Kvassay v. Murray

808 P.2d 896 (1991)

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Nature of the Case

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Facts

Kvassay (P) contracted to sell 24,000 cases of baklava to Murray (D) under the name of Great American for $19.00 per case. The sales were to occur over a one-year period. D was P’s only customer. The contract included a provision for liquidated damages of $5 per case remaining to be delivered. Almost immediately, the checks from Great American were dishonored for insufficient funds. Frequently D issued personal checks for the amount due. After 3,000 cases, P stopped producing because D refused to purchase any more product. P sued D. The court ruled that the liquidated damages could not be recovered because the amount was unreasonable. The trial court determined that the amount of damages was improper because P’s enterprise lacked duration, permanency, and recognition. The court compared P’s yearly income of $20,000 with the $105,000 requested and found that the disparity becomes so great as to make the clause unenforceable. P appealed.