Okla. Stat. tit. 12A § 2A-504

Current through Laws 2024, c. 453.

Section 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) of this section, or such provision 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 insolvency (Section 72 or 73 of this act), 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) of this section; 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 ($500.00).

(4) A lessee's right to restitution under subsection (3) of this section 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) of this section; and

(b) the amount of value of any benefits received by the lessee directly or indirectly by reason of the lease contract.

Okla. Stat. tit. 12A, § 2A-504

Added by Laws 1988, HB 1683, c. 86, § 51, eff. 11/1/1988.

Oklahoma Code Comment

This provision would appear to be more workable than prior Oklahoma law, which in 15 Oklahoma Statutes §§ 214 and 215 required that damages be difficult or impracticable to determine and, in cases interpreting those statutes, that actual damages be by their nature uncertain, in order to allow liquidated damages which could not be disproportionate to probable actual harm. See § 2A-504, Official Comment. While the older sections are displaced by this section for leases, that may not be as much change as it would seem. For example, in B & B Lines, Inc. v. Ryan Freight Lines, Inc., 601 P.2d 1207 (Okla.App.1979), the court upheld a damage formula of $12 per day when the plaintiff was deprived of the use of a trailer which it might have re-rented and where the accrued contract damages exceeded the value of the property. This result seems difficult to reconcile with the test under 15 Oklahoma Statutes §§ 214 and 215, although not with the rule of this section.

The result in Hargrove v. Bourne, 150 P. 121 (Okla.1915), where the court invalidated a provision to pay $500 in event of breach as it bore no necessary relation to what actual damages might be, also appears consistent with this provision.

For discussion of the relationship between this section and the consequence of the TRAC lease amendment included in the 1990 amendments to Article 2A, see Huddleson, Old Wine in New Bottles: UCC Article 2A-Leases, 39 Ala.L.Rev. 615, 639, 648 (1988).