355.2-718 Liquidation or limitation of damages -- Deposits.
(1)
(2)
(3)
(4)
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.
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 (0), whichever is smaller.
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 article 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.
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 this article on resale
by an aggrieved seller (KRS 355.2-706).
Effective: July 1, 1960
History: Created 1958 Ky. Acts ch. 77, sec. 2-718, effective July 1, 1960.
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