§ 34.1-2-725 — Statute of limitations in contracts for sale

(a) An action for breach of any contract for sale must be
commenced within four (4) years after the cause of action has
accrued. By the original agreement the parties may reduce the
period of limitation to not less than one (1) year but may not
extend it.
(b) A cause of action accrues when the breach occurs,
regardless of the aggrieved party's lack of knowledge of the
breach. A breach of warranty occurs when tender of delivery is
made, except that where a warranty explicitly extends to future
performance of the goods and discovery of the breach must await
the time of such performance the cause of action accrues when
the breach is or should have been discovered.
(c) Where an action commenced within the time limited by
subsection (a) is so terminated as to leave available a remedy
by another action for the same breach such other action may be
commenced after the expiration of the time limited and within
six (6) months after the termination of the first action unless
the termination resulted from voluntary discontinuance or from
dismissal for failure or neglect to prosecute.
(d) This section does not alter the law on tolling of the
statute of limitations nor does it apply to causes of action
which have accrued before this act becomes effective.
ARTICLE 2.A - LEASES
PART 1
GENERAL PROVISIONS
34.1-2.A-101. Short title.
This article shall be known and may be cited as the Uniform
Commercial Code-Leases.
34.1-2.A-102. Scope.
This article applies to any transaction, regardless of form,
that creates a lease.
34.1-2.A-103. Definitions and index of definitions.
(a) In this article unless the context otherwise requires:
(i) "Buyer in ordinary course of business" means a
person who in good faith and without knowledge that the sale to
him 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 pre-existing 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;
(ii) "Cancellation" occurs when either party puts an
end to the lease contract for default by the other party;
(iii) "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;
(iv) "Conforming" goods or performance under a lease
contract means goods or performance that are in accordance with
the obligations under the lease contract;
(v) "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 ($25,000.00);
(vi) "Fault" means wrongful act, omission, breach, or
default;
(vii) "Finance lease" means a lease with respect to
which:
(A) The lessor does not select, manufacture, or
supply the goods;
(B) The lessor acquires the goods or the right
to possession and use of the goods in connection with the lease;
and
(C) One of the following occurs:
(I) 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;
(II) 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;
(III) 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, or
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
(IV) If the lease is not a consumer lease,
the lessor, before the lessee signs the lease contract, informs
the lessee in writing (1) 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, (2) 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 (3) 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.
(viii) "Goods" means all things that are movable at
the time of identification to the lease contract, or are
fixtures (section 34.1-2.A-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;
(ix) "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;
(x) "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;
(xi) "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;
(xii) "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;
(xiii) "Leasehold interest" means the interest of the
lessor or the lessee under a lease contract;
(xiv) "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;
(xv) "Lessee in ordinary course of business" means a
person who in good faith and without knowledge that the lease to
him 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 pre-existing lease contract but does
not include a transfer in bulk or as security for or in total or
partial satisfaction of a money debt;
(xvi) "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;
(xvii) "Lessor's residual interest" means the
lessor's interest in the goods after expiration, termination, or
cancellation of the lease contract;
(xviii) "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;
(xix) "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;
(xx) "Merchant lessee" means a lessee that is a
merchant with respect to goods of the kind subject to the lease;
(xxi) "Present value" means the amount as of a date
certain of one (1) 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;
(xxii) "Purchase" includes taking by sale, lease,
mortgage, security interest, pledge, gift, or any other
voluntary transaction creating an interest in goods;
(xxiii) "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;
(xxiv) "Supplier" means a person from whom a lessor
buys or leases goods to be leased under a finance lease;
(xxv) "Supply contract" means a contract under which
a lessor buys or leases goods to be leased;
(xxvi) "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.
(b) Other definitions applying to this article and the
sections in which they appear are:
"Accessions". Section 34.1-2.A-310(a).
"Construction mortgage". Section 34.1-2.A-309(a)(iv).
"Encumbrance". Section 34.1-2.A-309(a)(v).
"Fixtures" Section 34.1-2.A-309(a)(i).
"Fixture filing". Section 34.1-2.A-309(a)(ii).
"Purchase money lease". Section 34.1-2.A-309(a)(iii).
(c) The following definitions in other articles apply to
this article:
"Account". Section 34.1-9-102(a)(ii).
"Between merchants". Section 34.1-2-104(c).
"Buyer". Section 34.1-2-103(a)(i).
"Chattel paper". Section 34.1-9-102(a)(xi).
"Consumer goods". Section 34.1-9-102(a)(xxiii).
"Document". Section 34.1-9-102(a)(xxx).
"Entrusting". Section 34.1-2-403(c).
"General intangible". Section 34.1-9-102(a)(xlii).
"Instrument". Section 34.1-9-102(a)(xlvii).
"Merchant". Section 34.1-2-104(a).
"Mortgage". Section 34.1-9-102(a)(lv).
"Pursuant to commitment". Section 34.1-9-102(a)(lxxi).
"Receipt". Section 34.1-2-103(a)(iii).
"Sale". Section 34.1-2-106(a).
"Sale on approval". Section 34.1-2-326.
"Sale or return". Section 34.1-2-326.
"Seller". Section 34.1-2-103(a)(iv).
(d) In addition, article 1 contains general definitions
and principles of construction and interpretation applicable
throughout this article.
34.1-2.A-104. Leases subject to other law.
(a) A lease, although subject to this article, is also
subject to any applicable:
(i) Certificate of title statute of this state;
(ii) Certificate of title statute of another
jurisdiction (section 34.1-2.A-105); or
(iii) Consumer protection statute of this state, or
final consumer protection decision of a court of this state
existing on the effective date of this article.
(b) In case of conflict between this article, other than
sections 34.1-2.A-105, 34.1-2.A-304(c), and 34.1-2.A-305(c), and
a statute or decision referred to in subsection (a), the statute
or decision controls.
(c) Failure to comply with an applicable law has only the
effect specified therein.
34.1-2.A-105. Territorial application of article to goods
covered by certificate of title.
Subject to the provisions of sections 34.1-2.A-304(c) and
34.1-2.A-305(c), with respect to goods covered by a certificate
of title issued under a statute of this state or of another
jurisdiction, compliance and the effect of compliance or
noncompliance with a certificate of title statute are governed
by the law (including the conflict of laws rules) of the
jurisdiction issuing the certificate until the earlier of (1)
surrender of the certificate, or (2) four months after the goods
are removed from that jurisdiction and thereafter until a new
certificate of title is issued by another jurisdiction.
34.1-2.A-106. Limitation on power of parties to consumer
lease to choose applicable law and judicial forum.
(a) If the law chosen by the parties to a consumer lease
is that of a jurisdiction other than a jurisdiction in which the
lessee resides at the time the lease agreement becomes
enforceable or within thirty (30) days thereafter or in which
the goods are to be used, the choice is not enforceable.
(b) If the judicial forum chosen by the parties to a
consumer lease is a forum that would not otherwise have
jurisdiction over the lessee, the choice is not enforceable.
34.1-2.A-107. Waiver or renunciation of claim or right
after default.
Any claim or right arising out of an alleged default or breach
of warranty may be discharged in whole or in part without
consideration by a written waiver or renunciation signed and
delivered by the aggrieved party.
34.1-2.A-108. Unconscionability.
(a) If the court as a matter of law finds a lease contract
or any clause of a lease contract to have been unconscionable at
the time it was made the court may refuse to enforce the lease
contract, or it may enforce the remainder of the lease contract
without the unconscionable clause, or it may so limit the
application of any unconscionable clause as to avoid any
unconscionable result.
(b) With respect to a consumer lease, if the court as a
matter of law finds that a lease contract or any clause of a
lease contract has been induced by unconscionable conduct or
that unconscionable conduct has occurred in the collection of a
claim arising from a lease contract, the court may grant
appropriate relief.
(c) Before making a finding of unconscionability under
subsection (a) or (b), the court, on its own motion or that of a
party, shall afford the parties a reasonable opportunity to
present evidence as to the setting, purpose, and effect of the
lease contract or clause thereof, or of the conduct.
