§ 2-A-305 — Sale or Sublease of Goods by Lessee

Section 2-A-305. Sale or Sublease of Goods by Lessee.\n (1) Subject to the provisions of Section 2-A-303, a buyer or sublessee\nfrom the lessee of goods under an existing lease contract obtains, to\nthe extent of the interest transferred, the leasehold interest in the\ngoods that the lessee had or had power to transfer, and except as\nprovided in subsection (2) and Section 2-A-511(4), takes subject to the\nexisting lease contract. A lessee with a voidable leasehold interest has\npower to transfer a good leasehold interest to a good faith buyer for\nvalue or a good faith sublessee for value, but only to the extent set\nforth in the preceding sentence. When goods have been delivered under a\ntransaction of lease the lessee has that power even though:\n (a) the lessor was deceived as to the identity of the lessee;\n (b) the delivery was in exchange for a check which is later\n dishonored; or\n (c) the delivery was procured through fraud punishable as\n larcenous under the criminal law.\n (2) A buyer in the ordinary course of business or a sublessee in the\nordinary course of business from a lessee who is a merchant dealing in\ngoods of that kind to whom the goods were entrusted by the lessor\nobtains, to the extent of the interest transferred, all of the lessor's\nand lessee's rights to the goods, and takes free of the existing lease\ncontract.\n (3) A buyer or sublessee from the lessee 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