In Truck Rent-A-Ctr., Inc. v. Puritan Farms 2nd (41 N.Y.2d 420, 361 N.E.2d 1015, 393 N.Y.S.2d 365 [1977]), the Court characterized liquidated damages as "in effect, . . . an estimate, made by the parties at the time they enter into their agreement, of the extent of the injury that would be sustained as a result of breach of the agreement" (41 N.Y.2d at 424). The Court called the distinction between liquidated damages and a penalty "well established": "A contractual provision fixing damages in the event of breach will be sustained if the amount liquidated bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation. If, however, the amount fixed is plainly or grossly disproportionate to the probable loss, the provision calls for a penalty and will not be enforced" (id. at 425).