(d) In an action in which the lessee claims
unconscionability with respect to a consumer lease:
(i) If the court finds unconscionability under
subsection (a) or (b), the court shall award reasonable
attorney's fees to the lessee;
(ii) If the court does not find unconscionability and
the lessee claiming unconscionability has brought or maintained
an action he knew to be groundless, the court shall award
reasonable attorney's fees to the party against whom the claim
is made;
(iii) In determining attorney's fees, the amount of
the recovery on behalf of the claimant under subsections (a) and
(b) is not controlling.
34.1-2.A-109. Option to accelerate at will.
(a) A term providing that one party or his successor in
interest may accelerate payment or performance or require
collateral or additional collateral "at will" or "when he deems
himself insecure" or in words of similar import must be
construed to mean that he has power to do so only if he in good
faith believes that the prospect of payment or performance is
impaired.
(b) With respect to a consumer lease, the burden of
establishing good faith under subsection (a) is on the party who
exercised the power; otherwise the burden of establishing lack
of good faith is on the party against whom the power has been
exercised.
PART 2
FORMATION AND CONSTRUCTION OF LEASE CONTRACT
34.1-2.A-201. Statute of frauds.
(a) A lease contract is not enforceable by way of action
or defense unless:
(i) The total payments to be made under the lease
contract, excluding payments for options to renew or buy, are
less than one thousand dollars ($1,000.00); or
(ii) There is a writing, signed by the party against
whom enforcement is sought or by that party's authorized agent,
sufficient to indicate that a lease contract has been made
between the parties and to describe the goods leased and the
lease term.
(b) Any description of leased goods or of the lease term
is sufficient and satisfies subsection (a)(ii), whether or not
it is specific, if it reasonably identifies what is described.
(c) A writing is not insufficient because it omits or
incorrectly states a term agreed upon, but the lease contract is
not enforceable under subsection (a)(ii) beyond the lease term
and the quantity of goods shown in the writing.
(d) A lease contract that does not satisfy the
requirements of subsection (a), but which is valid in other
respects, is enforceable:
(i) If the goods are to be specially manufactured or
obtained for the lessee and are not suitable for lease or sale
to others in the ordinary course of the lessor's business, and
the lessor, before notice of repudiation is received and under
circumstances that reasonably indicate that the goods are for
the lessee, has made either a substantial beginning of their
manufacture or commitments for their procurement;
(ii) If the party against whom enforcement is sought
admits in that party's pleading, testimony or otherwise in court
that a lease contract was made, but the lease contract is not
enforceable under this provision beyond the quantity of goods
admitted; or
(iii) With respect to goods that have been received
and accepted by the lessee.
(e) The lease term under a lease contract referred to in
subsection (d) is:
(i) If there is a writing signed by the party against
whom enforcement is sought or by that party's authorized agent
specifying the lease term, the term so specified;
(ii) If the party against whom enforcement is sought
admits in that party's pleading, testimony, or otherwise in
court a lease term, the term so admitted; or
(iii) A reasonable lease term.
34.1-2.A-202. Final written expression: parol or extrinsic
evidence.
(a) Terms with respect to which the confirmatory memoranda
of the parties agree or which are otherwise set forth in a
writing intended by the parties as a final expression of their
agreement with respect to such terms as are included therein may
not be contradicted by evidence of any prior agreement or of a
contemporaneous oral agreement but may be explained or
supplemented:
(i) By course of dealing or usage of trade or by
course of performance; and
(ii) By evidence of consistent additional terms
unless the court finds the writing to have been intended also as
a complete and exclusive statement of the terms of the
agreement.
34.1-2.A-203. Seals inoperative.
The affixing of a seal to a writing evidencing a lease contract
or an offer to enter into a lease contract does not render the
writing a sealed instrument and the law with respect to sealed
instruments does not apply to the lease contract or offer.
34.1-2.A-204. Formation in general.
(a) A lease contract may be made in any manner sufficient
to show agreement, including conduct by both parties which
recognizes the existence of a lease contract.
(b) An agreement sufficient to constitute a lease contract
may be found although the moment of its making is undetermined.
(c) Although one (1) or more terms are left open, a lease
contract does not fail for indefiniteness if the parties have
intended to make a lease contract and there is a reasonably
certain basis for giving an appropriate remedy.
34.1-2.A-205. Firm offers.
An offer by a merchant to lease goods to or from another person
in a signed writing that by its terms gives assurance it will be
held open is not revocable, for lack of consideration, during
the time stated or, if no time is stated, for a reasonable time,
but in no event may the period of irrevocability exceed three
(3) months. Any such term of assurance on a form supplied by
the offeree must be separately signed by the offeror.
34.1-2.A-206. Offer and acceptance in formation of lease
contract.
(a) Unless otherwise unambiguously indicated by the
language or circumstances, an offer to make a lease contract
must be construed as inviting acceptance in any manner and by
any medium reasonable in the circumstances.
(b) If the beginning of a requested performance is a
reasonable mode of acceptance, an offeror who is not notified of
acceptance within a reasonable time may treat the offer as
having lapsed before acceptance.
34.1-2.A-207. Repealed by Laws 2015, ch. 124, § 3.
34.1-2.A-208. Modification, rescission and waiver.
(a) An agreement modifying a lease contract needs no
consideration to be binding.
(b) A signed lease agreement that excludes modification or
rescission except by a signed writing may not be otherwise
modified or rescinded, but, except as between merchants, such a
requirement on a form supplied by a merchant must be separately
signed by the other party.
(c) Although an attempt at modification or rescission does
not satisfy the requirements of subsection (b), it may operate
as a waiver.
(d) A party who has made a waiver affecting an executory
portion of a lease contract may retract the waiver by reasonable
notification received by the other party that strict performance
will be required of any term waived, unless the retraction would
be unjust in view of a material change of position in reliance
on the waiver.
34.1-2.A-209. Lessee under finance lease as beneficiary of
supply contract.
(a) The benefit of a supplier's promises to the lessor
under the supply contract and of all warranties, whether express
or implied, including those of any third party provided in
connection with or as part of the supply contract, extends to
the lessee to the extent of the lessee's leasehold interest
under a finance lease related to the supply contract, but is
subject to the terms of the warranty and of the supply contract
and all defenses or claims arising therefrom.
(b) The extension of the benefit of a supplier's promises
and of warranties to the lessee (section 34.1-2.A-209(a)) does
not: (1) modify the rights and obligations of the parties to the
supply contract, whether arising therefrom or otherwise; or (2)
impose any duty or liability under the supply contract on the
lessee.
(c) Any modification or rescission of the supply contract
by the supplier and the lessor is effective between the supplier
and the lessee unless, before the modification or rescission,
the supplier has received notice that the lessee has entered
into a finance lease related to the supply contract. If the
modification or rescission is effective between the supplier and
the lessee, the lessor is deemed to have assumed, in addition to
the obligations of the lessor to the lessee under the lease
contract, promises of the supplier to the lessor and warranties
that were so modified or rescinded as they existed and were
available to the lessee before modification or rescission.
(d) In addition to the extension of the benefit of the
supplier's promises and of warranties to the lessee under
subsection (a), the lessee retains all rights that the lessee
may have against the supplier which arise from an agreement
between the lessee and the supplier or under other law.
34.1-2.A-210. Express warranties.
(a) Express warranties by the lessor are created as
follows:
(i) Any affirmation of fact or promise made by the
lessor to the lessee which relates to the goods and becomes part
of the basis of the bargain creates an express warranty that the
goods will conform to the affirmation or promise;
(ii) Any description of the goods which is made part
of the basis of the bargain creates an express warranty that the
goods will conform to the description;
(iii) Any sample or model that is made part of the
basis of the bargain creates an express warranty that the whole
of the goods will conform to the sample or model.
(b) It is not necessary to the creation of an express
warranty that the lessor use formal words, such as "warrant" or
"guarantee," or that the lessor have a specific intention to
make a warranty, but an affirmation merely of the value of the
goods or a statement purporting to be merely the lessor's
opinion or commendation of the goods does not create a warranty.
34.1-2.A-211. Warranties against interference and against
infringement; lessee's obligation against infringement.
(a) There is in a lease contract a warranty that for the
lease term no person holds a claim to or interest in the goods
that arose from an act or omission of the lessor, other than a
claim by way of infringement or the like, which will interfere
with the lessee's enjoyment of its leasehold interest.
(b) Except in a finance lease there is in a lease contract
by a lessor who is a merchant regularly dealing in goods of the
kind a warranty that the goods are delivered free of the
rightful claim of any person by way of infringement or the like.
