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Lease

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QuestionAnswer
UCC 2A -governs leases-adopted in WY -genearlly follows Art 2 by substituting the term "lease" for the term "sale" but there are a few new or different rules to Art 2A
Lease -under Art 2A restricts its coverage to a lease of goods -"a transfer of the right to possession and use of goods for a term in return for consideration" -includes "sublease"
"goods" defined "all things that are movable at the time of identification to the lease contract"
Distinguishing a lease from a disguised sale on credit (secured transaction) Test: a K is disguised as a secured trans rather than true lease if: 1. the "lessee" has no right to terminate his obligation to pay during the lease terms; and 2. one of the following is present: a. next card
a)lease is for entire economic life of goods or gives "lessee" option to renew for rest of economic life for nominal or no add'l consid; or b)lease provides that lessee will become owner of goods or has option to purchase goods for nominal/no add'l consi
Factors that by themselves do not indicate a disguised sale 1. the lessee pays consideration equal to or greater than the fair market value of the leased good 2.the lessee assumes major duties as the good
Protective Article 9 Filing -when in doubt of sale on credit or lease, have client make a protective filing under Art 9. Art 9 permits filing of a financing statment using terms "lessor" and "lessee" as opposed to "secured party" & "debtor" -filing protects seller from other cred.
Minor Differences btwn Art 2A and Art 2 -Statute of Frauds -2A has no"battle of forms" section -Consumer Protection
Statute of Frauds -lease be in writing if total pymts under lease will be $1000/more -must be signed by party against whom enforcement is sought, desc leased goods, & lease term, & indicate that lease contract has been made btwn parties -must specify quantity of goods
Consumer Protection -if lessee is consumer, consumer lease arises -2A contains provisions protecting consumer 1.option to accelerate at will 2. unconscionability
Accelleration Term -if lease contains term allowing acceleration of the entire lease obligation at the will of the lessor, the term is enforceable only if the leassor exercises it in good faith, which the lessor has the burden of proving
Unconscionability -2A doesnt define but contains following rules: 1. doesn't req both proced'l & substan unconscionability. 2. successful consumer is permitted to recover atty fees not limited to amt of recovery. If consumer loses(knew groundless) he pays lessor atty fe
Finance Lease -in a finance lease the lessee, instead of buying goods and financing the sale, has the lessor buy the goods from the seller (supplier) and then lease them to the lessee -lessor must be true financer-not in the business of selling goods involved
Finance Lease Warranties -Lessor makes no implied warranties -but any warranties made by the supplier to the lessor are passed on the the lessee, who has a direct cause of action on them against the supplier to the exte of lessee's interest in goods, regardless of lack of privit
The "hell or high water" clause -finance lease imposes an absolute obligation on the lessee to make pymts to the lessor no matter how badly the leased goods perform or break down -doesnt apply to consumer leases
Remedies: Default by Lessor -gives lessee same rights & remedies lessee would have if was art2 transaction. -Lessee may: accept goods & recover damages for breach of warranty, cancel lease k, recover rent & security pd, cover & recover damages, or exercise other rights provided in
Remedies: Default by Lessee Remedies similar to Art2 -2A does not allow lessor to get entire amt of rent called for-limits lessor to actual damages -substatial default may led to suit for entire future rent only if goods neither repossessed oby nor tendered to lessor
Created by: sachav3