Kentucky Revised Statutes

Ky. Rev. Stat. § 355.2-718 (2026)

Liquidation or limitation of damages -- Deposits

✓ current as of May 2026

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(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), 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 (KRS 355.2-706). Effective: July 1, 1960 History: Created 1958 Ky. Acts ch. 77, sec. 2-718, effective July 1, 1960.

Notes of Decisions

Cited in 6 cases, 1970–2003 · leading case: Marley Cooling Tower Co. v. Caldwell Energy & Env't, Inc., 280 F. Supp. 2d 651 (W.D. Ky. 2003).

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Marley Cooling Tower Co. v. Caldwell Energy & Env't, Inc., 280 F. Supp. 2d 651 (W.D. Ky. 2003). · cites it 2× “Ky.Rev.Stat. Ann. § 355.2-718(1) (Baldwin 1983).”

In Re Yost, 54 B.R. 818 (Bankr. W.D. Ky. 1985). “See Kentucky Revised Statutes § 355.2-718. 14 . Uncle George Orphans Home, Inc.”

Leitchfield Dev. Corp. v. Clark, 757 S.W.2d 207 (Ky. Ct. App. 1988). · cites it 2× “2-612) and unless otherwise agreed under the sections on contractual limitations of remedy (KRS 355.2-718 and 355.2-719), if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may (a) reject the whole; or (b) accept the whole; or (c)…”

Coca-Cola Bottling Works (Thomas) Inc. v. Hazard Coca-Cola Bottling Works, Inc., 450 S.W.2d 515 (Ky. Ct. App. 1970). “We are dealing with very valuable, highly-developed property, tied up with complex and variable economic forces.”

Capital Holding Corp. v. Octagon Dev. Co., 757 S.W.2d 202 (Ky. Ct. App. 1988). “Our Uniform Commercial Code provides for such damages at KRS 355.2-718 and they are clearly allowable in this jurisdiction, In Re Robinson, 49 B.”

Est. of Robinson Ex Rel. Simpson v. Hunt (In Re Robinson), 49 B.R. 575 (Bankr. W.D. Ky. 1985). “See Kentucky Revised Statutes § 355.2-718. 2 . Uncle George Orphans Home, Inc.”

— Ky. Rev. Stat. § 355.2-718(1) — 1 case

Marley Cooling Tower Co. v. Caldwell Energy & Env't, Inc., 280 F. Supp. 2d 651 (W.D. Ky. 2003). “Ky.Rev.Stat. Ann. § 355.2-718(1) (Baldwin 1983).”

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