(c) A lessee who furnishes specifications to a lessor or a
supplier shall hold the lessor and the supplier harmless against
any claim by way of infringement or the like that arises out of
compliance with the specifications.
34.1-2.A-212. Implied warranty of merchantability.
(a) Except in a finance lease, a warranty that the goods
will be merchantable is implied in a lease contract if the
lessor is a merchant with respect to goods of that kind.
(b) Goods to be merchantable must be at least such as:
(i) Pass without objection in the trade under the
description in the lease agreement;
(ii) In the case of fungible goods, are of fair
average quality within the description;
(iii) Are fit for the ordinary purposes for which
goods of that type are used;
(iv) Run, within the variation permitted by the lease
agreement, of even kind, quality and quantity within each unit
and among all units involved;
(v) Are adequately contained, packaged and labeled as
the lease agreement may require; and
(vi) Conform to any promises or affirmations of fact
made on the container or label.
(c) Other implied warranties may arise from course of
dealing or usage of trade.
34.1-2.A-213. Implied warranty of fitness for particular
purpose.
Except in a finance lease, if the lessor at the time the lease
contract is made has reason to know of any particular purpose
for which the goods are required and that the lessee is relying
on the lessor's skill or judgment to select or furnish suitable
goods, there is in the lease contract an implied warranty that
the goods will be fit for that purpose.
34.1-2.A-214. Exclusion or modification of warranties.
(a) Words or conduct relevant to the creation of an
express warranty and words or conduct tending to negate or limit
a warranty must be construed wherever reasonable as consistent
with each other; but, subject to the provisions of section
34.1-2.A-202 on parol or extrinsic evidence, negation or
limitation is inoperative to the extent that the construction is
unreasonable.
(b) Subject to subsection (c), to exclude or modify the
implied warranty of merchantability or any part of it the
language must mention "merchantability," be by a writing, and be
conspicuous. Subject to subsection (c), to exclude or modify
any implied warranty of fitness the exclusion must be by a
writing and be conspicuous. Language to exclude all implied
warranties of fitness is sufficient if it is in writing, is
conspicuous and states, for example, "There is no warranty that
the goods will be fit for a particular purpose."
(c) Notwithstanding subsection (b), but subject to
subsection (d):
(i) Unless the circumstances indicate otherwise, all
implied warranties are excluded by expressions like "as is," or
"with all faults," or by other language that in common
understanding calls the lessee's attention to the exclusion of
warranties and makes plain that there is no implied warranty, if
in writing and conspicuous;
(ii) If the lessee before entering into the lease
contract has examined the goods or the sample or model as fully
as desired or has refused to examine the goods, there is no
implied warranty with regard to defects that an examination
ought in the circumstances to have revealed; and
(iii) An implied warranty may also be excluded or
modified by course of dealing, course of performance, or usage
of trade.
(d) To exclude or modify a warranty against interference
or against infringement (section 34.1-2.A-211) or any part of
it, the language must be specific, be by a writing, and be
conspicuous, unless the circumstances, including course of
performance, course of dealing, or usage of trade, give the
lessee reason to know that the goods are being leased subject to
a claim or interest of any person.
34.1-2.A-215. Cumulation and conflict of warranties
express or implied.
(a) Warranties, whether express or implied, must be
construed as consistent with each other and as cumulative, but
if that construction is unreasonable, the intention of the
parties determines which warranty is dominant. In ascertaining
that intention the following rules apply:
(i) Exact or technical specifications displace an
inconsistent sample or model or general language of description;
(ii) A sample from an existing bulk displaces
inconsistent general language of description;
(iii) Express warranties displace inconsistent
implied warranties other than an implied warranty of fitness for
a particular purpose.
34.1-2.A-216. Third-party beneficiaries of express and
implied warranties.
A warranty to or for the benefit of a lessee under this article,
whether express or implied, extends to any person who may
reasonably be expected to use, consume, or be affected by the
goods and who is injured by breach of the warranty. The
operation of this section may not be excluded, modified, or
limited with respect to injury to the person of an individual to
whom the warranty extends, but an exclusion, modification, or
limitation of the warranty, including any with respect to rights
and remedies, effective against the lessee is also effective
against the beneficiary designated under this section.
34.1-2.A-217. Identification.
(a) Identification of goods as goods to which a lease
contract refers may be made at any time and in any manner
explicitly agreed to by the parties. In the absence of explicit
agreement, identification occurs:
(i) When the lease contract is made if the lease
contract is for a lease of goods that are existing and
identified;
(ii) When the goods are shipped, marked, or otherwise
designated by the lessor as goods to which the lease contract
refers, if the lease contract is for a lease of goods that are
not existing and identified; or
(iii) When the young are conceived, if the lease
contract is for a lease of unborn young of animals.
34.1-2.A-218. Insurance and proceeds.
(a) A lessee obtains an insurable interest when existing
goods are identified to the lease contract even though the goods
identified are nonconforming and the lessee has an option to
reject them.
(b) If a lessee has an insurable interest only by reason
of the lessor's identification of the goods, the lessor, until
default or insolvency or notification to the lessee that
identification is final, may substitute other goods for those
identified.
(c) Notwithstanding a lessee's insurable interest under
subsections (a) and (b), the lessor retains an insurable
interest until an option to buy has been exercised by the lessee
and risk of loss has passed to the lessee.
(d) Nothing in this section impairs any insurable interest
recognized under any other statute or rule of law.
(e) The parties by agreement may determine that one (1) or
more parties have an obligation to obtain and pay for insurance
covering the goods and by agreement may determine the
beneficiary of the proceeds of the insurance.
34.1-2.A-219. Risk of loss.
(a) Except in the case of a finance lease, risk of loss is
retained by the lessor and does not pass to the lessee. In the
case of a finance lease, risk of loss passes to the lessee.
(b) Subject to the provisions of this article on the
effect of default on risk of loss (section 34.1-2.A-220), if
risk of loss is to pass to the lessee and the time of passage is
not stated, the following rules apply:
(i) If the lease contract requires or authorizes the
goods to be shipped by carrier:
(A) And it does not require delivery at a
particular destination, the risk of loss passes to the lessee
when the goods are duly delivered to the carrier; but
(B) If it does require delivery at a particular
destination and the goods are there duly tendered while in the
possession of the carrier, the risk of loss passes to the lessee
when the goods are there duly so tendered as to enable the
lessee to take delivery.
(ii) If the goods are held by a bailee to be
delivered without being moved, the risk of loss passes to the
lessee on acknowledgment by the bailee of the lessee's right to
possession of the goods;
(iii) In any case not within paragraph (i) or (ii),
the risk of loss passes to the lessee on the lessee's receipt of
the goods if the lessor, or, in the case of a finance lease, the
supplier, is a merchant; otherwise the risk passes to the lessee
on tender of delivery.
34.1-2.A-220. Effect of default on risk of loss.
(a) Where risk of loss is to pass to the lessee and the
time of passage is not stated:
(i) If a tender or delivery of goods so fails to
conform to the lease contract as to give a right of rejection,
the risk of their loss remains with the lessor, or, in the case
of a finance lease, the supplier, until cure or acceptance;
(ii) If the lessee rightfully revokes acceptance, he,
to the extent of any deficiency in his effective insurance
coverage, may treat the risk of loss as having remained with the
lessor from the beginning.
(b) Whether or not risk of loss is to pass to the lessee,
if the lessee as to conforming goods already identified to a
lease contract repudiates or is otherwise in default under the
lease contract, the lessor, or, in the case of a finance lease,
the supplier, to the extent of any deficiency in his effective
insurance coverage may treat the risk of loss as resting on the
lessee for a commercially reasonable time.
34.1-2.A-221. Casualty to identified goods.
(a) If a lease contract requires goods identified when the
lease contract is made, and the goods suffer casualty without
fault of the lessee, the lessor or the supplier before delivery,
or the goods suffer casualty before risk of loss passes to the
lessee pursuant to the lease agreement or section 34.1-2.A-219,
then:
(i) If the loss is total, the lease contract is
avoided; and
(ii) If the loss is partial or the goods have so
deteriorated as to no longer conform to the lease contract, the
lessee may nevertheless demand inspection and at his option
either treat the lease contract as avoided or, except in a
finance lease that is not a consumer lease, accept the goods
with due allowance from the rent payable for the balance of the
lease term for the deterioration or the deficiency in quantity
but without further right against the lessor.
