(1) In this article 2.5, 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 to him or her is in violation of the ownership
rights or security interest or leasehold interest of a third party in the goods, buys in
ordinary course from a person in the business of selling goods of that kind but does
not include a pawnbroker. Buying may be for cash or by exchange of other
property or on secured or unsecured credit and includes acquiring goods or
documents of title under a preexisting contract for sale but does not include a
transfer in bulk or as security for or in total or partial satisfaction of a money debt.
(b) Cancellation occurs when either party puts an end to the lease contract
for default by the other party.
(c) Commercial unit means such a unit of goods as by commercial usage is
a single whole for purposes of lease and division of which materially impairs its
character or value on the market or in use. A commercial unit may be a single
article, as a machine, or a set of articles, as a suite of furniture or a line of
machinery, or a quantity, as a gross or carload, or any other unit treated in use or in
the relevant market as a single whole.
(d) Conforming goods or performance under a lease contract means goods
or performance that are in accordance with the obligations under the lease
contract.
(e) Consumer lease means a lease that a lessor regularly engaged in the
business of leasing or selling makes to a lessee who is an individual and who takes
under the lease primarily for a personal, family, or household purpose, if the total
payments to be made under the lease contract, excluding payments for options to
renew or buy, do not exceed twenty-five thousand dollars.
(f) Fault means wrongful act, omission, breach, or default.
(g) Finance lease means a lease with respect to which:
(i) The lessor does not select, manufacture or supply the goods;
(ii) The lessor acquires the goods or the right to possession and use of the
goods in connection with the lease; and
(iii) One of the following occurs:
(A) The lessee receives a copy of the contract by which the lessor acquired
the goods or the right to possession and use of the goods before signing the lease
contract;
(B) The lessee's approval of the contract by which the lessor acquired the
goods or the right to possession and use of the goods is a condition to effectiveness
of the lease contract;
(C) The lessee, before signing the lease contract, receives an accurate and
complete statement designating the promises and warranties, and any disclaimers
of warranties, limitations or modifications of remedies, of liquidated damages,
including those of a third party, such as the manufacturer of the goods, provided to
the lessor by the person supplying the goods in connection with or as part of the
contract by which the lessor acquired the goods or the right to possession and use
of the goods; or
(D) If the lease is not a consumer lease, the lessor, before the lessee signs
the lease contract, informs the lessee in writing (a) of the identity of the person
supplying the goods to the lessor, unless the lessee has selected that person and
directed the lessor to acquire the goods or the right to possession and use of the
goods from that person, (b) that the lessee is entitled under this article to the
promises and warranties, including those of any third party, provided to the lessor
by the person supplying the goods in connection with or as part of the contract by
which the lessor acquired the goods or the right to possession and use of the goods,
and (c) that the lessee may communicate with the person supplying the goods to
the lessor and receive an accurate and complete statement of those promises and
warranties, including any disclaimers and limitations of them or of remedies.
(h) Goods means all things that are movable at the time of identification to
the lease contract, or are fixtures (section 4-2.5-309), but the term does not include
money, documents, instruments, accounts, chattel paper, general intangibles, or
minerals or the like, including oil and gas, before extraction. The term also includes
the unborn young of animals.
(h.5) Hybrid lease means a single transaction involving a lease of goods
and:
(i) The provision of services;
(ii) A sale of other goods; or
(iii) A sale, lease, or license of property other than goods.
(i) Installment lease contract means a lease contract that authorizes or
requires the delivery of goods in separate lots to be separately accepted, even
though the lease contract contains a clause each delivery is a separate lease or
its equivalent.
(j) Lease means a transfer of the right to possession and use of goods for a
term in return for consideration, but a sale, including a sale on approval or a sale or
return, or retention or creation of a security interest is not a lease. Unless the
context clearly indicates otherwise, the term includes a sublease.
(k) Lease agreement means the bargain, with respect to the lease, of the
lessor and the lessee in fact as found in their language or by implication from other
circumstances including course of dealing or usage of trade or course of
performance as provided in this article. Unless the context clearly indicates
otherwise, the term includes a sublease agreement.
