CONTRACTS/BRIEF OVERVIEW

I.     DEFINITIONS.

        A.     CONTRACT DEFINED.

A contract in the modern sense has been defined as an agreement containing a promise enforceable in law. The agreement must be mutual, between two or more competent parties for a valuable consideration, and may be to do or not to do a particular thing. A simple contract may or may not be in writing and requires no seal. An analysis of this definition will show its scope and limitation. The term "agreement" implies that there are at least two parties involved, since one party can not agree to a proposition unless it is made to him by another. The term "agreement" further implies that one party makes a proposal or offer to which the other party assents, hence agreement is reducible to offer and acceptance.

        B.     KINDS OF CONTRACTS.

An executed contract is completed; an executory contract is one still to be executed or completed. An express contract is a contract actually made between two or more parties; an implied contract is one in which some of the provisions or the entire agreement must be implied from previous agreements, from existing customs, or from the acts of the parties.

        C.     REQUIREMENTS:

1.   Two or more parties competent to contract.
   
   
2.   Mutual "meeting of the minds" of the contracting parties.
   
   
3.   Legal subject matter.
   
   
4.   Consideration.

II.     STATUTE OF FRAUDS.

In every state there is a statute called the statute of frauds, which provides that certain contracts must be in writing to bind the parties. SEE ORS 41.580 (GENERALLY); ORS 71.2060, 72.2090, (COMMERCIAL CODE); ORS 41.580 (CREDIT AND MONEY LENDING); ORS 112.270 (CONTRACT FOR WILL OR DEVISE). Often these contracts include:

        A.     Agreements for the sale of real estate.

        B.     A contract for the sale of goods for more than a certain amount, which mount varies in different states, must be in writing, or there must be actual delivery and acceptance of the goods, or part payment must be made for them.

        C.     A contract must be in writing to charge the defendant upon any special promise to answer for the debt, default, or miscarriage of another person or to charge any executor or administrator upon any special promise to answer any debt or damages out of his own estate.

        D.     A written contract is necessary to charge any person upon any agreement made upon consideration of marriage, or upon any agreement that cannot be performed within the space of one year from the making thereof.

III.     OFFER AND ACCEPTANCE.

        A.     Agreement must contain a promise.

This agreement must be something more than assent to some general proposition such as: "The world is round." It must contain a promise. Thus if A says to B: "The world is round," and B replies: "I assent to that," they will have an agreement, but it is of no legal significance. If, however, A says to B, "I will promise to do thus and so, if you will promise to do thus and so, and B assents, we have an agreement which contains promises from A to B and B to A.

        B.     Promise must be enforceable in law.

It will be observed from the definition that a contract is not only an agreement containing a promise, but it must be one that is enforceable in law. Many agreements which contain promises are of no validity in law for the reason that they are not intended by the parties to create legal obligations. Ordinarily, social agreements are of this nature. Thus, if A invites a friend to dinner, and the friend accepts, they have an agreement in proper form, but the failure to attend the dinner or a failure to give the dinner involves no legal consequence. Again, the parties may have entered into an agreement which in form is legal, but which the parties do not intend to be binding. A gave his check for $300 to B for an old silver watch 'worth perhaps $15. B presented the check to the bank and it was not paid; he then brought suit against A. It appeared that the whole transaction was a joke, and neither party intended a legal obligation. Accordingly, the court dismissed the suit. The rule laid down in this case applies to all cases where the parties do not intend a legal obligation, although in form they have created one.
Motive is not material. The motives which induce parties to make a contract are as a rule not material as long as they intend to make a binding agreement. This is illustrated by the celebrated case of Williams v. Carwardine. In this case one A offered a reward for information. leading to the conviction of a murderer. B gave the information and brought suit to recover the reward. It was alleged by A that B gave the information because of a desire to be revenged for a wrong done to B by the murderer, and not to secure the reward. But the court held that this was immaterial, since it appeared that the information was given in response to the offer of a reward with intent to claim the same. Par-ties enter into contracts for a variety of reasons, a-ad in accordance with the rule of the above case, the law is not concerned with the motive, but considers only the question whether or not an offer has been made and accepted.