PART 3
EFFECT OF LEASE CONTRACT
34.1-2.A-301. Enforceability of lease contract.
Except as otherwise provided in this article, a lease contract
is effective and enforceable according to its terms between the
parties, against purchasers of the goods and against creditors
of the parties.
34.1-2.A-302. Title to and possession of goods.
Except as otherwise provided in this article, each provision of
this article applies whether the lessor or a third party has
title to the goods, and whether the lessor, the lessee, or a
third party has possession of the goods, notwithstanding any
statute or rule of law that possession or the absence of
possession is fraudulent.
34.1-2.A-303. Alienability of party's interest under lease
contract or of lessor's residual interest in goods; delegation
of performance; transfer of rights.
(a) 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
34.1-9-109(a)(iii).
(b) Except as provided in subsection (d) and section
34.1-9-407, a provision in a lease agreement which (1) 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 (2) makes such a transfer an event of
default, gives rise to the rights and remedies provided in
subsection (e), but a transfer that is prohibited or is an event
of default under the lease agreement is otherwise effective.
(c) A provision in a lease agreement which (1) 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 (2) 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 materially increases the
burden or risk imposed on, the other party to the lease contract
within the purview of subsection (d).
(d) Subject to subsection (e) and section 34.1-9-407:
(i) 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 34.1-2.A-501(b);
(ii) If paragraph (i) is not applicable and if a
transfer is made that (1) is prohibited under a lease agreement
or (2) 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, (1) 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
(2) a court having jurisdiction may grant other appropriate
relief, including cancellation of the lease contract or an
injunction against the transfer.
(e) 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.
(f) 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.
(g) 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.
34.1-2.A-304. Subsequent lease of goods by lessor.
(a) Subject to section 34.1-2.A-303, a subsequent lessee
from a lessor of goods under an existing lease contract obtains,
to the extent of the leasehold interest transferred, the
leasehold interest in the goods that the lessor had or had power
to transfer, and except as provided in subsection (b) and
section 34.1-2.A-527(d), takes subject to the existing lease
contract. A lessor with voidable title has power to transfer a
good leasehold interest to a good faith subsequent lessee for
value, but only to the extent set forth in the preceding
sentence. If goods have been delivered under a transaction of
purchase, the lessor has that power even though:
(i) The lessor's transferor was deceived as to the
identity of the lessor;
(ii) The delivery was in exchange for a check which
is later dishonored;
(iii) It was agreed that the transaction was to be a
"cash sale"; or
(iv) The delivery was procured through fraud
punishable as larcenous under the criminal law.
(b) A subsequent lessee in the ordinary course of business
from a lessor who is a merchant dealing in goods of that kind to
whom the goods were entrusted by the existing lessee of that
lessor before the interest of the subsequent lessee became
enforceable against that lessor obtains, to the extent of the
leasehold interest transferred, all of that lessor's and the
existing lessee's rights to the goods, and takes free of the
existing lease contract.
(c) A subsequent lessee from the lessor of goods that are
subject to an existing lease contract and are covered by a
certificate of title issued under a statute of this state or of
another jurisdiction takes no greater rights than those provided
both by this section and by the certificate of title statute.
34.1-2.A-305. Sale or sublease of goods by lessee.
(a) Subject to the provisions of section 34.1-2.A-303, a
buyer or sublessee from the lessee of goods under an existing
lease contract obtains, to the extent of the interest
transferred, the leasehold interest in the goods that the lessee
had or had power to transfer, and except as provided in
subsection (b) and section 34.1-2.A-511(d), takes subject to the
existing lease contract. A lessee with a voidable leasehold
interest has power to transfer a good leasehold interest to a
good faith buyer for value or a good faith sublessee for value,
but only to the extent set forth in the preceding sentence.
When goods have been delivered under a transaction of lease the
lessee has that power even though:
(i) The lessor was deceived as to the identity of the
lessee;
(ii) The delivery was in exchange for a check which
is later dishonored; or
(iii) The delivery was procured through fraud
punishable as larcenous under the criminal law.
(b) A buyer in the ordinary course of business or a
sublessee in the ordinary course of business from a lessee who
is a merchant dealing in goods of that kind to whom the goods
were entrusted by the lessor obtains, to the extent of the
interest transferred, all of the lessor's and lessee's rights to
the goods, and takes free of the existing lease contract.
(c) A buyer or sublessee from the lessee of goods that are
subject to an existing lease contract and are covered by a
certificate of title issued under a statute of this state or of
another jurisdiction takes no greater rights than those provided
both by this section and by the certificate of title statute.
34.1-2.A-306. Priority of certain liens arising by
operation of law.
If a person in the ordinary course of his business furnishes
services or materials with respect to goods subject to a lease
contract, a lien upon those goods in the possession of that
person given by statute or rule of law for those materials or
services takes priority over any interest of the lessor or
lessee under the lease contract or this article unless the lien
is created by statute and the statute provides otherwise or
unless the lien is created by rule of law and the rule of law
provides otherwise.
34.1-2.A-307. Priority of liens arising by attachment or
levy on, security interests in, and other claims to goods.
(a) Except as otherwise provided in section 34.1-2.A-306,
a creditor of a lessee takes subject to the lease contract.
(b) Except as otherwise provided in subsection (e) and in
sections 34.1-2.A-306 and 34.1-2.A-308, a creditor of a lessor
takes subject to the lease contract unless:
(i) The creditor holds a lien that attached to the
goods before the lease contract became enforceable;
(ii) Repealed By Laws 2001, Ch. 137, § 4.
(iii) Repealed By Laws 2001, Ch. 137, § 4.
(c) Repealed By Laws2001, Ch. 137, § 4.
(d) Repealed By Laws 2001, Ch. 137, § 4.
(e) Except as otherwise provided in sections 34.1-9-717,
34.1-9-321 and 34.1-9-323, a lessee takes a leasehold interest
subject to a security interest held by a creditor of the lessor.
34.1-2.A-308. Special rights of creditors.
(a) A creditor of a lessor in possession of goods subject
to a lease contract may treat the lease contract as void if as
against the creditor retention of possession by the lessor is
fraudulent under any statute or rule of law, but retention of
possession in good faith and current course of trade by the
lessor for a commercially reasonable time after the lease
contract becomes enforceable is not fraudulent.
(b) Nothing in this article impairs the rights of
creditors of a lessor if the lease contract (1) becomes
enforceable, not in current course of trade but in satisfaction
of or as security for a pre-existing claim for money, security,
or the like, and (2) is made under circumstances which under any
statute or rule of law apart from this article would constitute
the transaction a fraudulent transfer or voidable preference.
(c) A creditor of a seller may treat a sale or an
identification of goods to a contract for sale as void if as
against the creditor retention of possession by the seller is
fraudulent under any statute or rule of law, but retention of
possession of the goods pursuant to a lease contract entered
into by the seller as lessee and the buyer as lessor in
connection with the sale or identification of the goods is not
fraudulent if the buyer bought for value and in good faith.
34.1-2.A-309. Lessor's and lessee's rights when goods
become fixtures.
(a) In this section:
(i) Goods are "fixtures" when they become so related
to particular real estate that an interest in them arises under
real estate law;
(ii) A "fixture filing" is the filing, in the office
where a record of a mortgage on the real estate would be filed
or recorded, of a financing statement covering goods that are or
are to become fixtures and conforming to the requirements of
section 34.1-9-502(a) and (b);
(iii) A lease is a "purchase money lease" unless the
lessee has possession or use of the goods or the right to
possession or use of the goods before the lease agreement is
enforceable;
(iv) A mortgage is a "construction mortgage" to the
extent it secures an obligation incurred for the construction of
an improvement on land including the acquisition cost of the
land, if the recorded writing so indicates; and
(v) "Encumbrance" includes real estate mortgages and
other liens on real estate and all other rights in real estate
that are not ownership interests.
(b) Under this article a lease may be of goods that are
fixtures or may continue in goods that become fixtures, but no
lease exists under this article of ordinary building materials
incorporated into an improvement on land.
(c) This article does not prevent creation of a lease of
fixtures pursuant to real estate law.
