should execute a counterpart and pay the expenses; for the mutual performance of which contract the parties bound themselves in the penalty of 500l. to be recovered against the defaulter as liquidated damages (b).

On the other hand, if there be a contract consisting of one or more stipulations, the breach of which cannot be measured, then the contract must be taken to have meant that the sum agreed on was to be liquidated damages, and not a penalty (c). And so it was held where a covenant for dissolution of partnership between attorneys contained an agreement, "that the said J. S. will not within the next seven years carry on the business of an attorney within fifty miles. from E., nor interfere with, solicit, or influence the clients of the late copartnership, and if the said J. S. shall in any respect infringe the present covenant, he the said J. S. shall pay the sum of 10007. as liquidated damages, and not by way of penalty" (d).

4. There never was any doubt that if there be only one event Where there is upon which the money is to become payable, and there is no only one event. adequate means of ascertaining the precise damage that may result to the plaintiff from the breach of the contract, it is perfectly competent to the parties to fix a given amount of

(b) Boys v. Ancell, 5 Bingh. N. C. 390; Davies v. Penton, 6 B. & C. 216; Charrington v. Laing, 6 Bingh. 242; Beckham v. Drake, 8 M. & W. 846.

(e) Per Parke, B., Atkyns v. Kinnier, 4 Exch. 776, 783. [So where a specified increased rent was to become payable on breach of any of the cove nants in the lease; Smith v. Ryan, 9 Ir. L. R. 235.]

(d) Galsworthy v. Strutt, 1 Exch. 659; Rawlinson v. Clarke, 14 M. & W. 187. [So Reynolds v. Bridge, 6 E. & B. 528; 26 L. J. Q. B. 12. And where the form of the bond given upon the sale of a medical practice, was that if any of certain prohibited things were done, and the sum of 300l. paid, then the bond should be void; that sum was held recoverable upon an infraction of the agreement; Mercer v. Irving, E. B. & E. 563; 27 L. J. Q. B. 291. But it does not follow in every such case that a man may elect to break his engagement by paying for his violation of the contract. Therefore, where the condition of a bond given by a managing clerk to an attorney, after reciting an agreement that the clerk should give a bond not to practise within a specified distance, was that if he did so practise, and should pay the sum of 1000l., the bond should be void, a Court of Equity, carrying out the real intention of the parties, granted an injunction to prevent him from practising; Howard v. Woodward, 34 L. J. Ch. 47. But of course this was upon the plaintiff's undertaking not to sue upon the bond. A man cannot have his liquidated damages and his writ of injunction also; Carnes v. Nesbitt, 7 H. & N. 158; 30 L. J. Ex. 348. In the ordinary case of payment of a deposit to be forfeited on the purchaser's failure to perform his contract, the vendor may retain it on such failure, though his damage be not so great; Hinton v. Sparkes, L. R. 3 C. P. 161; 37 L. J. C. P. 81].

Use of the words "liquidated damage" not conclusive.

In cases or doubt, inclination in favour of penalty.

compensation, in order to avoid the difficulty (e). And this, even though the contract be one of indemnity, as an insurance policy, and it can be proved that the plaintiff has not been damnified to the amount estimated (ƒ).

5. The cases cited above (g) have overruled the doctrine laid down in Reilly v. Jones (h), that the mere use of the words" liquidated damages " is decisive against the sum being held to be a penalty. The principle is, that although the parties may have used the term "liquidated damages," yet if the Court can see upon the whole of the instrument taken together, that there was no intention that the entire sum should be paid absolutely on non-performance of any of the stipulations of the deed, they will reject the words and consider it as being in the nature of a penalty only (i).

6. Where it is doubtful from the terms of the contract, whether the parties meant that the sum should be a penalty or liquidated damages, the inclination of the Court will be to view it as a penalty (k). But the mere largeness of the amount fixed will not, per se, be sufficient reason for holding it to be so (1).

(e) Per Cresswell, J., Sainter v. Ferguson, 7 C. B. 730; Fletcher v. Dyche, 2 T. R. 32. [Sparrow v. Paris, 7 H. & N. 594; 31 L. J. Ex. 137. A stipulation for interest on purchase-money, at a rate increasing with the delay in payment, has been held not to be in the nature of a penalty to secure punctual payment; Herbert v. Salisbury and Yeovil Ry. Co., L. R. 2 Eq. 221. But if mortgage interest is 4 per cent., with an agreement that if it is not paid punctually 5 per cent. shall be paid, that is in the nature of a penalty against which equity will relieve; Ib., per Lord Romilly.]

(f) Irving v. Manning, 6 C. B. 391.

(g) Ante, p. 101.

(h) 1 Bingh. 302.

(i) Per Parke, B., Green v. Price, 13 M. & W. 701; affirmed, 16 M. & W. 346; Cole v. Sims, 23 L. J. Ch. 258. [The use of the expression "penalty," or "liquidated damages," significs nothing, the real intention of the parties having to be ascertained. See Sparrow v. Paris, 7 H. & N. 594; 31 L. J. Ex. 137; per Bramwell, B., Betts v. Burch, 4 H. & N. at p. 510; 28 L. J. Ex. at p. 271; and Dimech v. Corlett, 12 Moo. P. C. 299.]

(k) Barton v. Glover, Holt, N. P. C. 43; Crisdee v. Bolton, 3 C. & P. 243. (1) Ibid., and per Lord Eldon, Astley v. Weldon, 2 B. &. P. 351; [and per Lord Romilly, Herbert v. Salisbury and Yeovil Ry. Co., L. R. 2 Eq. 221.]

