King Motors, Inc. v. Delfino

The question presented in this case is whether a provision in a contract for the payment of a certain sum of money constituted one for liquidated damages, as stated in it, or one for a penalty. The trial court gave judgment for the plaintiff to recover upon the former basis and the defendant has appealed.

The plaintiff is an automobile dealer. It has a franchise to sell Cadillac cars which provides, in effect, that, if a new car it sells becomes the property of a person not in its territory within a six-month period from the date of the sale, it has to pay a commission to the dealer in the…