(d) The perfected interest of a lessor of fixtures has
priority over a conflicting interest of an encumbrancer or owner
of the real estate if:
(i) The lease is a purchase money lease, the
conflicting interest of the encumbrancer or owner arises before
the goods become fixtures, the interest of the lessor is
perfected by a fixture filing before the goods become fixtures
or within ten (10) days thereafter, and the lessee has an
interest of record in the real estate or is in possession of the
real estate; or
(ii) The interest of the lessor is perfected by a
fixture filing before the interest of the encumbrancer or owner
is of record, the lessor's interest has priority over any
conflicting interest of a predecessor in title of the
encumbrancer or owner, and the lessee has an interest of record
in the real estate or is in possession of the real estate.
(e) The interest of a lessor of fixtures, whether or not
perfected, has priority over the conflicting interest of an
encumbrancer or owner of the real estate if:
(i) The fixtures are readily removable factory or
office machines, readily removable equipment that is not
primarily used or leased for use in the operation of the real
estate, or readily removable replacements of domestic appliances
that are goods subject to a consumer lease, and before the goods
become fixtures the lease contract is enforceable;
(ii) The conflicting interest is a lien on the real
estate obtained by legal or equitable proceedings after the
lease contract is enforceable;
(iii) The encumbrancer or owner has consented in
writing to the lease or has disclaimed an interest in the goods
as fixtures; or
(iv) The lessee has a right to remove the goods as
against the encumbrancer or owner. If the lessee's right to
remove terminates, the priority of the interest of the lessor
continues for a reasonable time.
(f) Notwithstanding paragraph (d)(i) but otherwise subject
to subsections (d) and (e), the interest of a lessor of
fixtures, including the lessor's residual interest, is
subordinate to the conflicting interest of an encumbrancer of
the real estate under a construction mortgage recorded before
the goods become fixtures if the goods become fixtures before
the completion of the construction. To the extent given to
refinance a construction mortgage, the conflicting interest of
an encumbrancer of the real estate under a mortgage has this
priority to the same extent as the encumbrancer of the real
estate under the construction mortgage.
(g) In cases not within the preceding subsections,
priority between the interest of a lessor of fixtures, including
the lessor's residual interest, and the conflicting interest of
an encumbrancer or owner of the real estate who is not the
lessee is determined by the priority rules governing conflicting
interests in real estate.
(h) If the interest of a lessor of fixtures, including the
lessor's residual interest, has priority over all conflicting
interests of all owners and encumbrancers of the real estate,
the lessor or the lessee may (1) on default, expiration,
termination, or cancellation of the lease agreement but subject
to the lease agreement and this article, or (2) if necessary to
enforce other rights and remedies of the lessor or lessee under
this article, remove the goods from the real estate, free and
clear of all conflicting interests of all owners and
encumbrancers of the real estate, but the lessor or lessee must
reimburse any encumbrancer or owner of the real estate who is
not the lessee and who has not otherwise agreed for the cost of
repair of any physical injury, but not for any diminution in
value of the real estate caused by the absence of the goods
removed or by any necessity of replacing them. A person
entitled to reimbursement may refuse permission to remove until
the party seeking removal gives adequate security for the
performance of this obligation.
(j) Even though the lease agreement does not create a
security interest, the interest of a lessor of fixtures,
including the lessor's residual interest, is perfected by filing
a financing statement as a fixture filing for leased goods that
are or are to become fixtures in accordance with the relevant
provisions of the article on secured transactions (article 9).
34.1-2.A-310. Lessor's and lessee's rights when goods
become accessions.
(a) Goods are "accessions" when they are installed in or
affixed to other goods.
(b) The interest of a lessor or a lessee under a lease
contract entered into before the goods became accessions is
superior to all interests in the whole except as stated in
subsection (d).
(c) The interest of a lessor or a lessee under a lease
contract entered into at the time or after the goods became
accessions is superior to all subsequently acquired interests in
the whole except as stated in subsection (d) but is subordinate
to interests in the whole existing at the time the lease
contract was made unless the holders of such interests in the
whole have in writing consented to the lease or disclaimed an
interest in the goods as part of the whole.
(d) The interest of a lessor or a lessee under a lease
contract described in subsection (b) or (c) is subordinate to
the interest of:
(i) A buyer in the ordinary course of business or a
lessee in the ordinary course of business of any interest in the
whole acquired after the goods became accessions; or
(ii) A creditor with a security interest in the whole
perfected before the lease contract was made to the extent that
the creditor makes subsequent advances without knowledge of the
lease contract.
(e) When under subsections (b) or (c) and (d) a lessor or
a lessee of accessions holds an interest that is superior to all
interests in the whole, the lessor or the lessee may (1) on
default, expiration, termination, or cancellation of the lease
contract by the other party but subject to the provisions of the
lease contract and this article, or (2) if necessary to enforce
his other rights and remedies under this article, remove the
goods from the whole, free and clear of all interests in the
whole, but he must reimburse any holder of an interest in the
whole who is not the lessee and who has not otherwise agreed for
the cost of repair of any physical injury but not for any
diminution in value of the whole caused by the absence of the
goods removed or by any necessity for replacing them. A person
entitled to reimbursement may refuse permission to remove until
the party seeking removal gives adequate security for the
performance of this obligation.
34.1-2.A-311. Priority subject to subordination.
Nothing in this article prevents subordination by agreement by
any person entitled to priority.
PART 4
PERFORMANCE OF LEASE CONTRACT:
34.1-2.A-401. Insecurity: adequate assurance of
performance.
(a) A lease contract imposes an obligation on each party
that the other's expectation of receiving due performance will
not be impaired.
(b) If reasonable grounds for insecurity arise with
respect to the performance of either party, the insecure party
may demand in writing adequate assurance of due performance.
Until the insecure party receives that assurance, if
commercially reasonable the insecure party may suspend any
performance for which he has not already received the agreed
return.
(c) A repudiation of the lease contract occurs if
assurance of due performance adequate under the circumstances of
the particular case is not provided to the insecure party within
a reasonable time, not to exceed thirty (30) days after receipt
of a demand by the other party.
(d) Between merchants, the reasonableness of grounds for
insecurity and the adequacy of any assurance offered must be
determined according to commercial standards.
(e) Acceptance of any nonconforming delivery or payment
does not prejudice the aggrieved party's right to demand
adequate assurance of future performance.
34.1-2.A-402. Anticipatory repudiation.
(a) If either party repudiates a lease contract with
respect to a performance not yet due under the lease contract,
the loss of which performance will substantially impair the
value of the lease contract to the other, the aggrieved party
may:
(i) For a commercially reasonable time, await
retraction of repudiation and performance by the repudiating
party;
(ii) Make demand pursuant to section 34.1-2.A-401 and
await assurance of future performance adequate under the
circumstances of the particular case; or
(iii) Resort to any right or remedy upon default
under the lease contract or this article, even though the
aggrieved party has notified the repudiating party that the
aggrieved party would await the repudiating party's performance
and assurance and has urged retraction. In addition, whether or
not the aggrieved party is pursuing one of the foregoing
remedies, the aggrieved party may suspend performance or, if the
aggrieved party is the lessor, proceed in accordance with the
provisions of this article on the lessor's right to identify
goods to the lease contract notwithstanding default or to
salvage unfinished goods (section 34.1-2.A-524).
34.1-2.A-403. Retraction of anticipatory repudiation.
(a) Until the repudiating party's next performance is due,
the repudiating party can retract the repudiation unless, since
the repudiation, the aggrieved party has cancelled the lease
contract or materially changed the aggrieved party's position or
otherwise indicated that the aggrieved party considers the
repudiation final.
(b) Retraction may be by any method that clearly indicates
to the aggrieved party that the repudiating party intends to
perform under the lease contract and includes any assurance
demanded under section 34.1-2.A-401.
(c) Retraction reinstates a repudiating party's rights
under a lease contract with due excuse and allowance to the
aggrieved party for any delay occasioned by the repudiation.
34.1-2.A-404. Substituted performance.
(a) If without fault of the lessee, the lessor and the
supplier, the agreed berthing, loading, or unloading facilities
fail or the agreed type of carrier becomes unavailable or the
agreed manner of delivery otherwise becomes commercially
impracticable, but a commercially reasonable substitute is
available, the substitute performance must be tendered and
accepted.
