This section contains the nature of the case and procedural background.

Wassenaar (P) was hired by Towne (D) as the general manager of its hotel. The contract provided for a three-year period of employment renewable at the employee's option and a stipulated damages clause in case D terminated P before the expiration of the contract. D terminated P's employment 21 months prior to the expiration date. P was then unemployed for about 10 weeks when he obtained another job at another hotel. P sued D for damages. D argued that P had failed to mitigate his damages. P argued that mitigation was irrelevant because of the stipulated damages clause in the contract. The trial judge ruled that P had no duty to mitigate; which was an affirmation of the validity of the stipulated damages clause. The jury gave P 21 months worth of pay from the unexpired term of the contract. The court of appeals reversed holding that the stipulated damages clause was a penalty; in that, the amount of damages from a breach of employment contract can easily be computed by the trial court. P appealed.

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