        C.     Meeting of minds.

In order that there may be an agreement, it is necessary that the minds of both parties shall coincide with respect to every material term of the alleged agreement. If one party has in mind one thing as the subject matter of a contract, and the other party has in mind a different thing, it will be impossible to say that they are in agreement. Thus, in the case of Raffles v. Wichelliams, the agreement was to buy and sell a cargo of cotton to arrive by the ship "Peerless" from Bombay. It appeared that there were two vessels named "Peerless," one sailing in October and one in December, and the plaintiff had one vessel in mind, and the defendant, the other. The court accordingly held that the parties had never agreed on the same thing and there was no contract.

Again the parties may fail to agree by reason of the fraud or deceit practiced upon one of the parties by the other party, so that one party signed an entirely different agreement, or did an entirely different act from the one he intended. In Foster v. MacKinnon. A signed an instrument represented by B to be a guaranty similar to papers
he had signed on previous occasions. As a matter of fact the instrument signed was a bill of exchange. The jury found that A was not negligent. It was held that A was not liable, since he could truthfully say that he had never agreed to become liable on a bill of exchange. If, however, A had been negligent in signing, that is, if he
had signed the instrument without investigation as to its character, and it had afterwards come into the hands of a person who had purchased it in good faith, the defendant would be liable, not because of a contract, since there would be none, but because his negligence had made possible the loss to the present holder.

The same rule is illustrated in cases where a party intends to make a particular contract, but thinks she is dealing with a person other than the one with whom she makes this contract. The courts hold in these cases that a contract exists provided lie deals face to face with the partly. Thus, A comes to B and states that he is C, a man of established credit, when in fact he is not. B, relying on the statement, sells goods to A on credit, which A sells to D, who buys in good faith. B can not recover the goods from D, because he did intend to sell to the very person with whom he made the agreement, although he was induced to sell to him by reason of the belief that the person was C. He, therefore, is not in a position to say as was the preceding case that he did not make the contract, since he did intend to sell to A. If, on the other hand, A had written to B making exactly the same representation that he was C, and B bad sent the goods addressed to C, which A came into possession of, B could recover the goods since he never intended to make a contract with A, and never had A in mind when he made the agreement or when he shipped the goods.

Where one party had previously dealt with another as the agent of a third person, and an agreement is now entered into between the parties in which no representation is -made that the party is acting as agent although the other party assumes that he is so acting, nevertheless a contract will arise, if it is clear that the person who was thought to be acting as agent did not know of the delusion under which the other party was laboring and consequently did not purposely mislead him.

        D.     When a knowledge of terms of offer is presumed.

A person accepting an offer is charged with knowledge of the terms of the offer, and can not set up his ignorance of them if reasonable means were adopted by the offeror to bring them to his attention. This principle is illustrated by the case of Fonseca v. Cunard Steamship Company. A passenger bought a ticket which contained on its face terms limiting the liability of the carrier for the baggage of the passenger. It appeared that the passenger did not read the conditions, yet the court hold he must be assumed to have known them since they were printed in full on the f a ce of the ticket, and he could not set UP that he had not read the terms of what amounted to an offer.

        E.     Actual meeting of minds not required.

All these cases go to show that, while the law is generally stated) in the form that there must be an actual meeting of minds of the parties to make a contract, the term is not to bo taken in its strict literal sense. Since in the case just stated it is apparent that the minds of the parties did not actually meet, yet as the offeror had made his offer in definite terms, and had taken reasonable steps, to bring them to the attention of the offeree, the law presumes that the offeree when he accepted the offer, accepted on these terms.

        F.     Offer must be communicated.

It is impossible for a person to assent to something of which he or she is ignorant, and it is equally impossible for a person to accept an offer of which he or she has no Knowledge, although it may appear that he has done the very act for the doing of which the offerer promised to pay. Yet if it appears that he was ignorant of the offer at the time or that he did not do the act with the intention of accepting the offer, no contract arises. In Fitch v. Snedaher, A offered a reward of $200 to any person or persons giving information leading to the arrest and conviction of a murderer. B gave the information leading to the arrest before he knew of the offer of a reward, and it was held that he could not recover since it appeared that he had not acted in reliance upon the offer.