(b) If the agreed means or manner of payment fails because
of domestic or foreign governmental regulation:
(i) The lessor may withhold or stop delivery or cause
the supplier to withhold or stop delivery unless the lessee
provides a means or manner of payment that is commercially a
substantial equivalent; and
(ii) If delivery has already been taken, payment by
the means or in the manner provided by the regulation discharges
the lessee's obligation unless the regulation is discriminatory,
oppressive, or predatory.
34.1-2.A-405. Excused performance.
(a) Subject to section 34.1-2.A-404 on substituted
performance, the following rules apply:
(i) Delay in delivery or nondelivery in whole or in
part by a lessor or a supplier who complies with paragraphs (ii)
and (iii) is not a default under the lease contract if
performance as agreed has been made impracticable by the
occurrence of a contingency the nonoccurrence of which was a
basic assumption on which the lease contract was made or by
compliance in good faith with any applicable foreign or domestic
governmental regulation or order, whether or not the regulation
or order later proves to be invalid;
(ii) If the causes mentioned in paragraph (i) affect
only part of the lessor's or the supplier's capacity to perform,
he shall allocate production and deliveries among his customers
but at his option may include regular customers not then under
contract for sale or lease as well as his own requirements for
further manufacture. He may so allocate in any manner that is
fair and reasonable;
(iii) The lessor seasonably shall notify the lessee
and in the case of a finance lease the supplier seasonably shall
notify the lessor and the lessee, if known, that there will be
delay or nondelivery and, if allocation is required under
paragraph (ii), of the estimated quota thus made available for
the lessee.
34.1-2.A-406. Procedure on excused performance.
(a) If the lessee receives notification of a material or
indefinite delay or an allocation justified under section
34.1-2.A-405, the lessee may by written notification to the
lessor as to any goods involved, and with respect to all of the
goods if under an installment lease contract the value of the
whole lease contract is substantially impaired (section
34.1-2.A-510):
(i) Terminate the lease contract (section
34.1-2.A-505(b)); or
(ii) Except in a finance lease that is not a consumer
lease, modify the lease contract by accepting the available
quota in substitution, with due allowance from the rent payable
for the balance of the lease term for the deficiency but without
further right against the lessor.
(b) If, after receipt of a notification from the lessor
under section 34.1-2.A-405, the lessee fails so to modify the
lease agreement within a reasonable time not exceeding thirty
(30) days, the lease contract lapses with respect to any
deliveries affected.
34.1-2.A-407. Irrevocable promises: finance leases.
(a) In the case of a finance lease that is not a consumer
lease the lessee's promises under the lease contract become
irrevocable and independent upon the lessee's acceptance of the
goods.
(b) A promise that has become irrevocable and independent
under subsection (a):
(i) Is effective and enforceable between the parties,
and by or against third parties including assignees of the
parties; and
(ii) Is not subject to cancellation, termination,
modification, repudiation, excuse, or substitution without the
consent of the party to whom the promise runs.
(c) This section does not affect the validity under any
other law of a covenant in any lease contract making the
lessee's promises irrevocable and independent upon the lessee's
acceptance of the goods.
PART 5
DEFAULT
34.1-2.A-501. Default: procedure.
(a) Whether the lessor or the lessee is in default under a
lease contract is determined by the lease agreement and this
article.
(b) If the lessor or the lessee is in default under the
lease contract, the party seeking enforcement has rights and
remedies as provided in this article and, except as limited by
this article, as provided in the lease agreement.
(c) If the lessor or the lessee is in default under the
lease contract, the party seeking enforcement may reduce the
party's claim to judgment, or otherwise enforce the lease
contract by self-help or any available judicial procedure or
nonjudicial procedure, including administrative proceeding,
arbitration, or the like, in accordance with this article.
(d) Except as otherwise provided in section 34.1-1-305(a)
or this article or the lease agreement, the rights and remedies
referred to in subsections (b) and (c) are cumulative.
(e) If the lease agreement covers both real property and
goods, the party seeking enforcement may proceed under this part
as to the goods, or under other applicable law as to both the
real property and the goods in accordance with that party's
rights and remedies in respect of the real property, in which
case this part does not apply.
34.1-2.A-502. Notice after default.
Except as otherwise provided in this article or the lease
agreement, the lessor or lessee in default under the lease
contract is not entitled to notice of default or notice of
enforcement from the other party to the lease agreement.
34.1-2.A-503. Modification or impairment of rights and
remedies.
(a) Except as otherwise provided in this article, the
lease agreement may include rights and remedies for default in
addition to or in substitution for those provided in this
article and may limit or alter the measure of damages
recoverable under this article.
(b) Resort to a remedy provided under this article or in
the lease agreement is optional unless the remedy is expressly
agreed to be exclusive. If circumstances cause an exclusive or
limited remedy to fail of its essential purpose, or provision
for an exclusive remedy is unconscionable, remedy may be had as
provided in this article.
(c) Consequential damages may be liquidated under section
34.1-2.A-504, or may otherwise be limited, altered, or excluded
unless the limitation, alteration, or exclusion is
unconscionable. Limitation, alteration, or exclusion of
consequential damages for injury to the person in the case of
consumer goods is prima facie unconscionable but limitation,
alteration, or exclusion of damages where the loss is commercial
is not prima facie unconscionable.
(d) Rights and remedies on default by the lessor or the
lessee with respect to any obligation or promise collateral or
ancillary to the lease contract are not impaired by this
article.
34.1-2.A-504. Liquidation of damages.
(a) Damages payable by either party for default, or any
other act or omission, including indemnity for loss or
diminution of anticipated tax benefits or loss or damage to
lessor's residual interest, may be liquidated in the lease
agreement but only at an amount or by a formula that is
reasonable in light of the then anticipated harm caused by the
default or other act or omission.
(b) If the lease agreement provides for liquidation of
damages, and such provision does not comply with subsection (a),
or such provision is an exclusive or limited remedy that
circumstances cause to fail of its essential purpose, remedy may
be had as provided in this article.
(c) If the lessor justifiably withholds or stops delivery
of goods because of the lessee's default or insolvency (section
34.1-2.A-525 or 34.1-2.A-526), the lessee is entitled to
restitution of any amount by which the sum of his payments
exceeds:
(i) The amount to which the lessor is entitled by
virtue of terms liquidating the lessor's damages in accordance
with subsection (a); or
(ii) In the absence of those terms, twenty percent
(20%) of the then present value of the total rent the lessee was
obligated to pay for the balance of the lease term, or, in the
case of a consumer lease, the lesser of such amount or five
hundred dollars ($500.00).
(d) A lessee's right to restitution under subsection (c)
is subject to offset to the extent the lessor establishes:
(i) A right to recover damages under the provisions
of this article other than subsection (a); and
(ii) The amount or value of any benefits received by
the lessee directly or indirectly by reason of the lease
contract.
34.1-2.A-505. Cancellation and termination and effect of
cancellation, termination, rescission, or fraud on rights and
remedies.
(a) On cancellation of the lease contract, all obligations
that are still executory on both sides are discharged, but any
right based on prior default or performance survives, and the
cancelling party also retains any remedy for default of the
whole lease contract or any unperformed balance.
(b) On termination of the lease contract, all obligations
that are still executory on both sides are discharged but any
right based on prior default or performance survives.
(c) Unless the contrary intention clearly appears,
expressions of "cancellation," "rescission," or the like of the
lease contract may not be construed as a renunciation or
discharge of any claim in damages for an antecedent default.
(d) Rights and remedies for material misrepresentation or
fraud include all rights and remedies available under this
article for default.
(e) Neither rescission nor a claim for rescission of the
lease contract nor rejection or return of the goods may bar or
be deemed inconsistent with a claim for damages or other right
or remedy.
34.1-2.A-506. Statute of limitations.
(a) An action for default under a lease contract,
including breach of warranty or indemnity, must be commenced
within four (4) years after the cause of action accrued. By the
original lease contract the parties may reduce the period of
limitation to not less than one (1) year.
(b) A cause of action for default accrues when the act or
omission on which the default or breach of warranty is based is
or should have been discovered by the aggrieved party, or when
the default occurs, whichever is later. A cause of action for
indemnity accrues when the act or omission on which the claim
for indemnity is based is or should have been discovered by the
indemnified party, whichever is later.
