Lambertvs.

Fox
FACTS:
Earlyin1911:JohnR.Edgar&Co.,engagedintheretailbookandstationerybusinesswastakenover
byitscreditorsincludingLambertandFox
LambertandFoxbecamethe2largeststockholdersinthenewcorporationcalledJohnR.Edgar&
Co.,Incorporated
LambertandFoxenteredintoanagreementwhereintheymutuallyandreciprocallyagreenottosell,
transfer,orotherwisedisposeofanpartofthestockuntilafter1yearfromtheagreementdateunless
consentedinwriting
violation:P1,000pesosasliquidateddamages
October19,1911:FoxsoldhisstockE.C.McCullough&Co.ofManila,astrongcompetitor
salewasmadebythedefendantagainsttheprotest
FozofferedtosellhissharesofstocktotheLambertforthesamesumthatMcCulloughwas
payingthemlessP1,000,thepenaltyspecifiedinthecontract
TrialCourt:dismissed
ISSUE:W/NFoxshouldbepenalized

HELD:YES.The judgment is reversed, the case remanded with instructions to enter a

judgment in favor of the plaintiff and against the defendant for P1,000, with interest;
without costs in this instance.
partiesexpresslystipulatedthatthecontractshouldlastoneyearregardlessoftheobjectiveitshould
beapplied
partieswhoarecompetenttocontractmaymakesuchagreementswithinthelimitationsofthe
lawandpublicpolicyastheydesire,andthatthecourtswillenforcethemaccordingtotheirterms
Thesuspensionofthepowertosellhasabeneficialpurpose,resultsintheprotectionofthe
corporationaswellasoftheindividualpartiestothecontract,andisreasonableastothelengthoftimeof
thesuspension.