§ 25-2A-504. Liquidation of damages. - North Carolina Statutes

§25‑2A‑504.  Liquidation of damages.

(1)        Damages payable byeither party for default, or any other act or omission, including indemnity forloss or diminution of anticipated tax benefits or loss or damage to lessor'sresidual interest, may be liquidated in the lease agreement but only at anamount or by a formula that is reasonable in light of the then‑anticipatedharm caused by the default or other act or omission.

(2)        If the leaseagreement provides for liquidation of damages, and such provision does notcomply with subsection (1) of this section, or such provision is an exclusiveor limited remedy that circumstances cause to fail of its essential purpose,remedy may be had as provided in this Article.

(3)        If the lessorjustifiably withholds or stops delivery of goods because of the lessee'sdefault or insolvency (G.S. 25‑2A‑525 or G.S. 25‑2A‑526),the lessee is entitled to restitution of any amount by which the sum of hispayments exceeds:

(a)        the amount to whichthe lessor is entitled by virtue of terms liquidating the lessor's damages inaccordance with subsection (1) of this section; or

(b)        in the absence ofthose terms, twenty percent (20%) of the then‑present value of the totalrent the lessee was obligated to pay for the balance of the lease term, or, inthe case of a consumer lease, the lesser of such amount or five hundred dollars($500.00).

(4)        A lessee's right torestitution under subsection (3) of this section is subject to offset to theextent the lessor establishes:

(a)        a right to recoverdamages under the provisions of this Article other than subsection (1) of thissection; and

(b)        the amount or valueof any benefits received by the lessee directly or indirectly by reason of thelease contract. (1993, c. 463, s. 1.)