KRS 355.2A-504: Liquidation of damages.

(1) Damages payable by either party for default, or any other act or omission, including

indemnity for loss or diminution of anticipated tax benefits or loss or damage to

lessor's residual interest, may be liquidated in the lease agreement but only at an

amount or by a formula that is reasonable in light of the then anticipated harm

caused by the default or other act or omission.

(2) If the lease agreement provides for liquidation of damages, and such provision does

not comply with subsection (1), or such provi sion is an exclusive or limited remedy

that circumstances cause to fail of its essential purpose, remedy may be had as

provided in this article.

(3) If the lessor justifiably withholds or stops delivery of goods because of the lessee's

default or insolvenc y (KRS 355.2A -525 or 355.2A -526), the lessee is entitled to

restitution of any amount by which the sum of his payments exceeds:

(a) The amount to which the lessor is entitled by virtue of terms liquidating the

lessor's damages in accordance with subsection (1); or

(b) In the absence of those terms, twenty percent (20%) of the then present value

of the total rent the lessee was obligated to pay for the balance of the lease

term, or, in the case of a consumer lease, the lesser of such amount or five

hundred dollars ($500).

(4) A lessee's right to restitution under subsection (3) is subject to offset to the extent

the lessor 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 lessee directly or

indirectly by reason of the lease contract.