Title 7 — Title 7

Obligation Against Infringement. (1) There is in a lease contract a warranty that for the lease term no person holds a claim to or interest in the goods that arose from an act or omission of the lessor, other than a claim by way of infringement or the like, which will interfere w…

(1) Except in a finance lease, a warranty that the goods will be merchantable is implied in a lease contract if the lessor is a merchant with respect to goods of that kind. (2) Goods to be merchantable must be at least such as (a) pass without objection in the trade under the des…

Except in a finance lease, if the lessor at the time the lease contract is made has reason to know of any particular purpose for which the goods are required and that the lessee is relying on the lessor’s skill or judgment to select or furnish suitable goods, there is in the leas…

(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit a warranty must be construed wherever reasonable as consistent with each other; but, subject to the provisions of Section 7-2A-202 on parol or extrinsic evidence, …

Warranties, whether express or implied, must be construed as consistent with each other and as cumulative, but if that construction is unreasonable, the intention of the parties determines which warranty is dominant. In ascertaining that intention the following rules apply: (a) E…

(1) A warranty to or for the benefit of a lessee under this article, whether express or implied, extends to any natural person who may reasonably be expected to use, consume, or be affected by the goods and who is injured in person by breach of the warranty. (2) This section does…

Identification of goods as goods to which a lease contract refers may be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement, identification occurs: (a) when the lease contract is made if the lease contract is for a lease o…

(1) A lessee obtains an insurable interest when existing goods are identified to the lease contract even though the goods identified are nonconforming and the lessee has an option to reject them. (2) If a lessee has an insurable interest only by reason of the lessor’s identificat…

(1) Except in the case of a finance lease, risk of loss is retained by the lessor and does not pass to the lessee. In the case of a finance lease, risk of loss passes to the lessee. (2) Subject to the provisions of this article on the effect of default on risk of loss (Section 7-…

(1) Where risk of loss is to pass to the lessee and the time of passage is not stated: (a) If a tender or delivery of goods so fails to conform to the lease contract as to give a right of rejection, the risk of their loss remains with the lessor, or, in the case of a finance leas…

If a lease contract requires goods identified when the lease contract is made, and the goods suffer casualty without fault of the lessee, the lessor or the supplier before delivery, or the goods suffer casualty before risk of loss passes to the lessee pursuant to the lease agreem…

Except as otherwise provided in this article, a lease contract is effective and enforceable according to its terms between the parties, against purchasers of the goods and against creditors of the parties. History: (Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §301.)

Except as otherwise provided in this article, each provision of this article applies whether the lessor or a third party has title to the goods, and whether the lessor, the lessee, or a third party has possession of the goods, notwithstanding any statute or rule of law that posse…

(1) As used in this section, “creation of a security interest” includes the sale of a lease contract that is subject to Article 9A, Secured Transactions, by reason of Section 7-9A-109(a)(3). (2) Except as provided in subsection (3) and Section 7-9A-407, a provision in a lease agr…

(1) Subject to Section 7-2A-303, a subsequent lessee from a lessor of goods under an existing lease contract obtains, to the extent of the leasehold interest transferred, the leasehold interest in the goods that the lessor had or had power to transfer, and except as provided in s…

(1) Subject to the provisions of Section 7-2A-303, a buyer or sublessee from the lessee of goods under an existing lease contract obtains, to the extent of the interest transferred, the leasehold interest in the goods that the lessee had or had power to transfer, and except as pr…

If a person in the ordinary course of his or her business furnishes services or materials with respect to goods subject to a lease contract, a lien upon those goods in the possession of that person given by statute or rule of law for those materials or services takes priority ove…

(1) Except as otherwise provided in Section 7-2A-306, a creditor of a lessee takes subject to the lease contract. (2) Except as otherwise provided in subsection (3) and in Sections 7-2A-306 and 7- 2A-308, a creditor of a lessor takes subject to the lease contract unless the credi…

(1) A creditor of a lessor in possession of goods subject to a lease contract may treat the lease contract as void if as against the creditor retention of possession by the lessor is fraudulent under any statute or rule of law, but retention of possession in good faith and curren…

(1) In this section: (a) goods are “fixtures” when they become so related to particular real estate that an interest in them arises under real estate law; (b) a “fixture filing” is the filing, in the office where a record of a mortgage on the real estate would be filed or recorde…

(1) Goods are “accessions” when they are installed in or affixed to other goods. (2) The interest of a lessor or a lessee under a lease contract entered into before the goods became accessions is superior to all interests in the whole except as stated in subsection (4). (3) The i…

Nothing in this article prevents subordination by agreement by any person entitled to priority. History: (Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §311.)

