## Facts

- A buyer contracted to purchase a Learjet Model 60 aircraft and paid a $250,000 deposit at contract execution.
- The contract required additional installment payments before delivery; the buyer made no payments beyond the initial deposit.
- The contract included a liquidated damages clause allowing the seller, upon buyer default, to cancel the contract and retain all amounts paid.
- After the buyer failed to make scheduled payments, the seller terminated the contract and retained the $250,000 deposit.
- The seller later sold the aircraft to another buyer, and the buyer argued the resale meant the seller’s damages were less than the deposit.
- The buyer sued for return of the deposit, claiming the clause was an unenforceable penalty.
- After remand from an earlier appeal, the district court conducted a bench trial, found the seller was a lost volume seller, and enforced the liquidated damages clause; the buyer appealed again.

## Issues

1. Whether the deposit-retention provision was enforceable liquidated damages under K.S.A. 84-2-718 or an unenforceable penalty.
2. Whether the seller’s resale of the aircraft, including allegedly higher profit, made the liquidated damages amount “grossly disproportionate” to harm.
3. Whether the seller qualified as a lost volume seller and how that status affected the reasonableness analysis under K.S.A. 84-2-718.

## Decision

- The Court of Appeals affirmed the judgment enforcing the liquidated damages clause.
- The court held K.S.A. 84-2-718 governed the aircraft sales contract and permitted liquidated damages that are reasonable in light of anticipated or actual harm, difficulty of proving loss, and difficulty of obtaining an adequate remedy.
- The court upheld the district court’s factual finding that the seller was a lost volume seller: it had capacity to make an additional sale, an additional sale would have been profitable, and it probably would have made an additional sale absent the breach.
- The court rejected the buyer’s argument that resale at equal or greater profit eliminated harm; under the lost volume theory, the seller could have made both sales, so resale did not negate the seller’s loss.
- The buyer did not meet the burden to prove the stipulated amount was unreasonable or “grossly disproportionate” so as to be a penalty.

## Legal Principles

- K.S.A. 84-2-718 governs liquidated damages in contracts for the sale of goods and validates clauses setting damages at an amount reasonable in light of anticipated or actual harm, difficulty of proof, and difficulty of securing an adequate remedy.
- A liquidated damages term is unenforceable as a penalty if the amount fixed is grossly disproportionate to the harm likely or actually caused by the breach.
- The party challenging a liquidated damages provision bears the burden of proving unenforceability.
- Reasonableness and enforceability of a liquidated damages clause is a question of law on appellate review.
- Lost volume seller status is a factual determination; when established, a resale does not necessarily offset the seller’s loss because the seller may have lost the profit from an additional sale it otherwise would have made.

## Conclusion

The court enforced the contract’s provision allowing the seller to retain the buyer’s $250,000 deposit, holding the amount was a reasonable liquidated damages measure under K.S.A. 84-2-718 and not a penalty, particularly given the seller’s lost volume seller status and the buyer’s failure to prove gross disproportionality.


Rodriguez v. Learjet, Inc., 946 P.2d 1010 (Kan. Ct. App. 1997)