§ 554.13504 — Liquidation of damages

Iowa § 554.13504

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 554: UNIFORM COMMERCIAL CODE

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, 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 554.13525 or 554.13526), the lessee is entitled to restitution of
any amount by which the sum of the lessee’s 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; 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 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;
and
b. the amount or value of any benefits received by the lessee directly or indirectly by
reason of the lease contract.