(c) If an action commenced within the time limited by
subsection (a) is so terminated as to leave available a remedy
by another action for the same default or breach of warranty or
indemnity, the other action may be commenced after the
expiration of the time limited and within six (6) months after
the termination of the first action unless the termination
resulted from voluntary discontinuance or from dismissal for
failure or neglect to prosecute.
(d) This section does not alter the law on tolling of the
statute of limitations nor does it apply to causes of action
that have accrued before this article becomes effective.
34.1-2.A-507. Proof of market rent: time and place.
(a) Damages based on market rent (section 34.1-2.A-519 or
34.1-2.A-528) are determined according to the rent for the use
of the goods concerned for a lease term identical to the
remaining lease term of the original lease agreement and
prevailing at the time of the default.
(b) If evidence of rent for the use of the goods concerned
for a lease term identical to the remaining lease term of the
original lease agreement and prevailing at the times or places
described in this article is not readily available, the rent
prevailing within any reasonable time before or after the time
described or at any other place or for a different lease term
which in commercial judgment or under usage of trade would serve
as a reasonable substitute for the one described may be used,
making any proper allowance for the difference, including the
cost of transporting the goods to or from the other place.
(c) Evidence of a relevant rent prevailing at a time or
place or for a lease term other than the one described in this
article offered by one party is not admissible unless and until
he has given the other party notice the court finds sufficient
to prevent unfair surprise.
(d) If the prevailing rent or value of any goods regularly
leased in any established market is in issue, reports in
official publications or trade journals or in newspapers or
periodicals of general circulation published as the reports of
that market are admissible in evidence. The circumstances of
the preparation of the report may be shown to affect its weight
but not its admissibility.
34.1-2.A-508. Lessee's remedies.
(a) If a lessor fails to deliver the goods in conformity
to the lease contract (section 34.1-2.A-509) or repudiates the
lease contract (section 34.1-2.A-402), or a lessee rightfully
rejects the goods (section 34.1-2.A-509) or justifiably revokes
acceptance of the goods (section 34.1-2.A-517), then with
respect to any goods involved, and with respect to all of the
goods if under an installment lease contract the value of the
whole lease contract is substantially impaired (section
34.1-2.A-510), the lessor is in default under the lease contract
and the lessee may:
(i) Cancel the lease contract (section
34.1-2.A-505(a));
(ii) Recover so much of the rent and security as has
been paid and is just under the circumstances;
(iii) Cover and recover damages as to all goods
affected whether or not they have been identified to the lease
contract (sections 34.1-2.A-518 and 34.1-2.A-520), or recover
damages for nondelivery (sections 34.1-2.A-519 and
34.1-2.A-520);
(iv) Exercise any other rights or pursue any other
remedies provided in the lease contract.
(b) If a lessor fails to deliver the goods in conformity
to the lease contract or repudiates the lease contract, the
lessee may also:
(i) If the goods have been identified, recover them
(section 34.1-2.A-522); or
(ii) In a proper case, obtain specific performance or
replevy the goods (section 34.1-2.A-521).
(c) If a lessor is otherwise in default under a lease
contract, the lessee may exercise the rights and pursue the
remedies provided in the lease contract, which may include a
right to cancel the lease, and in section 34.1-2.A-519(c).
(d) If a lessor has breached a warranty, whether express
or implied, the lessee may recover damages (section
34.1-2.A-519(d)).
(e) On rightful rejection or justifiable revocation of
acceptance, a lessee has a security interest in goods in the
lessee's possession or control for any rent and security that
has been paid and any expenses reasonably incurred in their
inspection, receipt, transportation, and care and custody and
may hold those goods and dispose of them in good faith and in a
commercially reasonable manner, subject to section
34.1-2.A-527(e).
(f) Subject to the provisions of section 34.1-2.A-407, a
lessee, on notifying the lessor of the lessee's intention to do
so, may deduct all or any part of the damages resulting from any
default under the lease contract from any part of the rent still
due under the same lease contract.
34.1-2.A-509. Lessee's rights on improper delivery;
rightful rejection.
(a) Subject to the provisions of section 34.1-2.A-510 on
default in installment lease contracts, if the goods or the
tender or delivery fail in any respect to conform to the lease
contract, the lessee may reject or accept the goods or accept
any commercial unit or units and reject the rest of the goods.
(b) Rejection of goods is ineffective unless it is within
a reasonable time after tender or delivery of the goods and the
lessee seasonably notifies the lessor.
34.1-2.A-510. Installment lease contracts: rejection and
default.
(a) Under an installment lease contract a lessee may
reject any delivery that is nonconforming if the nonconformity
substantially impairs the value of that delivery and cannot be
cured or the nonconformity is a defect in the required
documents; but if the nonconformity does not fall within
subsection (b) and the lessor or the supplier gives adequate
assurance of its cure, the lessee must accept that delivery.
(b) Whenever nonconformity or default with respect to one
or more deliveries substantially impairs the value of the
installment lease contract as a whole there is a default with
respect to the whole. But, the aggrieved party reinstates the
installment lease contract as a whole if the aggrieved party
accepts a nonconforming delivery without seasonably notifying of
cancellation or brings an action with respect only to past
deliveries or demands performance as to future deliveries.
34.1-2.A-511. Merchant lessee's duties as to rightfully
rejected goods.
(a) Subject to any security interest of a lessee (section
34.1-2.A-508(e)), if a lessor or a supplier has no agent or
place of business at the market of rejection, a merchant lessee,
after rejection of goods in his possession or control, shall
follow any reasonable instructions received from the lessor or
the supplier with respect to the goods. In the absence of those
instructions, a merchant lessee shall make reasonable efforts to
sell, lease, or otherwise dispose of the goods for the lessor's
account if they threaten to decline in value speedily.
Instructions are not reasonable if on demand indemnity for
expenses is not forthcoming.
(b) If a merchant lessee (subsection (a)) or any other
lessee (section 34.1-2.A-512) disposes of goods, he is entitled
to reimbursement either from the lessor or the supplier or out
of the proceeds for reasonable expenses of caring for and
disposing of the goods and, if the expenses include no
disposition commission, to such commission as is usual in the
trade, or if there is none, to a reasonable sum not exceeding
ten percent (10%) of the gross proceeds.
(c) In complying with this section or section
34.1-2.A-512, the lessee is held only to good faith. Good faith
conduct hereunder is neither acceptance or conversion nor the
basis of an action for damages.
(d) A purchaser who purchases in good faith from a lessee
pursuant to this section or section 34.1-2.A-512 takes the goods
free of any rights of the lessor and the supplier even though
the lessee fails to comply with one (1) or more of the
requirements of this article.
34.1-2.A-512. Lessee's duties as to rightfully rejected
goods.
(a) Except as otherwise provided with respect to goods
that threaten to decline in value speedily (section
34.1-2.A-511) and subject to any security interest of a lessee
(section 34.1-2.A-508(e)):
(i) The lessee, after rejection of goods in the
lessee's possession, shall hold them with reasonable care at the
lessor's or the supplier's disposition for a reasonable time
after the lessee's seasonable notification of rejection;
(ii) If the lessor or the supplier gives no
instructions within a reasonable time after notification of
rejection, the lessee may store the rejected goods for the
lessor's or the supplier's account or ship them to the lessor or
the supplier or dispose of them for the lessor's or the
supplier's account with reimbursement in the manner provided in
section 34.1-2.A-511; but
(iii) The lessee has no further obligations with
regard to goods rightfully rejected.
(b) Action by the lessee pursuant to subsection (a) is not
acceptance or conversion.
34.1-2.A-513. Cure by lessor of improper tender or
delivery; replacement.
(a) If any tender or delivery by the lessor or the
supplier is rejected because nonconforming and the time for
performance has not yet expired, the lessor or the supplier may
seasonably notify the lessee of the lessor's or the supplier's
intention to cure and may then make a conforming delivery within
the time provided in the lease contract.
(b) If the lessee rejects a nonconforming tender that the
lessor or the supplier had reasonable grounds to believe would
be acceptable with or without money allowance, the lessor or the
supplier may have a further reasonable time to substitute a
conforming tender if he seasonably notifies the lessee.
