KRS 355.2-718: 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 amo unt 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 righ t 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).