NY Lease of Goods Flashcards
To what does UCC-2A apply?
Leases of goods. Subleases are included
What is the difference between lease a sale on credit? Treat a sale on credit as a sale where the lessor is article 9 secured party.
Is a sale on credit if
- the lessee has NO RIGHT to TERMINATE his obligation to pay during the lease term; AND EITHER:
- The lease is for the entire economic life of the goods or gives lessee option to renew for the rest of economic life for no value or consideration; or
- The lease provides that lessee will become the owner or has an option to purchase for no additional cost
For a lease to be within the statute of frauds under New York law, ___? What is required in the writing?
Its total payments will be $1000 or more. The writing will describe the lease term, the leased goods (including QUANTITY), and indicate the contract has been made between the parties.
In a lease of goods, the lessor makes all the usual warranties that are made by a seller under the UCC. There is one major exception: the finance lease. In a finance lease, the lessor makes no implied warranties (only warranties made by the supplier to the lessor). Describe the transaction and creates a finance lease
In a finance lease, lessee has the lessor by the goods from a supplier, and then lease the goods to the lessee. The lessee’s claims are against the supplier for breach of warranty. The lessee must make his payments “hell or high water” – ABSOLUTE OBLIGATION while the lessee deals with the supplier on the problems.
What remedies does the lessee have if the lessor defaults?
The lessee has all the same remedies as a buyer would have under article 2.
What remedies does a lessor have on default by the lessee for the lease of goods?
Lessor may cancel the contract, withhold or stop delivery, take possession of previously delivered goods, dispose of or retain the goods and recover damages, recover rent, or any other contractual remedy. He can repossess the goods without breaching the peace.
Upon default by the lessee, when can the lessor bring suit for the entire future rent?
When the goods were NEITHER repossessed NOR tendered by the lessee (e.g., destroyed or of zero value), or where the lessor is a lost volume lessor.
Does article 2A allow subleasing (or assignment or other transfer) of the lease, even if the contract says otherwise?
Yes! Even if the agreement says otherwise, article 2A provides for subleases or transfer.
What rights do creditors of the lessor or lessee have in the leased goods?
Have no better write that their debtors, unless: 1. The lease is actually a “true sale”; 2. Mechanics liens, where an artist is working on the leased property; 3. If the lessor’s creditors attached the security interest before the lease began, and the lease was not in the ordinary course of business or the lessee was aware of the security interest.
