Colorado § 4-2-718 - Liquidation or limitation of damages - deposits.
Full text of Colorado Colorado Revised Statutes § 4-2-718 — Liquidation or limitation of damages - deposits., with citation guidance and answers to common questions.
§ 4-2-718. 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) of this section; or
(b) In the absence of such terms, twenty percent of the value of the total performance for which the buyer is obligated under the contract or five hundred dollars, whichever is smaller.
(3) The buyer's right to restitution under subsection (2) of this section 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) of this section, 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) of this section; 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 4-2-706).
Source: L. 65: p. 1341, § 1. C.R.S. 1963: § 155-2-718.
ANNOTATION
Law reviews. For article, "Exclusion and Modification of Warranty under the U.C.C. — How to Succeed in Business Without Being Liable for Not Really Trying", see 46 Den. L.J. 579 (1969).
Source: official Colorado text · Last verified 2026-08-27
Frequently Asked Questions About Colorado § 4-2-718
What does Colorado Revised Statutes § 4-2-718 cover?
Section 4-2-718 ("Liquidation or limitation of damages - deposits.") is part of the Colorado Revised Statutes, the codified statutory law of Colorado. It sets out the legal rule or procedure described in the text above. Statutes are amended regularly, so always verify against the official source.
How do I cite Colorado § 4-2-718?
A common citation format is "Colorado Revised Statutes § 4-2-718" (Colorado). Legal writing may require the code abbreviation, section number, and year or edition. Match the style required by your court, professor, or publisher.
Is this the official text of Colorado law?
No. This page is for research and education and may not include the most recent amendments. For official current law, check the Colorado official source linked on this page or consult a licensed Colorado attorney.
How does Colorado § 4-2-718 apply to my situation?
Statutes are interpreted in context, and application depends on your specific facts. Only a licensed attorney in Colorado can advise on how this section applies to you. Contact your state or local bar association for a referral.
Sources & Verification
Not legal advice. Verify against the official source and consult a licensed attorney in Colorado.