        G.     Where the contract arises.

It is important to determine where the contract arises since the construction of its terms will ordinarily depend upon the law of the state where the contract arose. If parties are dealing face to face when the agreement is made the place where they are at the time will be the place of contract. If, how, ever, the contract is made by letters or by telegraph or telephone, a different situation arises. Suppose for example, A in New York writes to B in Chicago offering to sell certain goods at certain prices, and B on receipt of the letter writes a letter accepting the offer, when does the contract arise, and where does it arise? According to the established rule in such cases the contract arises as soon as the letter is put into the mail in Chicago, properly addressed and stamped. Accordingly the contract is completed in Illinois. This result is reached by assuming that A by mailing his letter made the postoffice department hi3 agent to transmit his offer and receive a reply. Accordingly when B mails his acceptance in Chicago he is regarded as having put his answer into the hands of A's agent, which in law is the same as if he had actually handed it to A in person.

The force of this reasoning is weakened when we consider another class of cases where the person making the offer in writing says to the offeree that, if the latter accepts, lie will do some act to indicate it, as by placing a letter under a Stone. If the offeree does as directed, the contract arises as soon as the act is completed. This class of cases indicates that the agency theory is not correct. The offeree is bound when he does the act which the offeror indicates will constitute the acceptance of the offer.

Applying this theory when an offer is sent to one at a distance, the offeror impliedly authorizes the offeree to use the ordinary means of communication, and if the offeree deposits a letter or sends a telegram properly addressed, he has completed the act which the offeror recognizes as an acceptance and if the telegram or letter is not received, the risk falls on the offeror and not on the offeree. In the case of contracts made by telephone, the same rule applies as in the case of letters or telegrams, and accordingly the contract arises as soon as the offeree has spoken the words into the transmitter which constitute an acceptance. The minds of the parties then legally meet although they do not actually meet when the offeree's act is completed.

        H.     Acceptance must be communicated.

The acceptance of an offer must be communicated to the offeror. As just indicated, the acceptance is communicated in point of law as soon as the offeree has done the act indicated by the offeror as constituting an acceptance. A mere determination to accept an offer is not enough. In Felthouse v. Bindley, A offered to sell a horse to B. There was a misunderstanding as to the price and B wrote to A saying that he would split the difference. A determined to accept but did not communicate his intention to B. The court accordingly held that there was no contract. Thus, if a person to whom an offer has been made writes a letter of acceptance which he carries in his pocket or leaves on his desk, no contract arises. He must do the overt act contemplated by the offeror, and put his acceptance out of his possession and in the course of transmission to the offeror.

        I.     Mere silence not an acceptance.

Mere silence on the part of the offeree will not constitute an acceptance ordinarily. Thus if A writes to B: "I have shipped to you certain goods at certain prices, and unless I hear from you shortly, I will assume you have accepted them on these terms," B is not bound to notify A that he will not take the goods and he can not be compelled to accept them or pay for them. Of course, if he does take and use the goods, it would constitute an acceptance of the offer, and would render him liable. There are exceptions to the above rule growing out of prior dealings of the parties. Thus in Hobbs v. Hassasolt Steamship Co., A was in the habit of shipping eelskins to B, a manufacturer of whips, who was accustomed to accept and pay for them. In this particular instance B refused to accept the consignment of skins, and failed to notify the shipper, and the skins were spoiled standing in the cars. B was held liable for their value on the ground that the previous course of dealing between the parties justified A in sending the goods in this manner, and expecting a reply, if they were not accepted. The situation in this case is exceptional, however, and clear evidence is always required to show, a course of dealing sufficient to Justify such an assumption on the part of the offeror. In its absence, the general rule that mere silence will not constitute an acceptance must prevail.

        J.     When actual receipt of acceptance is necessary.

The general rule, that a contract made by mail or telegraph arises as soon as the acceptance is put in course of transmission, is based upon usage and the supposed intent of the parties, and therefore evidence will be received to show that in a particular case the parties intended a different rule to apply. Thus if the offeror stipulates that the acceptance must be received by him, the contract will not arise when the letter is mailed, but only when it has actually been received as stipulated. Thus A wrote to B offering to lease certain premises to him at a certain stipulated rental, adding: "If I do not hear from you by the 15th, I shall consider the offer refused." B telegraphed an acceptance which was never received. It was held there was no contract since the offeror clearly stipulated for the actual receipt of the acceptance. If the clause, unless I hear from you by the 15th" had been omitted, the contract would have arisen although the telegram bad never been received.

