§ 2-718 — Liquidation or Limitation of Damages; Deposits

Section 2--718. Liquidation or Limitation of Damages; Deposits.\n (1) Damages for breach by either party may be liquidated in the\nagreement but only at an amount which is reasonable in the light of the\nanticipated or actual harm caused by the breach, the difficulties of\nproof of loss, and the inconvenience or nonfeasibility of otherwise\nobtaining an adequate remedy. A term fixing unreasonably large\nliquidated damages is void as a penalty.\n (2) Where the seller justifiably withholds delivery of goods because\nof the buyer's breach, the buyer is entitled to restitution of any\namount by which the sum of his payments exceeds\n (a) the amount to which the seller is entitled by virtue of terms\n liquidating the seller's damages in accordance with\n subsection (1), or\n (b) in the absence of such terms, twenty per cent of the value of\n the total performance for which the buyer is obligated under\n the contract or $500, whichever is smaller.\n (3) The buyer's right to restitution under subsection (2) is subject\nto offset to the extent that the seller establishes\n (a) a right to recover damages under the provisions of this\n Article other than subsection (1), and\n (b) the amount or value of any benefits received by the buyer\n directly or indirectly by reason of the contract.\n (4) Where a seller has received payment in goods their reasonable\nvalue or the proceeds of their resale shall be treated as payments for\nthe purposes of subsection (2); but if the seller has notice of the\nbuyer's breach before reselling goods received in part performance, his\nresale is subject to the conditions laid down in this Article on resale\nby an aggrieved seller (Section 2--706).\n