## Facts

- Henry Rubinstein and Leo Rubinstein, distant relatives, jointly owned equal shares in two operating corporations (a grocery business and a delicatessen) and two corporations holding real property used by the delicatessen.
- After business disagreements, they executed a written separation agreement on July 20, 1965, each represented by separate counsel.
- The agreement valued each operating business at $70,000 and required Henry to choose one business immediately; Leo would receive the other.
- If the chosen business was the delicatessen, the associated realty would also transfer under a valuation mechanism; the realty was not a significant negotiation point.
- Each party deposited $5,000 in escrow with their respective attorneys to be applied at closing; any surplus would be returned.
- The agreement stated that if either party defaulted or refused to consummate the transaction, the defaulting party’s $5,000 would be forfeited as liquidated damages and paid to the other party.
- Henry promptly elected to take the delicatessen; closing was contemplated within one week, but the transaction was not consummated due to disputes over details.
- Henry sued for specific performance; Leo initially counterclaimed for specific performance but later argued the liquidated-damages clause was an adequate and exclusive remedy barring equitable relief.

## Issues

1. Whether a liquidated-damages clause requiring forfeiture of a $5,000 deposit upon default automatically precludes specific performance absent explicit exclusive-remedy language.

## Decision

- The Court of Appeals of New York reversed the determination that the liquidated-damages provision was the sole remedy.
- The court held that the agreement’s liquidated-damages clause did not, by itself, bar specific performance.
- The court allowed Henry to pursue specific performance because the contract did not clearly state that liquidated damages were the exclusive remedy.

## Legal Principles

- A liquidated-damages clause will not be construed to exclude other remedies, including specific performance, unless the contract clearly provides that stipulated damages are the sole and exclusive remedy for breach.
- Contractual remedies are generally cumulative; exclusivity is not inferred from silence.
- A forfeiture-as-liquidated-damages provision commonly sets a predetermined monetary consequence for nonclosing but does not necessarily reflect an intent to displace equitable enforcement of the bargain.

## Conclusion

The court held that the presence of a liquidated-damages deposit forfeiture provision did not automatically limit the nonbreaching party to money damages; without clear exclusive-remedy language, specific performance remained available to enforce the business-division agreement.


Rubinstein v. Rubinstein, 23 N.Y.2d 293 (N.Y. 1968)