Liquidated Damage Clauses

"(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), 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 chapter.

(3) If the lessor justifiably withholds or stops delivery of goods because of the lessee’s default or insolvency (§ 6A-2.1-525 or 6A-2.1-526), the lessee is entitled to restitution of any amount by which the sum of his or her 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); or

(b) In the absence of those terms, 20 percent 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 $ 500.

(4) A lessee’s right to restitution under subsection (3) is subject to offset to the extent the lessor establishes:

(a) A right to recover damages under the provisions of this chapter other than subsection (1); and

(b) The amount or value of any benefits received by the lessee directly or indirectly by reason of the lease contract. (R.I. Gen. Laws § 6A-2.1-504)"

"RI Courts will not enforce a liquidated damages clause where there have been no damages because it would be an unjust enrichment. A liquidated damages clause will not be enforced if it is actually a disguised penalty. R.I. Home Improvement, Inc. v. Daigle, 2009 R.I. Super. LEXIS 76 (R.I. Super. Ct. 2009). In addition, a liquidated damages clause for delay in contract performance is not enforceable if the delay is due, in whole or in part, to the fault of the party claiming the damages. DePasquale Bldg. & Realty Co. v. R.I. Bd. of Governors for Higher Educ., 2009 R.I. Super. LEXIS 79, 22 (R.I. Super. Ct. 2009).

A liquidated damages clause is enforceable if it is a reasonable forecast of the compensation lost, R.I. Home Improvement, Inc. v. Daigle, 2009 R.I. Super. LEXIS 76 (R.I. Super. Ct. 2009), or if it is used to fix a standard by which to determine the amount to be paid as compensation in the event of a breach where damages are uncertain in damages or amount, or are difficult to ascertain, DePasquale Bldg. & Realty Co. v. R.I. Bd. of Governors for Higher Educ., 2009 R.I. Super. LEXIS 79, 23 (R.I. Super. Ct. 2009)."