§ 26-1-2-718 — Liquidation or limitation of damages; deposits

(1) Damages for breach by either party may
be liquidated in the agreement, but only at an amount which is
reasonable in the light of the anticipated or actual harm caused by the
breach, the difficulties of proof of loss, and the inconvenience or
nonfeasibility of otherwise obtaining an adequate remedy. A term
fixing unreasonably large liquidated damages is void as a penalty.
(2) Where the seller justifiably withholds delivery of goods because
of the buyer's breach, the buyer is entitled to restitution of any amount
by which the sum of his payments exceeds:
(a) the amount to which the seller is entitled by virtue of terms
liquidating the seller's damages in accordance with subsection (1);
or
(b) in the absence of such terms, twenty percent (20%) of the
value of the total performance for which the buyer is obligated
under the contract or five hundred dollars ($500), whichever is
smaller.
(3) The buyer's right to restitution under subsection (2) is subject to
offset to the extent that the seller establishes:
(a) a right to recover damages under the provisions of IC 26-1-2
other than subsection (1); and
(b) the amount or value of any benefits received by the buyer
directly or indirectly by reason of the contract.
(4) Where a seller has received payment in goods, their reasonable
value or the proceeds of their resale shall be treated as payments for the
purposes of subsection (2), but if the seller has notice of the buyer's
breach before reselling goods received in part performance, his resale
is subject to the conditions laid down in IC 26-1-2-706 on resale by an
aggrieved seller.
Formerly: Acts 1963, c.317, s.2-718. As amended by
P.L.152-1986, SEC.173.