(1) A lease contract imposes an obligation on each party that the other’s expectation of receiving due performance will not be impaired. (2) If reasonable grounds for insecurity arise with respect to the performance of either party, the insecure party may demand in writing adequa…

(1) If either party repudiates a lease contract with respect to a performance not yet due under the lease contract, the loss of which performance will substantially impair the value of the lease contract to the other, the aggrieved party may: (a) for a commercially reasonable tim…

(1) Until the repudiating party’s next performance is due, the repudiating party can retract the repudiation unless, since the repudiation, the aggrieved party has cancelled the lease contract or materially changed the aggrieved party’s position or otherwise indicated that the ag…

(1) If without fault of the lessee, the lessor and the supplier, the agreed berthing, loading, or unloading facilities fail or the agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable, but a commercially reasonab…

Subject to Section 7-2A-404 on substituted performance, the following rules apply: (a) Delay in delivery or nondelivery in whole or in part by a lessor or a supplier who complies with paragraphs (b) and (c) is not a default under the lease contract if performance as agreed has be…

(1) If the lessee receives notification of a material or indefinite delay or an allocation justified under Section 7-2A-405, the lessee may by written notification to the lessor as to any goods involved, and with respect to all of the goods if under an installment lease contract …

(1) In the case of a finance lease that is not a consumer lease the lessee’s promises under the lease contract become irrevocable and independent upon the lessee’s acceptance of the goods. (2) A promise that has become irrevocable and independent under subsection (1): (a) is effe…

(1) Whether the lessor or the lessee is in default under a lease contract is determined by the lease agreement and this article. (2) If the lessor or the lessee is in default under the lease contract, the party seeking enforcement has rights and remedies as provided in this artic…

Except as otherwise provided in this article or the lease agreement, the lessor or lessee in default under the lease contract is not entitled to notice of default or notice of enforcement from the other party to the lease agreement. History: (Acts 1992, 2nd Ex. Sess., No. 92-700,…

(1) Except as otherwise provided in this article, the lease agreement may include rights and remedies for default in addition to or in substitution for those provided in this article and may limit or alter the measure of damages recoverable under this article. (2) Resort to a rem…

(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 th…

Rescission, or Fraud on Rights and Remedies. (1) On cancellation of the lease contract, all obligations that are still executory on both sides are discharged, but any right based on prior default or performance survives, and the cancelling party also retains any remedy for defaul…

(1) An action for default under a lease contract, including breach of warranty or indemnity, must be commenced within 4 years after the cause of action accrued. By the original lease contract the parties may reduce the period of limitation to not less than one year. (2) A cause o…

(1) Damages based on market rent (Section 7-2A-519 or 7-2A-528) are determined according to the rent for the use of the goods concerned for a lease term identical to the remaining lease term of the original lease agreement and prevailing at the times specified in Sections 7-2A-51…

(1) If a lessor fails to deliver the goods in conformity to the lease contract (Section 7-2A-509) or repudiates the lease contract (Section 7-2A-402), or a lessee rightfully rejects the goods (Section 7-2A-509) or justifiably revokes acceptance of the goods (Section 7-2A-517), th…

(1) Subject to the provisions of Section 7-2A-510 on default in installment lease contracts, if the goods or the tender or delivery fail in any respect to conform to the lease contract, the lessee may reject or accept the goods or accept any commercial unit or units and reject th…

(1) Under an installment lease contract a lessee may reject any delivery that is nonconforming if the nonconformity substantially impairs the value of that delivery and cannot be cured or the nonconformity is a defect in the required documents; but if the nonconformity does not f…

(1) Subject to any security interest of a lessee (Section 7-2A-508(5)), if a lessor or a supplier has no agent or place of business at the market of rejection, a merchant lessee, after rejection of goods in his or her possession or control, shall follow any reasonable instruction…

(1) Except as otherwise provided with respect to goods that threaten to decline in value speedily (Section 7-2A-511) and subject to any security interest of a lessee (Section 7-2A-508(5)): (a) the lessee, after rejection of goods in the lessee’s possession, shall hold them with r…

(1) If any tender or delivery by the lessor or the supplier is rejected because it is nonconforming and the time for performance has not yet expired, the lessor or the supplier may seasonably notify the lessee of the lessor’s or the supplier’s intention to cure and may then make …

(1) In rejecting goods, a lessee’s failure to state a particular defect that is ascertainable by reasonable inspection precludes the lessee from relying on the defect to justify rejection or to establish default: (a) if, stated seasonably, the lessor or the supplier could have cu…

(1) Acceptance of goods occurs after the lessee has had a reasonable opportunity to inspect the goods and (a) the lessee signifies or acts with respect to the goods in a manner that signifies to the lessor or the supplier that the goods are conforming or that the lessee will take…

Establishing Default After Acceptance; Notice of Claim or Litigation to Person Answerable Over. (1) A lessee must pay rent for any goods accepted in accordance with the lease contract, with due allowance for goods rightfully rejected or not delivered. (2) A lessee’s acceptance of…

(1) A lessee may revoke acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the lessee if the lessee has accepted it: (a) Except in the case of a finance lease, on the reasonable assumption that its nonconformity would be cured and it has…

(1) After a default by a lessor under the lease contract of the type described in Section 7-2A-508(1), or, if agreed, after other default by the lessor, the lessee may cover by making any purchase or lease of or contract to purchase or lease goods in substitution for those due fr…

Warranty in Regard to Accepted Goods. (1) Except as otherwise provided with respect to damages liquidated in the lease agreement (Section 7-2A-504) or otherwise determined pursuant to agreement of the parties (Sections 7-1-302 and 7-2A-503), if a lessee elects not to cover or a l…

(1) Incidental damages resulting from a lessor’s default include expenses reasonably incurred in inspection, receipt, transportation, and care and custody of goods rightfully rejected or goods the acceptance of which is justifiably revoked, any commercially reasonable charges, ex…

(1) Specific performance may be decreed if the goods are unique or in other proper circumstances. (2) A decree for specific performance may include any terms and conditions as to payment of the rent, damages, or other relief that the court deems just. (3) A lessee has a right of …