(810 ILCS 5/2-718)
(from Ch. 26, par. 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, 20% 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).
(Source: Laws 1961, p. 2101