Title 12A, Uniform Commercial Code

IDENTIFICATION 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 i…

INSURANCE AND PROCEEDS (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 t…

RISK OF LOSS (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 los…

EFFECT OF DEFAULT ON RISK OF LOSS (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,…

CASUALTY TO IDENTIFIED GOODS 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…

ENFORCEABILITY OF LEASE CONTRACT 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. Added by Laws 1988, c. 86, § 31, eff. Nov…

TITLE TO AND POSSESSION OF GOODS 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 …

ALIENABILITY OF PARTY'S INTEREST UNDER LEASE CONTRACT OR OF LESSOR'S RESIDUAL INTEREST IN GOODS; DELEGATION OF PERFORMANCE; TRANSFER OF RIGHTS (1) As used in this section, "creation of a security interest" includes the sale of a lease contract that is subject to Article 9 of this…

SUBSEQUENT LEASE OF GOODS BY LESSOR (1) Subject to Section 2A-303 of this title, 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 ha…

SALE OR SUBLEASE OF GOODS BY LESSEE (1) Subject to the provisions of Section 33 of this act, 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 …

PRIORITY OF CERTAIN LIENS ARISING BY OPERATION OF LAW If a person in the ordinary course of his 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…

PRIORITY OF LIENS ARISING BY ATTACHMENT OR LEVY ON, SECURITY INTERESTS IN, AND OTHER CLAIMS TO GOODS (1) Except as otherwise provided in Section 2A-306 of this title, a creditor of a lessee takes subject to the lease contract. (2) Except as otherwise provided in subsection (3) of…

SPECIAL RIGHTS OF CREDITORS (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 possess…

LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS BECOME FIXTURES (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 mortgage …

LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS BECOME ACCESSIONS (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 …

PRIORITY SUBJECT TO SUBORDINATION. Nothing in this article prevents subordination by agreement by any person entitled to priority. Added by Laws 1991, c. 117, § 10, eff. Jan. 1, 1992.

INSECURITY; ADEQUATE ASSURANCE OF PERFORMANCE (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, t…

ANTICIPATORY REPUDIATION (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 co…

RETRACTION OF ANTICIPATORY REPUDIATION (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 posi…

SUBSTITUTED PERFORMANCE (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…

EXCUSED PERFORMANCE Subject to Section 44 of this act 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) of this section is not a default under the leas…

PROCEDURE ON EXCUSED PERFORMANCE (1) If the lessee receives notification of a material or indefinite delay or an allocation justified under Section 45 of this act, the lessee, by written notification to the lessor as to any goods involved, and with respect to all of the goods if …

IRREVOCABLE PROMISES; FINANCE LEASES (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 independ…

DEFAULT; PROCEDURE (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 pro…

NOTICE AFTER DEFAULT 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. Added by Laws 1988, c. 86,…

MODIFICATION OR IMPAIRMENT OF RIGHTS AND REMEDIES (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 r…

LIQUIDATION OF DAMAGES (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 am…

CANCELLATION AND TERMINATION AND EFFECT OF CANCELLATION, TERMINATION, 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 …

STATUTE OF LIMITATIONS (1) An action for default under a lease contract, including breach of warranty or indemnity, must be commenced within four (4) years after the cause of action accrued. By the original lease contract the parties may reduce the period of limitation to not les…

PROOF OF MARKET RENT; TIME AND PLACE (1) Damages based on market rent (Section 2A-519 or 2A-528 of this title) 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 prevai…

LESSEE'S REMEDIES (1) If a lessor fails to deliver the goods in conformity to the lease contract (Section 2A-509 of this title) or repudiates the lease contract (Section 2A-402 of this title), or a lessee rightfully rejects the goods (Section 2A-509 of this title) or justifiably …

LESSEE'S RIGHTS ON IMPROPER DELIVERY; RIGHTFUL REJECTION (1) Subject to the provisions of Section 58 of this act, a lessee, 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 rejec…

INSTALLMENT LEASE CONTRACTS; REJECTION AND DEFAULT (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 requ…

MERCHANT LESSEE'S DUTIES AS TO RIGHTFULLY REJECTED GOODS (1) Subject to any security interest of a lessee (subsection (5) of Section 55 of this act), if a lessor or a supplier has no agent or place of business at the market of rejection, a merchant lessee, after rejection of good…

LESSEE'S DUTIES AS TO RIGHTFULLY REJECTED GOODS (1) Except as otherwise provided with respect to goods that threaten to decline in value speedily (Section 58 of this act) and subject to any security interest of a lessee (subsection (5) of Section 55 of this act): (a) the lessee, …

CURE BY LESSOR OF IMPROPER TENDER OR DELIVERY; REPLACEMENT (1) If any tender or delivery by the lessor or the supplier is rejected because nonconforming and the time for performance has not yet expired, the lessor or the supplier may seasonably notify the lessee of the lessor's o…

WAIVER OF LESSEE'S OBJECTIONS (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…

ACCEPTANCE OF GOODS (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…

EFFECT OF ACCEPTANCE OF GOODS; NOTICE OF DEFAULT; BURDEN OF 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 rightfu…

REVOCATION OF ACCEPTANCE OF GOODS (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 nonco…

COVER; SUBSTITUTE GOODS (1) After a default by a lessor under the lease contract of the type described in subsection (1) of Section 2A-508 of this title, or, if agreed, after other default by the lessor, the lessee may cover by making any purchase or lease of or contract to purch…

LESSEE'S DAMAGES FOR NONDELIVERY, REPUDIATION, DEFAULT AND BREACH OF WARRANTY IN REGARD TO ACCEPTED GOODS (1) Except as otherwise provided with respect to damages liquidated in the lease agreement (Section 2A-504 of this title) or otherwise determined pursuant to agreement of the…

LESSEE'S INCIDENTAL AND CONSEQUENTIAL DAMAGES (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 re…

LESSEE'S RIGHT TO SPECIFIC PERFORMANCE OR REPLEVIN (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…

LESSEE'S RIGHT TO GOODS ON LESSOR'S INSOLVENCY (1) Subject to subsection (2) of this section and even though the goods have not been shipped, a lessee who has paid a part or all of the rent and security for goods identified to a lease contract (Section 26 of this act) on making a…

LESSOR'S REMEDIES (1) If a lessee wrongfully rejects or revokes acceptance of goods or fails to make a payment when due or repudiates with respect to a part or the whole, then, with respect to any goods involved, and with respect to all of the goods if under an installment lease …

LESSOR'S RIGHT TO IDENTIFY GOODS TO LEASE CONTRACT (1) After default by the lessee under the lease contract of the type described in either subsection (1) of Section 2A-523 of this title or paragraph (a) of subsection (3) of Section 2A-523 of this title, or, if agreed, after othe…

LESSOR'S RIGHT TO POSSESSION OF GOODS (1) If a lessor discovers the lessee to be insolvent, the lessor may refuse to deliver the goods. (2) After a default by the lessee under the lease contract of the type described in subsection (1) of Section 2A-523 or paragraph (a) of subsect…

LESSOR'S STOPPAGE OF DELIVERY IN TRANSIT OR OTHERWISE (1) A lessor may stop delivery of goods in the possession of a carrier or other bailee if the lessor discovers the lessee to be insolvent and may stop delivery of carload, truckload, planeload, or larger shipments of express o…

LESSOR'S RIGHTS TO DISPOSE OF GOODS (1) After a default by a lessee under the lease contract of the type described in subsection (1) of Section 2A-523 of this title or paragraph (a) of subsection (3) of Section 2A-523 of this title or after the lessor refuses to deliver or takes …