Okla. Stat. tit. 12A § 2-718

Current through Laws 2024, c. 9.

Section 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) 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 ($500.00), 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 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.

(4) 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 (Section 2-706).

Okla. Stat. tit. 12A, § 2-718

Laws 1961, SB 36, p. 100, § 2-718, eff. 1/1/1962.

Oklahoma Code Comment

(1) This changes the Oklahoma law. 15 Okl.St.Ann. § 214 provides: "Every contract, by which the amount of damages to be paid, or other compensation to be made, for a breach of an obligation, is determined in anticipation thereof, is to that extent void, except as expressly provided by the next section." 15 Okl.St.Ann. § 215 states: "A stipulation or condition in a contract, providing for the payment of an amount which shall be presumed to be the amount of damage sustained by a breach of such contract, shall be held valid, when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage." The Oklahoma court has in several cases found that actual damages would be difficult to fix and has upheld the liquidated damage provision. See Consolidated Flour Mills Co. v. File Bros. Wholesale Co., C.A., 110 F.2d 926 (1940); Hudson v. Elliott, 207 Okl. 676, 252 P.2d 482, (1953).

The language of the Commercial Code is more flexible, and gives the court more discretion, since the standard is what is "reasonable" in light of various conditions, but it clearly reflects a restrictive attitude toward liquidated damages clauses. 15 Okl.St.Ann. §§ 214 and 215 are undoubtedly superseded by this section to the extent that they are inconsistent.

(2) Oklahoma has previously held that the purchaser is entitled to recover the down payment, less actual damages suffered by the seller. Briscoe v. Johnson, 73 Okl. 273, 176 P. 214 (1918). Under this section, the buyer's right of restitution is preserved, with certain limitations.

(3) This preserves the seller's rights to whatever actual damages he may establish under any provision of the Commercial Code. The Commercial Code does not so provide, but it must be assumed that the seller is not entitled to both actual damages, and the statutory amounts stated in (2), but that he would have his option to follow the remedy which would produce for him the greatest advantage.

(4) The purpose of this paragraph is to incorporate the good faith requirements of Section 2-706 so that the value of property taken as the purchase price, or part thereof, can be fairly determined.