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Friday, May 16, 2008

Patriots Fan Ordered to Pay $65,500 in Liquidated Damages for Breach of 10-Year Agreement for "Luxury" Stadium Seats

This breach of contract story from the Boston Globe:

If you want to buy those luxury seats at Gillette Stadium to enjoy Patriots games, better read the fine print first.

A man who decided he wanted out of his 10-year agreement for two luxury seats after just one year must pay for the seats for the rest of the 10 years, the state Supreme Judicial Court ruled today.

Paul Minihane, a real estate broker with experience as a contractor and developer, signed up for two $3,750 seats in the Club Level III section for 10 seasons, from 2002 to 2011.

The contract he signed said that if he defaulted, he would have to pay the balance for all the remaining years.

Minihane paid a $7,500 deposit and later made another $2,000 payment, using the seats for the 2002 season. But after that, he made no further payments to NPS LLC, the developer of the stadium.

A lower court judge said the contract's provisions were unreasonable and ordered Minihane to pay $6,000.

But the Supreme Judicial Court said today that Minihane hadn't shown that the provisions weren't unreasonable.

The developers were entitled to the "liquidated damages" the contract required in case of a breach, the court said.

The court noted that even though the Patriots had won a Super Bowl in early 2002, shortly before the contract was inked, demand for luxury seats "was then and remains variable and depends, according to the evidence, on the current performance of the team, as well as other factors, such as the popularity of the players and the relative popularity of other sports, that are unpredictable at the time of contract."

The court said the terms "may be harsh," but Minihane -- who at the time of the Superior Court trial was chairman of the Boston Finance Commission -- hadn't shown that they were "unreasonably and grossly disproportionate."

The court awarded the stadium developers the total amount of unpaid fees: $65,500, plus interest.

UPDATE: Here's a link to the opinion of the Massachusetts Supreme Court. This would have made for a fun liquidated damages exam question.

[Meredith R. Miller]

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