§ 26-1-2.1-504 — Liquidation of damages

Indiana § 26-1-2.1-504

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 2.1: 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), 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 IC 26-1-2.1.
(3) If the lessor justifiably withholds or stops delivery of goods
because of the lessee's default or insolvency (IC 26-1-2.1-525 or IC 26-1-2.1-526), 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 (20%) 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 ($500).
(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 IC 26-1-2.1
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.

Legislative History

As added by P.L.189-1991, SEC.3.