N.Y. Uniform Commercial Code Law § 2-718: Liquidation or Limitation of Damages; Deposits

Section 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

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 per cent of the value of

the total performance for which the buyer is obligated under

the contract or $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 (Section 2--706).