Doan v. Rogan

Citations

• 79 Ohio St. (N.S.) 372

Syllabus

<p>Written contract to form partnership — To be succeeded by corporation■ — General conduct of corporation set forth — Contract does not lack consideration — And is enforceable, when — Stipulation for liquidated damages for breach — Not construed as penalty, when.</p> <p>1. A contract in writing by which the parties agree to form a present partnership for the establishment of a mercantile business, to be succeeded afterward by a corporation of which the parties are to be directors, and the general conduct of which is set forth in the agreement, one of the parties to furnish the capital and devote a portion of his time to the conduct of the business, and the other to give his entire and undivided attention to the business for a period of three years, and to receive a fixed salary therefor, also to share in the profits, but to be protected by the one who is to furnish the capital from any liability for debts incurred, is not invalid as lacking consideration or mutuality, but is an enforceable contract.</p> <p>2. Whether a stipulation providing for liquidated damages for the breach of a contract is to be construed as liquidated damages or as a penalty depends upon the intention of the parties to be gathered from the entire instrument. While courts will not construe contracts in a way authorizing recovery for liquidated damages simply because the parties have used that term in the agreement, yet, where parties to a contract otherwise valid have in terms provided that the damages of the injured party by a breach on the part of the other of some particular stipulation, or for a total breach, shall be a certain sum specified as liquidated damages, and it is apparent that damages from such breach would be uncertain as to amount and difficult of proof, and the contract taken as a whole is not so manifestly unreasonable and disproportionate as to justify the conclusion that it does not truly express the intention of the parties, but is consistent with the conclusion that it w