THE next point of a preliminary nature which requires notice, is the right to recover interest. This right exists in a great number of actions, but I have thought it better, for the sake of clearness, to place the whole subject before the reader in a single view.

Interest is recoverable, either upon the original cause of action, or again upon the amount of the judgment. It may also arise either at common law, or by statute.

I. First, then, as to interest at common law upon the Interest at comoriginal cause of action.

It is now established as a general principle, that interest is allowed by law only upon mercantile securities, or in those cases where there has been an express promise to pay interest, or where such promise is to be implied from the usage of trade, or other circumstances (a).

mon law.

notes.

1. As to the case of bills of exchange and promissory notes, On bills and this rule has never been doubted. Some distinctions, however, prevail as to the time from which interest is to be computed,

and the rate at which it is to be calculated, where any part of the contract has been entered into abroad. This subject will

be discussed at length, post, Chapter viii.

2. Cases in which there has been an express agreement in Express agree

words to allow interest, are, of course, quite clear. Where, ment.

however, A. and B., who had jointly and severally granted an annuity, mutually agreed each to pay one half of it, and

(a) Per Abbott, C. J., Higgins v. Sargent, 2 B. & C. 349.

Implied agree

ment.

Compound interest.

Where payment to be made by bill.

to indemnify the other against all actions, suits, charges, damages, demands, sums of money and expenses, which either of them might incur through the default of the other in paying his just share; it was held that one who had paid more than his just share was not entitled at law to interest (as interest and not as damages) upon the surplus. The Court said, "The contract is to pay the money and damages; there is no express contract to pay interest, nor any course of dealing from which such a contract can be implied" (b).

3. Where parties have acquiesced in a course of dealing, in which interest was exacted, they will be assumed to have contracted to pay it (c); and in this way even compound interest may be charged, as long as the accounts remain open (d). But although compound interest may be charged, by means of half-yearly rests, where such a practice is assented to, it is not sufficient to show that such has been the usage of the plaintiff, without proving that the defendant was acquainted with it (e). And even in the case of merchants' accounts where this system prevails the plaintiff can recover no more than the principal upon the last balance, in which there is no new account, and no new transaction, however long it may be before the action is brought to recover the balance; and the jury cannot give interest, still less compound interest, upon the balance ().

Again, where a party undertakes to pay a debt by means of a bill or note, which would, if given, bear interest, and fails to give the note, the debt will bear interest from the time the bill or note would have been due (g). But the contract to pay by bill must be clearly made out. Therefore, where the

(b) Bell v. Free, 1 Swanst. 90.

(c) Ex parte Williams, 1 Rose, 399.

(d) Bruce v. Hunter, 3 Camp. 467; Newell v. Jones, 4 C. & P. 124; Eaton v. Bell, 5 B. & A. 34; Fergusson v. Fyfe, 8 Cl. & F. 121; [Mosse v. Salt, 32 Beav. 269; 32 L. J. Ch. 756].

(e) Dawes v. Pinner, 2 Camp. 486, n.; Moore v. Voughton, 1 Stark. 487. [And see Williamson v. Williamson, L. R. 7 Eq. 542, where acquiescence in a banker's charge of 5001. for a half year's commission on an overdrawn account, was held not to entitle the banker to make the same charge as of right in subsequent half years. Also Crosskill v. Bower, 32 Beav. 86; 32 L. J. Ch. 540.]

(f) Attwood v. Taylor, 1 M. & G. at p. 301; Waring v. Cunliffe, 1 Ves. 99; Ex parte Bevan, 9 Ves. 223; Fergusson v. Fyffe, 8 Cl. & F. 121.

(g) Slack v. Lowell, 3 Taunt. 157; Marshall v. Poole, 13 East, 98; Furr v. Ward, 3 M. & W. 25; Rhoades v. Lord Selsey, 2 Beav. 359.

defendant undertook to pay money according to instructions to be received from a third party, and the instructions given were to pay it in discharge of a bill given by that third party, and then in the plaintiff's hands, Held that this was not an undertaking to pay by a bill, on which interest would run, though interest would run on a direct guarantee for payment of a bill (h).

It is a question for the jury to say, whether the defendant had contracted to pay by bill or not, and slight evidence on this point has been held sufficient. Goods were sold to the defendant in January, and in April he wrote to the plaintiff saying, "The document you have sent me appears to be in the nature of a bill, and being payable to your order, is good in the market; just what I wished to avoid. The document I have wished to give you was simply my promissory note, payable to yourself." Nothing was proved to have been said at the time of the contract about payment, and no demand for interest had ever been made, but the plaintiff claimed interest in his particulars of demand. It was decided that this letter offered some evidence of an agreement to pay by a note, upon which the jury were warranted in giving interest (i).

The principle of these decisions of course is, that where a person promises to give a bill, which would bear interest, the law will imply an engagement, in case no bill is given, to pay interest as if it had been given (k). It seems to be on the Bond with a same principle, that where a bond is given with a penalty in penalty. a larger amount, to secure payment of a sum of money, interest will be allowed even without an express stipulation. "The principal money due and the interest thereon may be considered as part of the penalty" (7). Because the object of the penalty is to secure him to whom it is given against all damage arising from default. Now one of the most obvious sources of damage is the loss of interest on the sum due (m). In one case (n) where interest was allowed in an