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California Commercial Code Section 2718

Legal Research Home > California Laws > Commercial Code > California Commercial Code Section 2718

2718.  (1) Damages for breach by either party may be liquidated in
the agreement subject to and in compliance with Section 1671 of the
Civil Code. If the agreement provides for liquidation of damages, and
such provision does not comply with Section 1671 of the Civil Code,
remedy may be had as provided in this division.
   (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 or her payments exceeds:
   (a) The amount to which the seller is entitled by virtue of terms
liquidating the seller's damages in accordance with subdivision (1),
or
   (b) In the absence of such terms, 20 percent 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 subdivision (2) is
subject to offset to the extent that the seller establishes:
   (a) A right to recover damages under the provisions of this
chapter other than subdivision (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 subdivision (2); but if the seller has notice of
the buyer's breach before reselling goods received in part
performance, his or her resale is subject to the conditions laid down
in this division on resale by an aggrieved seller (Section 2706).

Last modified: February 22, 2013