§  162.  Penalty  or  Liquidated  Damages.  J^  gome  instances,
the  sum  designated  by  the  contract  as  payable  in  the  event
of  a  non-performance,  is  treated  as  a  penalty,  in  other
instances  it  is  considered  as  liquidated  damages.  If  it  is  a
penalty,  it  is  a  sum  to  be  forfeited  or  a  fine  inflicted  by  wa^
of  punishment  on  the  party  for  his  breach  of  contract,  and
it  cannot  be  recovered,  but  the  other  party  is  entitled  only
to  the  actual  damages  suffered  by  him,  which  are  to  be  esti-
mated according  to  the  ordinary  rules  for  the  measure  of
damages.  If  on  the  other  hand,  the  sum  is  treated  as  liqui-
dated damages,  it  is  the  definite  amount  agreed  upon  by  the
parties  under  conditions  fixed  by  lav7  as  the  measure  of
damages  for  the  breach  of  the  contract,  and  it  may  be
recovered.
