7-2A-305
Section 7-2A-305 Sale or sublease of goods by lessee. (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 provided in subsection (2) and Section 7-2A-511(4),
takes subject to the existing lease contract. A lessee with a voidable leasehold interest
has power to transfer a good leasehold interest to a good faith buyer for value or a good
faith sublessee for value, but only to the extent set forth in the preceding sentence. When
goods have been delivered under a transaction of lease the lessee has that power even though:
(a) the lessor was deceived as to the identity of the lessee; (b) the delivery was in exchange
for a check which is later dishonored; or (c) the delivery was procured through fraud punishable
as larcenous under the criminal law. (2) A buyer in the...
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7-2A-309
of the lease agreement but subject to the lease agreement and this article, or (ii) if necessary
to enforce other rights and remedies of the lessor or lessee under this article, remove the
goods from the real estate, free and clear of all conflicting interests of all owners and
encumbrancers of the real estate, but the lessor or lessee must reimburse any encumbrancer
or owner of the real estate who is not the lessee and who has not otherwise agreed for the
cost of repair of any physical injury, but not for any diminution in value of the real
estate caused by the absence of the goods removed or by any necessity of replacing them. A
person entitled to reimbursement may refuse permission to remove until the party seeking removal
gives adequate security for the performance of this obligation. (9) Even though the lease
agreement does not create a security interest, the interest of a lessor of fixtures, including
the lessor's residual interest, is perfected by filing a financing...
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7-2A-209
Section 7-2A-209 Lessee under finance lease as beneficiary of supply contract. (1) The benefit
of a 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's leasehold interest
under a finance lease related to the supply contract, but is subject to the terms of the warranty
and of the supply contract and all defenses or claims arising therefrom. (2) The extension
of the benefit of a supplier's promises and of warranties to the lessee (Section 7-2A-209(1))
does not: (i) modify the rights and obligations of the parties to the supply contract, whether
arising therefrom or otherwise, or (ii) impose any duty or liability under the supply contract
on the lessee. (3) Any modification or rescission of the supply contract by the supplier and
the lessor is effective between the supplier and the...
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7-2A-406
Section 7-2A-406 Procedure on excused performance. (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 the value of the whole lease contract
is substantially impaired (Section 7-2A-510): (a) terminate the lease contract (Section 7-2A-505(2));
or (b) except in a finance lease, modify the lease contract by accepting the available quota
in substitution, with due allowance from the rent payable for the balance of the lease term
for the deficiency but without further right against the lessor. (2) If, after receipt of
a notification from the lessor under Section 7-2A-405, the lessee fails so to modify the lease
agreement within a reasonable time not exceeding 30 days, the lease contract lapses with respect
to any deliveries affected. (Acts 1992, 2nd Ex. Sess., No....
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7-2A-218
Section 7-2A-218 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 the lessor's identification of the goods, the lessor, until the lessor's default
or insolvency or notification to the lessee that identification is final, may substitute other
goods for those identified. (3) Notwithstanding a lessee's insurable interest under subsections
(1) and (2), the lessor retains an insurable interest until an option to buy has been exercised
by the lessee and risk of loss has passed to the lessee. For this purpose the option to buy
shall be deemed to have been exercised by the lessee when the resulting sale is closed, not
when the lessee gives notice to the lessor of the lessee's intention to exercise the option.
(4) Nothing in this section impairs any insurable interest...
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7-2A-308
Section 7-2A-308 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 possession in good faith and current course of trade by the lessor for a commercially
reasonable time after the lease contract becomes enforceable is not fraudulent. (2) Nothing
in this article impairs the rights of creditors of a lessor if the lease contract is made
under circumstances which under any statute or rule of law apart from this article would constitute
the transaction a fraudulent transfer or voidable preference. (3) A creditor of a seller may
treat a sale or an identification of goods to a contract for sale as void if as against the
creditor retention of possession by the seller is fraudulent under any statute or rule of
law, but retention of possession of the goods pursuant to a lease...
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7-2A-306
Section 7-2A-306 Priority of certain liens arising by operation of law. 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 over any interest
of the lessor or lessee under the lease contract or this article unless the lien is created
by statute and the statute provides otherwise or unless the lien is created by rule of law
and the rule of law provides otherwise. (Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §306.)...

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7-9A-407
Section 7-9A-407 Restrictions on creation or enforcement of security interest in leasehold
interest or in lessor's residual interest. (a) Term restricting assignment generally ineffective.
Except as otherwise provided in subsection (b), a term in a lease agreement is ineffective
to the extent that it: (1) prohibits, restricts, or requires the consent of a party to the
lease to the assignment or transfer of, or the creation, attachment, perfection, or enforcement
of a security interest in, an interest of a party under the lease contract or in the lessor's
residual interest in the goods; or (2) provides that the assignment or transfer or the creation,
attachment, perfection, or enforcement of the security interest may give rise to a default,
breach, right of recoupment, claim, defense, termination, right of termination, or remedy
under the lease. (b) Effectiveness of certain terms. Except as otherwise provided in Section
7-2A-303(7), a term described in subsection (a)(2) is effective to...
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7-2A-531
Section 7-2A-531 Standing to sue third parties for injury to goods. (1) If a third party
so deals with goods that have been identified to a lease contract as to cause actionable injury
to a party to the lease contract (a) the lessor has a right of action against the third party,
and (b) the lessee also has a right of action against the third party if the lessee: (i) has
a security interest in the goods; (ii) has an insurable interest in the goods; or (iii) bears
the risk of loss under the lease contract or has since the injury assumed that risk
as against the lessor and the goods have been converted or destroyed. (2) If at the time of
the injury the party plaintiff did not bear the risk of loss as against the other party
to the lease contract and there is no arrangement between them for disposition of the recovery,
his or her suit or settlement, subject to his or her own interest, is as a fiduciary for the
other party to the lease contract. (3) Either party with the consent of the...
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7-1-203
Section 7-1-203 Lease distinguished from security interest. (a) Whether a transaction in the
form of a lease creates a lease or security interest is determined by the facts of each case.
(b) A transaction in the form of a lease creates a security interest if the consideration
that the lessee is to pay the lessor for the right to possession and use of the goods is an
obligation for the term of the lease and is not subject to termination by the lessee, and:
(1) The original term of the lease is equal to or greater than the remaining economic life
of the goods; (2) The lessee is bound to renew the lease for the remaining economic life of
the goods or is bound to become the owner of the goods; (3) The lessee has an option to renew
the lease for the remaining economic life of the goods for no additional consideration or
for nominal additional consideration upon compliance with the lease agreement; or (4) The
lessee has an option to become the owner of the goods for no additional...
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