Again the circumstances under which the offer is made may show that an actual receipt of the acceptance was intended. In the case of Haas v. Myers, A and B agreed to purchase a herd of cattle in Montana if prices were favorable. B was to go to Montana to inspect the herd and it was agreed that if satisfied with the herd, both as to condition and prices, he was to wire A, "Yes;" otherwise, "No. " If "Yes," then A was to wire the price necessary for a one-third interest, which amount was to be deposited in a bank to the credit of B. B telegraphed to A, and A replied, but A's telegram was never received. It was held that inasmuch as B was to do certain acts on receipt of A's telegram, it was necessary that such telegram be actually received by him, and, if not so received, the contract did not arise.

        K.     Acceptance must be responsive to the offer.

The acceptance of an offer must be responsive to the offer. Thus if A writes to B, "I will give you $500, if you will agree to build a fence around my property," and B replies, "I accept," a contract is made. But if B instead of replying starts to build or actually builds a fence, it would not be an acceptance since the offer calls for a reply and not an act. If, on the other hand, A had said, "I will give you $500 on your completing a fence around nay property," no contract would arise by B's writing a letter accepting the offer, since A is asking not for a promise, but for an act, i. e., building a fence. In other words, where the offer contemplates a unilateral contract, the offeree cannot turn it into a bilateral contract by giving a promise.

        L.     Notice of acceptance: Unilateral contracts.

Where the acceptance of an offer is an act, notice that trick act has been done is not necessary, since the contract arises as soon as the act is completed. Thus in the illustration above the contract would executed as soon as the fence was built. To this rule there are some apparent exceptions growing out of commercial usage. Thus where A writes B, "If you will sell certain goods to C, I will guarantee that he will pay for them," this offer would be accepted by selling the goods to C in reliance on the guaranty, but the law requires further that B notify A that lie has acted on the offer. The giving of the notice is not am acceptance of the offer, however, but it is an additional act which the law requires in deference to commercial usage. If A is to be responsible for C's debt to B, he should be notified that the debt has been incurred in reliance on his promise in order that he may protect him

IV.     FAILURE TO CONTRACT.

        A.     Generally.

Where parties to a contract are unable to agree as to the precise scope of the obligation, or are unable or unwilling for any reason to carry it our the courts are usually called upon to determine the question for them. The issue maybe presented in various forms. Is there a contract at all? If a contract, is it unenforceable for tiny reason? Granted there is an obligation of some sort created, what is its scope? What must the plaintiff do in order to enforce the defendant's promise? What has the defendant left undone that he or she must do to fulfil obligations?

        B.     Some kinds of contracts are unlawful or unenforceable by their very nature.

1.     A contract to commit a breach of peace.

2.     An agreement for immoral purposes.

3.     An agreement procured by threats, violence, or fraud.

4.     Wagers or bets cannot be collected by law.

5.     Interest at rates higher than the maximum rate fixed by law cannot be collected.

6.     A contract in violation of a statute in the state in which it is made.

7.     An agreement to prevent competition on a sale under an execution.

8.     An agreement to prohibit the carrying on of a trade throughout the state.

9.     The right to vote or hold a public office cannot be sold by contract.

10.    Contracts for concealing felony, for violating public trust, for bribery, or for extortion are prohibited.

11.    Two or more persons cannot intentionally make a contract to willfully injure a third person.

12.    An agreement with a thief to drop a criminal prosecution in consideration of his bringing back the goods and paying all damages is not good and will be no bar to a future prosecution.

        C.     There may not be an intent to contract.

1.     A contract with an intoxicated person, mentally incompetent person, or minor cannot be enforced by the other party.

2.     Where consent to an agreement is given by mistake and the other party knows of the mistake, such agreement cannot be enforced.

        D.     There may be a lack of legal consideration.

1.     Consideration.

Consideration is the thing that induces a party to make a contract. It is the substantial cause or reason inducing the parties to enter into an agreement. A valuable consideration is one that is equal to money or may be translated into monetary terms. It is sometimes defined as "money or its equivalent." The law does not require that the consideration should be a good or bad bargain. As long as something is done or suffered by either party, always providing it is not illegal, the consideration is good. The smallest consideration is sufficient to make it legal. The value of the consideration is generally unimportant. All considerations that are immoral are consequently illegal, and contracts based upon them are generally void.

