§ 25-2-718. Liquidation or limitation of damages; deposits. - North Carolina Statutes

§25‑2‑718.  Liquidation or limitation of damages; deposits.

(1)        Damages for breachby either party may be liquidated in the agreement but only at an amount whichis reasonable in the light of the anticipated or actual harm caused by thebreach, the difficulties of proof of loss, and the inconvenience ornonfeasibility of otherwise obtaining an adequate remedy.  A term fixingunreasonably large liquidated damages is void as a penalty.

(2)        Where the sellerjustifiably withholds delivery of goods because of the buyer's breach, thebuyer is entitled to restitution of any amount by which the sum of his paymentsexceeds

(a)        the amount to whichthe seller is entitled by virtue of terms liquidating the seller's damages inaccordance with subsection (1),

(b)        in the absence ofsuch terms, twenty per cent (20%) of the value of the total performance forwhich the buyer is obligated under the contract or five hundred dollars($500.00), whichever is smaller, or

(c)        at the election ofthe seller in the case of a layaway contract, the aggregate payments receivedby seller from buyer under the contract or fifty dollars ($50.00), whichever issmaller.

(3)        The buyer's rightto restitution under subsection (2) is subject to offset to the extent that theseller establishes

(a)        a right to recoverdamages under the provisions of this article other than subsection (1), and

(b)        the amount or valueof any benefits received by the buyer directly or indirectly by reason of thecontract.

(4)        Where a seller hasreceived payment in goods their reasonable value or the proceeds of theirresale shall be treated as payments for the purposes of subsection (2); but ifthe seller has notice of the buyer's breach before reselling goods received inpart performance, his resale is subject to the conditions laid down in thisarticle on resale by an aggrieved seller (G.S. 25‑2‑706). (1965,c. 700, s. 1; 1993, c. 340, s. 2.)