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    LAMBERT V FOX

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    Dan Marco Griarte
    The plaintiff and defendant were the largest shareholders in a new corporation, and they signed an agreement not to sell their shares for one year without permission. However, the defendant sold his shares to a competitor of the corporation. The plaintiff is suing the defendant to enforce the penalty clause in their agreement. The court ruled that penalty clauses in contracts will be enforced, and the plaintiff does not need to prove damages occurred, as avoiding that was the purpose of the penalty clause. The court found for the plaintiff.

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    LAMBERT V FOX

    Uploaded by

    Dan Marco Griarte
    41 views2 pages
    The plaintiff and defendant were the largest shareholders in a new corporation, and they signed an agreement not to sell their shares for one year without permission. However, the defendant sold his shares to a competitor of the corporation. The plaintiff is suing the defendant to enforce the penalty clause in their agreement. The court ruled that penalty clauses in contracts will be enforced, and the plaintiff does not need to prove damages occurred, as avoiding that was the purpose of the penalty clause. The court found for the plaintiff.

    Original Title

    LAMBERT v FOX

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    The plaintiff and defendant were the largest shareholders in a new corporation, and they signed an agreement not to sell their shares for one year without permission. However, the defendant sold his shares to a competitor of the corporation. The plaintiff is suing the defendant to enforce the penalty clause in their agreement. The court ruled that penalty clauses in contracts will be enforced, and the plaintiff does not need to prove damages occurred, as avoiding that was the purpose of the penalty clause. The court found for the plaintiff.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    41 views2 pages

    LAMBERT V FOX

    Uploaded by

    Dan Marco Griarte
    The plaintiff and defendant were the largest shareholders in a new corporation, and they signed an agreement not to sell their shares for one year without permission. However, the defendant sold his shares to a competitor of the corporation. The plaintiff is suing the defendant to enforce the penalty clause in their agreement. The court ruled that penalty clauses in contracts will be enforced, and the plaintiff does not need to prove damages occurred, as avoiding that was the purpose of the penalty clause. The court found for the plaintiff.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    LAMBERT v.

    FOX

     the plaintiff and the defendant are the two largest stockholders in the new corporation called
    John R. Edgar & Co., Incorporated.

     A few days after the incorporation was completed plaintiff and defendant entered into the
    following agreement:

    Therefore, the undersigned mutually and reciprocally agree not to sell, transfer, or otherwise
    dispose of any part of their present holdings of stock in said John R. Edgar & Co. Inc., till
    after one year from the date hereof.

    Either party violating this agreement shall pay to the other the sum of one thousand (P1,000)
    pesos as liquidated damages, unless previous consent in writing to such sale, transfer, or
    other disposition be obtained.

     Notwithstanding this contract the defendant Fox on October 19, 1911, sold his stock in the
    said corporation to E. C. McCullough of the firm of E. C. McCullough & Co. of Manila, a
    strong competitor of the said John R. Edgar & Co., Inc.

     This sale was made by the defendant against the protest of the plaintiff and with the warning
    that he would be held liable under the contract hereinabove set forth and in accordance with
    its terms. In fact, the defendant Foz offered to sell his shares of stock to the plaintiff for the
    same sum that McCullough was paying them less P1,000, the penalty specified in the
    contract.

     The appellee urges that the plaintiff cannot recover for the reason that he did not prove
    damages, that a penalty, as such, will not be enforced and that the party suing, in spite of the
    penalty assigned, will be put to his proof to demonstrate the damages actually suffered by
    reason of defendants wrongful act or omission.

    RULING:

     penalties provided in contracts of this character are enforced . It is the rule that
    parties who are competent to contract may make such agreements within the
    limitations of the law and public policy as they desire, and that the courts will enforce
    them according to their terms

     The only case recognized by the Civil Code in which the court is authorized to
    intervene for the purpose of reducing a penalty stipulated in the contract is when the
    principal obligation has been partly or irregularly fulfilled and the court can see that the
    person demanding the penalty has received the benefit of such or irregular performance. In
    such case the court is authorized to reduce the penalty to the extent of the benefits
    received by the party enforcing the penalty.

     In this jurisdiction, there is no difference between a penalty and liquidated damages,


    so far as legal results are concerned. Whatever differences exists between them as a
    matter of language, they are treated the same legally. In either case the party to whom
    payment is to be made is entitled to recover the sum stipulated without the necessity
    of proving damages. Indeed one of the primary purposes in fixing a penalty or in
    liquidating damages, is to avoid such necessity.

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