Ariz. Rev. Stat. » Title 47
Arizona Revised Statutes

Ariz. Rev. Stat. § 47-2718 (2026)

Liquidation or limitation of damages; deposits

✓ current as of May 2026
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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 of this section, or

2. In the absence of such terms, twenty per cent of the value of the total performance for which the buyer is obligated under the contract or five hundred dollars, whichever is smaller.

C. The buyer's right to restitution under subsection B of this section 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 of this section, and

2. The amount or value of any benefits received by the buyer directly or indirectly by reason of the contract.

D. 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 B of this section; 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 chapter on resale by an aggrieved seller (section 47-2706).

Notes of Decisions
Cited in 4 cases (2 in the last 5 years), 2004–2026 · leading case: Dobson Bay Club II DD, LLC v. La Sonrisa De Siena, LLC, 393 P.3d 449 (Ariz. 2017).
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Dobson Bay Club II DD, LLC v. La Sonrisa De Siena, LLC, 393 P.3d 449 (Ariz. 2017). · cites it 10× “Because I believe that over the course of that journey the majority lost the forest for the trees, I respectfully dissent.”
Gilbert v. Monaco Coach Corp., 352 F. Supp. 2d 1323 (N.D. Ga. 2004). “Ariz.Rev.Stat. § 47-2718(b). The Court, then, will look to Arizona law in determining whether plaintiffs are barred from seeking consequential and incidental damages.”
McCumber v. Invitation Homes Inc (N.D. Tex. 2022). · cites it 3× “Arizona Illegal Penalty Claim—Ariz. Rev. Stat. § 47-2718—Count 1 Invitation Homes argues that Plaintiffs “merely regurgitat[e] the elements of a cause of action” without providing factual allegations.”
Polite (D. Ariz. 2026). · cites it 2× “, person receiving—meaning that the 30- 10 day requirement does not apply to Defendant? 11 3) Why A.R.S. § 47-2718, which relates to liquidated damages, applies to a 12 settlement agreement that does not contain a liquidated damages clause? 13 4) Why you could rely upon…”
— Ariz. Rev. Stat. § 47-2718(A) — 1 case
Dobson Bay Club II DD, LLC v. La Sonrisa De Siena, LLC, 393 P.3d 449 (Ariz. 2017). “Because I believe that over the course of that journey the majority lost the forest for the trees, I respectfully dissent.”
— Ariz. Rev. Stat. § 47-2718(b) — 1 case
Gilbert v. Monaco Coach Corp., 352 F. Supp. 2d 1323 (N.D. Ga. 2004). “Ariz.Rev.Stat. § 47-2718(b). The Court, then, will look to Arizona law in determining whether plaintiffs are barred from seeking consequential and incidental damages.”
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