2.     A contract without a consideration, such as a promise to make a gift, cannot be enforced.

3.     Useless things, such as agreeing not to go out of the house for a month, cannot become the subject of a contract.

4.     Contracts in which there is misrepresentation or concealment of material facts cannot be enforced by the party guilty of such misrepresentation or concealment.

5.     If a thing contracted for is not in existence at the time of making the contract, as in a case where parties contract for the purchase and sale of a horse without knowing that the horse is dead at the time, the contract is not valid.

6.     A verbal release without payment satisfaction for the debt is not good. Release must be under seal, unless made for some new consideration.

        E.     A party may lack the authority to legally contract.

1.     Guardians, trustees, executors, administrators, or attorneys cannot take advantage of those for whom they act by becoming parties to contracts in which the persons for whom they are acting are interested.

2.     A contract with a young child cannot be enforced against the minor.

3.     A contract made by a minor is not binding upon the minor, yet the minor can hold the other party to all the conditions of the contract.

4.     A fraudulent contract may be binding on the party guilty of fraud, although not laying any obligation on the part of the party acting in good faith.

5.     A contract binding in the place where it is made is binding everywhere, but courts of one state will not enforce contracts made in another state where to do so would be in violation of the statutes or public policy of their own state.

V.     THE LAW GOVERNING CONTRACTS.

Several basic principles of law apply to all contracts.

        A.     Interpretation.

1.     Problems of interpretation.

In solving these questions, the court must consider the terms of the agreement, if it be in writing, or the words and acts of the parties, if the agreement be oral. It must take into account the circumstances under which the agreement was made; the meaning of technical terms; the customs or practices of a particular trade or calling to which the contract relates; to what extent the prior negotiations and dealings between the parties is to be considered as forming a part of the contract; what acts or words are to be ignored. In short, the court must by considering the language, acts, and circumstances of the parties with reference to this articular agreement decide what they meant, and give effect to that meaning. The court will always seek to determine and give effect to the intention of the parties to the contract. The court will first look at the language of the contract as drafted to give it effect. If the language should be obscure on certain points, the court will try to determine the intent of the parties when they entered into the agreement, providing the intent can be gathered from the terms of the instrument itself. Sometimes the court must look to the prior history of bargaining, or the history of dealing between the contracting parties to resolve the question of the intention. It is of the utmost importance that the terms of the contract be specifically and explicitly stated.

In performing their function the courts make use of certain rules to aid in arriving at the goal of their investigations i.e., the ascertainment of the intent of the parties. These rules are not hard and fast and yield to the obvious contrary intent of the parties themselves. The statement that the court will carry out the intention of the parties must be qualified by the further statement that it will carry out not necessarily the actual intent or expectation of the individual parties, but the intent properly construed. Thus it may happen that the liability enforced is not the one the parties intended to assume, but if expressed in clear terms, the court is bound to give it the ordinary meaning.

        B.     Dependent or independent Promises.

A makes a contract with B, by the terms of which A agrees to sell a horse to B, and B agrees to pay $500 therefor. B is unwilling or unable or hesitates to carry out this agreement. A desires to proceed against B for breach of contract. The question presented to the court is essentially a question of interpretation. What in contemplation of law did the parties intend by this agreement? Three distinct results are possible. First, it may be said that the promises of A and B are entirely distinct and therefore A can sue B on his promise to pay $500, leaving B to sue A on the latter's promise to deliver the horse; secondly, it may be said that before A can recover damages from B, A must deliver the horse to B, or attempt to deliver it; or lastly that A need not actually deliver the horse or even tender it, but must be ready and willing to do so, and notify B of that fact.

The early development of the law tended to favor a construction that found independent promises and A was permitted to sue B without a tender or offer of performance of any kind. The two promises would be regarded as independent of each other, and therefore the question of A's duties would be of no moment in deciding B's liability. The modern view is distinctly contrary. The law presumes that where the promises are given for each other, the performances are dependent on each other also, unless by necessary implication from the facts or by direct provision they were made independent. Since A gave a promise to deliver a horse to B in return for B's promise to pay $500, it will be assumed that A intended to give the horse only in the event that A received the money and conversely that B intended to pay the money only in the event that B received the horse.

        C.     Time for performance.

In the foregoing example, there is no reason on the facts why both acts cannot be done at the same time, and it appears further that no provision is made for the extension of credit, they must be performed at the same time. There is thus a rule of interpretation that where mutual promises can be performed at the same time, they must be performed at the same time.

