Texas Business & Commerce Code

§ 2.718 — LIQUIDATION OR LIMITATION OF DAMAGES; DEPOSITS

BC § 2.718Title 1. UNIFORM COMMERCIAL CODE · Ch. 2. SALES · Art. G. REMEDIES

Statute text

(a)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 non-feasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.

(b)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

(1)the amount to which the seller is entitled by virtue of terms liquidating the seller's damages in accordance with Subsection (a), or

(2)in the absence of such terms, twenty percent of the value of the total performance for which the buyer is obligated under the contract or $500, whichever is smaller.

(c)The buyer's right to restitution under Subsection (b) is subject to offset to the extent that the seller establishes

(1)a right to recover damages under the provisions of this chapter other than Subsection (a), and

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Legislative history

Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1, eff. Sept. 1, 1967.