Sales and Leases | 211
at $2,000 per unauthorized copy, reproduction, or use of the software. The fee to license the software was $500 annually. On similar facts, a federal district court easily found that the liquidated-damages clause was unenforceable. The developer’s true harm from unauthorized copying, reproduction, or use of the software was lost annual license fees— $500. This amount, known at the time of contracting, was quite easy to determine by simple computation. [ Adapted from Stoner & Assoc’s v. JKC Nampa, Inc. , No. C08–422RAJ, 2009 WL 901920 (W.D. Wa. 2009).] d. Inconvenience or Infeasibility of Otherwise Procuring an Adequate Remedy A liquidated-damages amount must be reasonable in light of the inconvenience or infeasibility of otherwise procuring an adequate remedy. Conceptually, this prong covers much the same ground as the difficulty of proving actual harm—so much so that at least some courts seem to disregard this prong altogether. Even so, in some instances, this prong may cover some issues that the difficulty of proving actual harm does not, for instance, issues involving the delay or expense of proving damages. [ See Stoner & Assoc’s v. JKC Nampa, Inc. , No. C08–422RAJ, 2009 WL 901920 (W.D. Wa. 2009); 2 Hawkland UCC Series § 2-718:1, Westlaw (database updated June 2021).] e. Result if Liquidated-Damages Provision Is Unenforceable If a liquidated-damages provision is unenforceable, for whatever reason, then the aggrieved party will recover damages under the normal rules in Article 2. [2 Hawkland UCC Series § 2-718:1, Westlaw (database updated June 2021).] 3. Breaching Buyer’s Restitution If the seller justifiably refuses to deliver the goods due to the buyer’s breach ( e.g. , the buyer repudiates the contract or wrongfully rejects the goods), the buyer has certain rights and remedies under Article 2. Namely, in this case, the breaching buyer has a right of restitution. The amount of restitution equals the buyer’s total payments to the seller, but only to the extent that sum exceeds (1) the seller’s enforceable liquidated damages, if any, or (2) if the seller is not entitled to liquidated damages, the smaller of 20 percent of the value of the buyer’s total performance (usually, the contract price) or $500. These rules were meant to cover instances in which the buyer made a small deposit either against the purchase price or as security for performance, as well as prepayments, down payments, and suchlike. But these rules can obviously cover many other situations. [U.C.C. § 2-718(2), cmt. 2 (1951); 2 Hawkland UCC Series § 2-718:2, Westlaw (database updated June 2021).] a. Seller’s Right to Offset Damages against Breaching Buyer’s Restitution Even if the breaching buyer is entitled to restitution, the seller may be entitled to offset certain amounts against (subtract them from) that restitution. Those amounts are (1) the
Made with FlippingBook - Online Brochure Maker