(l) Lease contract means the total legal obligation that results from the
lease agreement as affected by this article and any other applicable rules of law.
Unless the context clearly indicates otherwise, the term includes a sublease
contract.
(m) Leasehold interest means the interest of the lessor or the lessee under
a lease contract.
(n) Lessee means a person who acquires the right to possession and use of
goods under a lease. Unless the context clearly indicates otherwise, the term
includes a sublessee.
(o) Lessee in ordinary course of business means a person who in good faith
and without knowledge that the lease to him or her is in violation of the ownership
rights or security interest or leasehold interest of a third party in the goods leases
in ordinary course from a person in the business of selling or leasing goods of that
kind but does not include a pawnbroker. Leasing may be for cash or by exchange
of other property or on secured or unsecured credit and includes acquiring goods or
documents of title under a preexisting lease contract but does not include a
transfer in bulk or as security for or in total or partial satisfaction of a money debt.
(p) Lessor means a person who transfers the right to possession and use of
goods under a lease. Unless the context clearly indicates otherwise, the term
includes a sublessor.
(q) Lessor's residual interest means the lessor's interest in the goods after
expiration, termination, or cancellation of the lease contract.
(r) Lien means a charge against or interest in goods to secure payment of a
debt or performance of an obligation, but the term does not include a security
interest.
(s) Lot means a parcel or a single article that is the subject matter of a
separate lease or delivery, whether or not it is sufficient to perform the lease
contract.
(t) Merchant lessee means a lessee that is a merchant with respect to
goods of the kind subject to the lease.
(u) Present value means the amount as of a date certain of one or more
sums payable in the future, discounted to the date certain. The discount is
determined by the interest rate specified by the parties if the rate was not
manifestly unreasonable at the time the transaction was entered into; otherwise,
the discount is determined by a commercially reasonable rate that takes into
account the facts and circumstances of each case at the time the transaction was
entered into.
(v) Purchase includes taking by sale, lease, mortgage, security interest,
pledge, gift, or any other voluntary transaction creating an interest in goods.
(w) Sublease means a lease of goods the right to possession and use of
which was acquired by the lessor as a lessee under an existing lease.
(x) Supplier means a person from whom a lessor buys or leases goods to be
leased under a finance lease.
(y) Supply contract means a contract under which a lessor buys or leases
goods to be leased.
(z) Termination occurs when either party pursuant to a power created by
agreement or law puts an end to the lease contract otherwise than for default.
(2) Other definitions applying to this article and the sections in which they
appear are:
Accessions.Section 4-2.5-310 (1).
Construction mortgage.Section 4-2.5-309 (1)(d).
Encumbrance.Section 4-2.5-309 (1)(e).
Fixtures.Section 4-2.5-309 (1)(a).
Fixture filing.Section 4-2.5-309 (1)(b).
Purchase money lease.Section 4-2.5-309 (1)(c).
(3) The following definitions in other articles apply to this article:
Account.Section 4-9-102 (a)(2).
Between merchants.Section 4-2-104 (3).
Buyer.Section 4-2-103 (1)(a).
Chattel paper.Section 4-9-102 (a)(11).
Consumer goods.Section 4-9-102 (a)(23).
Document.Section 4-9-102 (a)(30).
Entrusting.Section 4-2-403 (3).
General intangible.Section 4-9-102 (a)(42).
Good faith.Section 4-2-103 (1)(b).
Instrument.Section 4-9-102 (a)(47).
Merchant.Section 4-2-104 (1).
Mortgage.Section 4-9-102 (a)(55).
Pursuant to commitment.Section 4-9-102 (a)(71).
Receipt.Section 4-2-103 (1)(c).
Sale.Section 4-2-106 (1).
Sale on approval.Section 4-2-326.
Sale or return.Section 4-2-326.
Seller.Section 4-2-103 (1)(d).
(4) In addition, article 1 of this title contains general definitions and
principles of construction and interpretation applicable throughout this article.