§ 4-2.5-504 — Liquidation of damages

Colorado § 4-2.5-504

• Jurisdiction: Colorado
• Title 04: Uniform
• Art.: Leases

Text

(1) Damages payable by either party for
default, or any other act or omission, including indemnity for loss or diminution of
anticipated tax benefits or loss or damage to lessor's residual interest, may be
liquidated in the lease agreement but only at an amount or by a formula that is
reasonable in light of the then anticipated harm caused by the default or other act
or omission.

(2) If the lease agreement provides for liquidation of damages, and such
provision does not comply with subsection (1) of this section, or such provision is an
exclusive or limited remedy that circumstances cause to fail of its essential
purpose, remedy may be had as provided in this article.

(3) If the lessor justifiably withholds or stops delivery of goods because of
the lessee's default or insolvency (section 4-2.5-525 or 4-2.5-526), the lessee is
entitled to restitution of any amount by which the sum of his or her payments
exceeds:

(a) The amount to which the lessor is entitled by virtue of terms liquidating
the lessor's damages in accordance with subsection (1) of this section; or

(b) In the absence of those terms, twenty percent of the then present value
of the total rent the lessee was obligated to pay for the balance of the lease term,
or, in the case of a consumer lease, the lesser of such amount or five hundred
dollars.

(4) A lessee's right to restitution under subsection (3) of this section is
subject to offset to the extent the lessor establishes:

(a) A right to recover damages under the provisions of this article other than
subsection (1) of this section; and

(b) The amount or value of any benefits received by the lessee directly or
indirectly by reason of the lease contract.

Legislative History

Source: L. 91: Entire article added, p. 302, � 1, effective July 1, 1992.