National Cooperative Refinery Association v. Northern Ordnance, Inc.

Of course the law does not favor penalties or forfeitures, and equity will unhesitatingly relieve against them when they are sought to be exacted for the breach of a contract. One is entitled only to just compensation for the breach. But, without derogating from this fundamental concept, the courts also encourage parties to stipulate with respect to the amount of damages to be suffered in the event of breach, and where the parties have so agreed, the court will not hesitate to enforce it, unless it is shown to be wholly disproportionate to the damages suffered. See Consolidated Flour Mills…