§ 41-02.1-33 — (2A-303) Alienability of party's interest under lease contract or of lessor's residual interest in goods - Delegation of performance - Transfer of rights

North Dakota § 41-02.1-33

• Jurisdiction: North Dakota
• Title 41: Uniform Commercial Code
• Ch. 41-02.1: Leases

Text

residual interest in goods - Delegation of performance - Transfer of rights.
1. Except as provided in subsection 3 and section 41-09-69, a provision in a lease
agreement that 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 that makes such a transfer an event of
default, is enforceable as provided in subsection 3, but a transfer that is prohibited or
is an event of default under the lease agreement is otherwise effective. "Creation of a

security interest" as used in this section includes the sale of a lease contract that is
subject to chapter 41-09.
2. A transfer of a right to damages for default with respect to the whole lease contract or
a transfer of a right to payment arising out of the transferor's due performance of the
transferor's entire obligation, which includes the creation of a security interest in the
right to future payment under a lease contract that is granted by a lessor who has no
remaining performance under the lease contract, may not be prohibited or made an
event of default and is not a transfer that 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 within subsection 3.
3. Subject to subsection 2 and section 41-09-69, if a transfer is made that is prohibited or
is an event of default under a lease agreement, or if a transfer is made that 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 prejudiced by the transfer agrees at any time to the transfer
in the lease contract or otherwise, then that party has, if the transfer is made an event
of default, the rights and remedies provided under subsection 2 of section 41-02.1-48.
In all other cases, except as limited by contract, the transferor is liable to the
prejudiced party for damages caused by the transfer to the extent the damages could
not reasonably be prevented by the prejudiced party. A court having jurisdiction may
grant other appropriate relief, including cancellation of the lease contract or an
injunction against the transfer.
4. 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 and acceptance by the transferee constitutes a promise
by the transferee to perform those duties. This promise is enforceable by either the
transferor or the other party to the lease contract.
5. Unless otherwise agreed by the lessor and the lessee, no delegation of performance
relieves the transferor as against the other party of any duty to perform or any liability
for default.
6. To prohibit the transfer of an interest of a party under a consumer lease contract or to
make a transfer an event of default, the language must be specific, by a writing, and
conspicuous.