Enforce contract on burglars

Question

Lets say I post a sign outside my house reading "if you break into this house, you agree to paying the owner a one million dollars access fee". This would be similar to how parking lots post their fees, which one is assumed to having accepted by simply leaving their car there.

If a burglar enters the house and later is caught and found guilty, would I be able to enforce the above contract, and collect 1MM from him, regardless of what the actual damages were?

(would it make a difference if the sign is not outside, but inside the house and reads 'by continuing this burglary, you accept a 1 million access fee' ?)

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To clarify: the sign would be posted all around the perimeter, clearly visible from all angles, and also be on every wall inside the house. There would be no way to enter the house or continue the burglary without seeing it..

Answer 1

united-states

A few problems:

1. It only works if you can catch the burglar and sue him. The percentage of burglaries that are solved (11%-15% depending upon the region in the U.S.) is quite small.

2. Breaches of contracts have remedies which are limited to compensatory damages. The $1,000,000 amount is probably a void against public policy "penalty" since it is not a reasonable estimate of a hard to determine but significant actual economic loss. This doctrine applies with even greater force when it is a contract of adhesion with no negotiation over its terms. The lawsuit would be for breach of contract by accessing the property without paying the fee. But unless you regularly rent the property to others for a similar amount (or an appraiser can convincingly testify that this is the going rate for allowing people to briefly visit a property of this kind legally), it is unlikely to hold up in court. Certainly, if the "access fee" was close to the fair market value of the entire property or a large percentage of that value, it would not be upheld. The fact that there was an implied in fact agreement to enter into a void contract doesn't validate it. Indeed, the $1,000,000 access fee term wouldn't be valid even if the burglar signed the contract in writing before entering onto your property (assuming, as the question implies, that $1,000,000 is far in excess of the fair rental value of the property for a period of a few hours at most). In contrast, if you set the amount at three times the going AirBnB rate to rent your house for one night, perhaps $600, that might very well be upheld as a valid liquidated damages clause.

3. There is a closely related argument, albeit harder to prove, that the contract terms are unconscionable, i.e. grossly disproportionate and unfair. This contract would probably be both a void penalty and unconscionable, although establishing that it is a void penalty would almost always be easier to do.

4. Contract debts can be wiped out in bankruptcy, unlike most debts related to intentionally tortious or criminal conduct.

5. Burglars normally commit burglaries because they are broke. It would be rare for a burglar who is caught to not be judgment-proof. When they go to prison for their act, they will have no income, and once they get out their economic prospects will be greatly diminished as a result of their crime. For example, in Iowa, only 6% of incarcerated criminals repay restitution orders (which average less than $1000). Realistically, it would be rare for you to be able to recover even the attorneys' fees and cost that you would incur to sue him. The likelihood that you would ever even recover the cost of putting up the signage is small.

6. By consenting to allow anyone who pays $1,000,000 to access your property, without regard to their ability to pay, what would otherwise have been criminal trespassing and/or burglary would now not be crimes. This conduct would now only be a breach of contract. If the burglar took something, that would still be larceny. But larceny is a less serious offense than burglary. This might even cause the prosecutors office to refuse to bring any criminal charges related to what would otherwise be a burglary of your house.

Answer 2

Does the burglar have the intention to legally enter the contract?

In addition to all the valid points made by @ohwilleke, there is a fundamental difference between the car park and your situation.

In the car park, the driver is acting with a lawful intention when they enter the contract of adhesion. They see your offer and they accept it by their conduct.

The burglar is acting unlawfully. They have no intention of complying with the law, so they have no intention of complying with contract law. They see your sign and, by acting unlawfully, they reject it.

Answer 3

canada

The specific example is likely not a contract

As phrased ("if you break into this house, you agree to paying the owner a one million dollars access fee"), I am doubtful there is a contract here.

The promise to pay one million dollars is not secured by consideration going the other direction. The wording does not say "in exchange for permission to access, you agree to paying... ." Instead, the wording contemplates that what would be occuring is "break[ing] into this house." That is an act without permission.

Instead, I read this as an attempt to unilaterally hold somebody to an obligation without a contractual basis for it.

But if it were a contract, its enforceability would turn on an unconscionability analysis, not a "penalty" analysis

If the wording instead were phrased as a price for permission to enter, accepted via conduct, this would much more clearly be a contract. For example: "In exchange for permission to be on the premises, you agree to pay one million dollars. You accept this contract if you enter onto the premises."

The law in Canada and the U.K. substantially differs from the law as described by ohwilleke (see point 2) in relation to penalties.

If the burglar accepts the contract by entry, yet chooses to not pay, the expectation damages would be one million dollars. The standard measure of damages for breach of contract is expectation damages, "measured according to the position which the plaintiff would have occupied had the contract been performed" (Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 1 at para. 50). In this case, had the burglar performed their side of the contract, the homeowner would have one million dollars. There is no question as to what the expectation damages are in this circumstance.

This is not an issue of a "penalty" for breach. When the agreement is to pay a particular sum, it is not a penalty to seek that sum.

Dunlop Pneumatic Tyre Co., Ltd. v New Garage and Motor Co., Ltd. [1915] AC 79 (UKHL):

It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid. This though one of the most ancient instances is truly a corollary to the last test. Whether it had its historical origin in the doctrine of the common law that when A promised to pay B a sum of money on a certain day and did not do so, B. could only recover the sum with, in certain cases, interest, but could never recover further damages.

The issue that an excessive "liquidated damages" clause presents is when it is not a genuine pre-estimate of the expectation damages in the case of a breach. Such an excessive liquidated damages clause would instead be considered an unenforceable "penalty" clause. But in the hypothetical contract here, one million dollars is exactly the expectation damages: one million dollars is what was promised; and one million dollars is how much richer the homeowner would be had the contract been performed.

It is also recognized that agreement to pay a sum on the happening of an event, no question of penalty arises. See Chitty on Contracts, 26th ed., p. 1831, stating that for a plaintiff to claim the agreed upon price does not even raise the penalty issue:

The law on penalties is not applicable to many sums of money payable under a contract. Thus, it is not relevant where the plaintiff claims an agreed sum (a debt) which is due from the defendant in return for the plaintiff’s performance of his obligations, or which is due upon the occurrence of an event other than a breach of the defendant’s contractual duty owed to the plaintiff.

The penalty doctrine "is not designed to relieve a party from the consequences of what might in the event prove to be an onerous or even commercially imprudent bargain" (Doman Forest Products Ltd. v. GMAC Commercial Credit Corp. - Canada, 2007 BCCA 88, para. 122).

For such relief, one would have to turn to the doctrine of unconscionability (point 3 in ohwilleke's analysis). I agree this would be a high bar to meet.