§ 554.13303 — Alienability of party’s interest under lease contract or of lessor’s residual interest in goods — delegation of performance — transfer of rights

Iowa § 554.13303

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 554: UNIFORM COMMERCIAL CODE

Text

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, Secured Transactions, by reason of section 554.9109,
subsection 1, paragraph “c”.
2. Except as provided in subsection 3 and section 554.9407, a provision in a lease
agreement which prohibits the voluntary or involuntary transfer, including a transfer by
sale, sublease, creation or enforcement of a security interest, or attachment, levy, or other
judicial process, of an interest of a party under the lease contract or of the lessor’s residual
interest in the goods, or makes such a transfer an event of default, gives rise to the rights
and remedies provided in subsection 4, but a transfer that is prohibited or is an event of
default under the lease agreement is otherwise effective.
3. A provision in a lease agreement which prohibits a transfer of a right to damages for
default with respect to the whole lease contract or of a right to payment arising out of the
transferor’s due performance of the transferor’s entire obligation, or makes such a transfer
an event of default, is not enforceable, and such a transfer is not a transfer that materially
impairs the prospect of obtaining return performance by, materially changes the duty of, or
materiallyincreasestheburdenorriskimposedon,theotherpartytotheleasecontractwithin
the purview of subsection 4.
4. Subject to subsection 3 and section 554.9407:
a. if a transfer is made which is made an event of default under a lease agreement, the
party to the lease contract not making the transfer, unless that party waives the default or
otherwise agrees, has the rights and remedies described in section 554.13501, subsection 2;
b. if paragraph “a” is not applicable and if a transfer is made that is prohibited under
a lease agreement or materially impairs the prospect of obtaining return performance by,
materially changes the duty of, or materially increases the burden or risk imposed on, the
other party to the lease contract, unless the party not making the transfer agrees at any time
to the transfer in the lease contract or otherwise, then, except as limited by contract, the
transferor is liable to the party not making the transfer for damages caused by the transfer
to the extent that the damages could not reasonably be prevented by the party not making
the transfer and a court having jurisdiction may grant other appropriate relief, including
cancellation of the lease contract or an injunction against the transfer.
5. A transfer of “the lease” or of “all my rights under the lease”, or a transfer in similar

general terms, is a transfer of rights and, unless the language or the circumstances, as in
a transfer for security, indicate the contrary, the transfer is a delegation of duties by the
transferor to the transferee. Acceptance by the transferee constitutes a promise by the
transferee to perform those duties. The promise is enforceable by either the transferor or
the other party to the lease contract.
6. Unless otherwise agreed by the lessor and the lessee, a delegation of performance does
not relieve the transferor as against the other party of any duty to perform or of any liability
for default.
7. In a consumer lease, to prohibit the transfer of an interest of a party under the lease
contract or to make a transfer an event of default, the language must be specific, by a writing,
and conspicuous.