and could not reduce the contractors’ recovery of the remaining contract price.


Muldoon v. Lynch, 66 Cal. 536, 6 P. 417 (Cal. 1885)