We concentrate on civil decisions of the North Carolina Supreme Court and the North Carolina Court of Appeals, as well as civil decisions of the U. Court of Appeals for the Fourth Circuit that interpret or apply North Carolina substantive law.
, the COA held today that a party challenging a liquidated damages provision (a contract provision pre-determining the amount of damages in the event of a breach) bears the burden of proving that the provision is unenforceable.
(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 (G.
This blog highlights developments in the appellate courts that affect business interests in North Carolina.
In , the defendant appellant argued that the plaintiff had failed to offer evidence on the amount of damages the plaintiff claimed it was entitled to.
(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), (b) in the absence of such terms, twenty per cent (20%) of the value of the total performance for which the buyer is obligated under the contract or five hundred dollars (0.00), whichever is smaller, or (c) at the election of the seller in the case of a layaway contract, the aggregate payments received by seller from buyer under the contract or fifty dollars (.00), 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.
As to the enforceability of the liquidated damages provision, the COA put the burden of establishing whether a liquidated damages provision is enforceable on the party seeking to invalidate the provision.
The court said "the purpose of a liquidated damages provision is to obviate the need for the nonbreaching party to prove actual damages" and "placing the burden on the party seeking to invalidate a stipulated damages provision [is] appropriate because that party .