§ 2-A-304 — Subsequent Lease of Goods by Lessor

Section 2-A-304. Subsequent Lease of Goods by Lessor.\n (1) Subject to Section 2-A-303, a subsequent lessee from a lessor of\ngoods under an existing lease contract obtains, to the extent of the\nleasehold interest transferred, the leasehold interest in the goods that\nthe lessor had or had power to transfer, and, except as provided in\nsubsection (2) and Section 2-A-527(4), takes subject to the existing\nlease contract. A lessor with voidable title has power to transfer a\ngood leasehold interest to a good faith subsequent lessee for value, but\nonly to the extent set forth in the preceding sentence. If goods have\nbeen delivered under a transaction of purchase, the lessor has that\npower even though:\n (a) the lessor's transferor was deceived as to the identity of\n the lessor;\n (b) the delivery was in exchange for a check which is later\n dishonored;\n (c) it was agreed that the transaction was to be a "cash sale";\n or\n (d) the delivery was procured through fraud punishable as\n larcenous under the criminal law.\n (2) A subsequent lessee in the ordinary course of business from a\nlessor who is a merchant dealing in goods of that kind to whom the goods\nwere entrusted by a prior lessee before the interest of the subsequent\nlessee became enforceable against that lessor obtains, to the extent of\nthe leasehold interest transferred, all of that lessor's and the prior\nlessee's rights to the goods and takes free of the existing lease\ncontract.\n (3) A subsequent lessee from the lessor of goods that are subject to\nan existing lease contract and are covered by a certificate of title\nissued under a statute of this state or of another jurisdiction takes no\ngreater rights than those provided both by this section and by the\ncertificate of title statute.\n