Where act on one side requires time. A promises to manufacture a table of a certain design for B, and B promises to Pay $30 for it. In this case it is obvious that since A's act requires time, it will not be possible for the two promises to be performed at the, same time. B can not be compelled to pay until A's act is complete; therefore, A must finish the table before B can be requested to pay; hence, we have the rule that where the promise on one side requires time and the promise on the other side is to pay money, the act requiring time must be performed first.

Where one act is to be done first. Although it may be perfectly possible for the mutual performances to take place at the same time as far as the acts themselves are concerned, yet the parties may indicate that one act is to be completed before the other is due. Thus, in the case of the contract by A to sell a horse to B, if the contract provided that the horse was to be delivered on a certain date and the money to be paid on a later date, it would be clear that B was entitled to the horse, without paying money at the time. A would be compelled to deliver on date named and if A did not, A would be liable on the promise.

If no time of payment is stated in the contract, payment must be made on the delivery of the goods. In most states sales between merchants are covered by a uniform body of laws, called the Uniform Commercial Code.

        D.     Conflicting terms.

If two parts of a contract are in direct conflict with each other, the former part holds good in preference to the latter.

        E.     A contract totally restraining the exercise of a one's trade or profession is void, but a restraint in a reasonable geographic area or period of time is not void.

        F.     A contract cannot be rescinded except by consent of both parties unless one party has given the other legal grounds to rescind, such as default or fraud.

        G.     Oral contracts.

Where the agreement sued upon is by word of mouth only, or partly written and partly oral, the court will receive in evidence all the facts known to the parties, the acts and words of the parties, and the agreement will be the final construction which the court puts on these acts and words.

        H. Written contracts.

1.     Certain contracts must be in writing in order to be enforceable: see Statute of Frauds.

2.     A contract required by law to be in writing cannot be changed by verbal agreement.

3.     Integration of written agreements.

Where the agreement sued upon is in writing, another rule comes into play. Where the writing is executed in a formal way, and is drawn as a result of previous negotiation, it will be assumed to embody the will of the parties, and the court will not consider the acts or words of the parties prior to its execution that may be inconsistent therewith, since the final will of the parties is assumed to be embodied in the instrument.

4.     Parol evidence rule.

Evidence will not be received to add to or take from an agreement which the court finds to be complete.

5.     Errors in grammar or spelling do not affect the legality of the agreement.

6.     An intentional alteration in a material part of a contract, made by one party without the consent of the other, discharges the other party from his obligations under the contract.

VI.     DAMAGES FOR VIOLATION OF CONTRACT.

The following are general rules that apply to violations of contracts:

        A.     Where no actual loss has been sustained by the violation of a contract, the plaintiff is entitled to nominal damages only. For example, A contract that states that A is to drill a well for B and to complete same within a specified time or forfeit $1000, said amount being intended not as an assessment of the damages that would probably be actually sustained, but to secure the performance of the contract by the imposition of a penalty. The courts will not compel A to pay the $1000 to B. They will, however, permit B to recover from A such damages as he actually sustained as a result of A's failure to complete the well within the specified time.

        B.     If a person agrees to serve as a laborer or clerk, he cannot be compelled to fulfill his agreement; damages, however, can be recovered for a failure to perform.

        C.     Expected profits on speculations in real property cannot be recovered in case of a violation of contract.

        D.     Failure on the part of the seller to convey real estate or deliver personal property according to agreement entitles the plaintiff to recover damages or to sue for specific performance of the contract.

        E.     In case of loss of goods by a common carrier, the plaintiff is entitled to the value of the goods where they were to be delivered, less the freight on such goods.

        F.     If a party contracts to employ another for a certain time, at a specified compensation, and discharges him or her without cause before the expiration of the time, the employee can obtain judgment for the full amount of wages for the entire unexpired balance of the time, provided he is unable to secure employment in the same line of work after making an earnest effort to do so. Should the former employee obtain work at a lower wage he or she can collect the difference.

        G.     Liquidated damages.

To prevent lawsuits and disputes the amount of damages for the violation of contract is sometimes fixed by the parties themselves by inserting in the contract some such provision as the following:

And it is further agreed that the party that shall fail to perform this agreement on his part shall pay to the other the full sum of $____________________ (here state amount), as liquidated damages.