Title 41 — Uniform Commercial Code

This chapter may be cited as the Uniform Commercial Code - Leases.

1. This chapter applies to any transaction, regardless of form, that creates a lease and, in the case of a hybrid lease, it applies to the extent provided in subsection 2. 2. In a hybrid lease: a. If the lease-of-goods aspects do not predominate: (1) Only the provisions of this c…

1. In this chapter unless the context otherwise requires: a. "Buyer in ordinary course of business" means a person who in good faith and without knowledge that the sale is in violation of the ownership rights or security interest or leasehold interest of a third party in the good…

1. A lease, although subject to this chapter, is also subject to any applicable: a. Certificate of title statute of this state; b. Certificate of title statute of another jurisdiction (section 41-02.1-05); or c. Consumer protection law of this state, both decisional and statutory…

Any claim or right arising out of an alleged default or breach of warranty may be discharged in whole or in part without consideration by a waiver or renunciation in a signed record delivered by the aggrieved party.

1. If the court as a matter of law finds a lease contract or any clause of a lease contract to have been unconscionable at the time it was made, the court may refuse to enforce the lease contract, or it may enforce the remainder of the lease contract without the unconscionable cl…

1. A term providing that one party or that party's successor in interest may accelerate payment or performance or require collateral or additional collateral "at will" or "when he or she deems himself or herself insecure" or in words of similar import must be construed to mean th…

1. A lease contract is not enforceable by way of action or defense unless: a. The total payments to be made under the lease contract, excluding payments for options to renew or buy, are less than one thousand dollars; or b. There is a record, signed by the party against whom enfo…

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a record intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any …

The affixing of a seal to a record evidencing a lease contract or an offer to enter into a lease contract does not render the record a sealed instrument and the law with respect to sealed instruments does not apply to the lease contract or offer.

1. A lease contract may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of a lease contract. 2. An agreement sufficient to constitute a lease contract may be found although the moment of its making is undetermin…

An offer by a merchant to lease goods to or from another person in a signed record that by its terms gives assurance it will be held open is not revocable, for lack of consideration, during the time stated or, if no time is stated, for a reasonable time, but in no event may the p…

1. Unless otherwise unambiguously indicated by the language or circumstances, an offer to make a lease contract must be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances. 2. If the beginning of a requested performance is a reasonable…

Repealed by S.L. 2007, ch. 354, § 29.

1. An agreement modifying a lease contract needs no consideration to be binding. 2. A signed lease agreement that excludes modification or rescission except by a signed record may not be otherwise modified or rescinded, but, except as between merchants, such a requirement on a fo…

1. The benefit of the supplier's promises to the lessor under the supply contract and of all warranties, whether express or implied, including those of any third party provided in connection with or as part of the supply contract, extends to the lessee to the extent of the lessee…

1. Express warranties by the lessor are created as follows: a. Any affirmation of fact or promise made by the lessor to the lessee which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods will conform to the affirmation or…

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: a. Pass without objection in the trade under the description in the lease …

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 41-02.1-11 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: 1. E…

A warranty to or for the benefit of a lessee under this chapter, whether express or implied, extends to any person who may reasonably be expected to use, consume, or be affected by the goods and who is injured by breach of the warranty. The operation of this section may not be ex…

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: 1. 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 identificatio…

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 section 41-02.1-29, if risk of loss is to pass to the lessee and the time of passage …

1. If 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 loss remains with the lessor, or, in the case of a finance lease, the supp…

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 under the lease agreement or…

Except as otherwise provided in this chapter, 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.

Except as otherwise provided in this chapter, each provision of this chapter 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. Subject to section 41-02.1-33, 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 …

1. Subject to section 41-02.1-33, 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 provided in subsect…

If a person in the ordinary course of 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 over any inter…

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 current…

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 recorded, of a fina…

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 intere…

Nothing in this chapter prevents subordination by agreement by any person entitled to priority.

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 adequate…

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: 1. For a commercially reasonable time, aw…

1. Until the repudiating party's next performance is due, the repudiating party can retract the repudiation unless the aggrieved party has canceled the lease contract or materially changed the aggrieved party's position or otherwise indicated that the aggrieved party considers th…

1. If without fault of the lessee, the lessor, or 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 reasonabl…

Subject to section 41-02.1-45 on substituted performance, the following rules apply: 1. Delay in delivery or nondelivery in whole or in part by a lessor or a supplier who complies with subsections 2 and 3 is not a default under the lease contract if performance as agreed has been…

1. If the lessee receives notification of a material or indefinite delay or an allocation justified under section 41-02.1-46, 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 effectiv…

1. Whether the lessor or the lessee is in default under a lease contract is determined by the lease agreement and this chapter. 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 chapter…

Except as otherwise provided in this chapter 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.

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

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 a lessor's residual interest, may be liquidated in the lease agreement but only at an amount or by a formula t…

1. An action for default under a lease contract, including breach of warranty or indemnity, must be commenced within four 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 …

1. Damages based on market rent (section 41-02.1-67 or 41-02.1-76) 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 time of the default. 2. If evide…

1. If a lessor fails to deliver the goods in conformity to the lease contract (section 41-02.1-57) or repudiates the lease contract (section 41-02.1-43), or a lessee rightfully rejects the goods (section 41-02.1-57) or justifiably revokes acceptance of the goods (section 41-02.1-…