§ 41-02-97 — (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. When 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 the buyer's
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 of the value of the total
performance for which the buyer is obligated under the contract or five hundred
dollars, 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 this chapter 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. When 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, the seller's resale is subject to the conditions laid down in this chapter on
resale by an aggrieved seller (section 41-02-85).