34.1-2.A-514. Waiver of lessee's objections.
(a) In rejecting goods, a lessee's failure to state a
particular defect that is ascertainable by reasonable inspection
precludes the lessee from relying on the defect to justify
rejection or to establish default:
(i) If, stated seasonably, the lessor or the supplier
could have cured it (section 34.1-2.A-513); or
(ii) Between merchants if the lessor or the supplier
after rejection has made a request in writing for a full and
final written statement of all defects on which the lessee
proposes to rely.
(b) A lessee's failure to reserve rights when paying rent
or other consideration against documents precludes recovery of
the payment for defects apparent in the documents.
34.1-2.A-515. Acceptance of goods.
(a) Acceptance of goods occurs after the lessee has had a
reasonable opportunity to inspect the goods and:
(i) The lessee signifies or acts with respect to the
goods in a manner that signifies to the lessor or the supplier
that the goods are conforming or that the lessee will take or
retain them in spite of their nonconformity; or
(ii) The lessee fails to make an effective rejection
of the goods (section 34.1-2.A-509(b)).
(b) Acceptance of a part of any commercial unit is
acceptance of that entire unit.
34.1-2.A-516. Effect of acceptance of goods; notice of
default; burden of establishing default after acceptance; notice
of claim or litigation to person answerable over.
(a) A lessee must pay rent for any goods accepted in
accordance with the lease contract, with due allowance for goods
rightfully rejected or not delivered.
(b) A lessee's acceptance of goods precludes rejection of
the goods accepted. In the case of a finance lease, if made
with knowledge of a nonconformity, acceptance cannot be revoked
because of it. In any other case, if made with knowledge of a
nonconformity, acceptance cannot be revoked because of it unless
the acceptance was on the reasonable assumption that the
nonconformity would be seasonably cured. Acceptance does not of
itself impair any other remedy provided by this article or the
lease agreement for nonconformity.
(c) If a tender has been accepted:
(i) Within a reasonable time after the lessee
discovers or should have discovered any default, the lessee
shall notify the lessor and the supplier, if any, or be barred
from any remedy against the party not notified;
(ii) Except in the case of a consumer lease, within a
reasonable time after the lessee receives notice of litigation
for infringement or the like (section 34.1-2.A-211) the lessee
shall notify the lessor or be barred from any remedy over for
liability established by the litigation; and
(iii) The burden is on the lessee to establish any
default.
(d) If a lessee is sued for breach of a warranty or other
obligation for which a lessor or a supplier is answerable over
the following apply:
(i) The lessee may give the lessor or the supplier,
or both, written notice of the litigation. If the notice states
that the person notified may come in and defend and that if the
person notified does not do so that person will be bound in any
action against that person by the lessee by any determination of
fact common to the two (2) litigations, then unless the person
notified after seasonable receipt of the notice does come in and
defend that person is so bound;
(ii) The lessor or the supplier may demand in writing
that the lessee turn over control of the litigation including
settlement if the claim is one for infringement or the like
(section 34.1-2.A-211) or else be barred from any remedy over.
If the demand states that the lessor or the supplier agrees to
bear all expense and to satisfy any adverse judgment, then
unless the lessee after seasonable receipt of the demand does
turn over control the lessee is so barred.
(e) Subsections (c) and (d) apply to any obligation of a
lessee to hold the lessor or the supplier harmless against
infringement or the like (section 34.1-2.A-211).
34.1-2.A-517. Revocation of acceptance of goods.
(a) A lessee may revoke acceptance of a lot or commercial
unit whose nonconformity substantially impairs its value to the
lessee if the lessee has accepted it:
(i) Except in the case of a finance lease, on the
reasonable assumption that its nonconformity would be cured and
it has not been seasonably cured; or
(ii) Without discovery of the nonconformity if the
lessee's acceptance was reasonably induced either by the
lessor's assurances or, except in the case of a finance lease,
by the difficulty of discovery before acceptance.
(b) Except in the case of a finance lease that is not a
consumer lease, a lessee may revoke acceptance of a lot or
commercial unit if the lessor defaults under the lease contract
and the default substantially impairs the value of that lot or
commercial unit to the lessee.
(c) If the lease agreement so provides, the lessee may
revoke acceptance of a lot or commercial unit because of other
defaults by the lessor.
(d) Revocation of acceptance must occur within a
reasonable time after the lessee discovers or should have
discovered the ground for it and before any substantial change
in condition of the goods which is not caused by the
nonconformity. Revocation is not effective until the lessee
notifies the lessor.
(e) A lessee who so revokes has the same rights and duties
with regard to the goods involved as if the lessee had rejected
them.
34.1-2.A-518. Cover; substitute goods.
(a) After a default by a lessor under the lease contract
of the type described in section 34.1-2.A-508(a), or, if agreed,
after other default by the lessor, the lessee may cover by
making any purchase or lease of or contract to purchase or lease
goods in substitution for those due from the lessor.
(b) Except as otherwise provided with respect to damages
liquidated in the lease agreement (section 34.1-2.A-504) or
otherwise determined pursuant to agreement of the parties
(sections 34.1-1-302 and 34.1-2.A-503), if a lessee's cover is
by a lease agreement substantially similar to the original lease
agreement and the new lease agreement is made in good faith and
in a commercially reasonable manner, the lessee may recover from
the lessor as damages (1) the present value, as of the date of
the commencement of the term of the new lease agreement, of the
rent under the new lease agreement applicable to that period of
the new lease term which is comparable to the then remaining
term of the original lease agreement minus the present value as
of the same date of the total rent for the then remaining lease
term of the original lease agreement, and (2) any incidental or
consequential damages, less expenses saved in consequence of the
lessor's default.
(c) If a lessee's cover is by lease agreement that for any
reason does not qualify for treatment under subsection (b), or
is by purchase or otherwise, the lessee may recover from the
lessor as if the lessee had elected not to cover and section
34.1-2.A-519 governs.
34.1-2.A-519. Lessee's damages for non-delivery,
repudiation, default, and breach of warranty in regard to
accepted goods.
(a) Except as otherwise provided with respect to damages
liquidated in the lease agreement (section 34.1-2.A-504) or
otherwise determined pursuant to agreement of the parties
(sections 34.1-1-302 and 34.1-2.A-503), if a lessee elects not
to cover or a lessee elects to cover and the cover is by lease
agreement that for any reason does not qualify for treatment
under section 34.1-2.A-518(b), or is by purchase or otherwise,
the measure of damages for non-delivery or repudiation by the
lessor or for rejection or revocation of acceptance by the
lessee is the present value, as of the date of the default, of
the then market rent minus the present value as of the same date
of the original rent, computed for the remaining lease term of
the original lease agreement, together with incidental and
consequential damages, less expenses saved in consequence of the
lessor's default.
(b) Market rent is to be determined as of the place for
tender or, in cases of rejection after arrival or revocation of
acceptance, as of the place of arrival.
(c) Except as otherwise agreed, if the lessee has accepted
goods and given notification (section 34.1-2.A-516(c)), the
measure of damages for non-conforming tender or delivery or
other default by a lessor is the loss resulting in the ordinary
course of events from the lessor's default as determined in any
manner that is reasonable together with incidental and
consequential damages, less expenses saved in consequence of the
lessor's default.
(d) Except as otherwise agreed, the measure of damages for
breach of warranty is the present value at the time and place of
acceptance of the difference between the value of the use of the
goods accepted and the value if they had been as warranted for
the lease term, unless special circumstances show proximate
damages of a different amount, together with incidental and
consequential damages, less expenses saved in consequence of the
lessor's default or breach of warranty.
34.1-2.A-520. Lessee's incidental and consequential
damages.
(a) Incidental damages resulting from a lessor's default
include expenses reasonably incurred in inspection, receipt,
transportation, and care and custody of goods rightfully
rejected or goods the acceptance of which is justifiably
revoked, any commercially reasonable charges, expenses or
commissions in connection with effecting cover, and any other
reasonable expense incident to the default.
(b) Consequential damages resulting from a lessor's
default include:
(i) Any loss resulting from general or particular
requirements and needs of which the lessor at the time of
contracting had reason to know and which could not reasonably be
prevented by cover or otherwise; and
(ii) Injury to person or property proximately
resulting from any breach of warranty.
34.1-2.A-521. Lessee's right to specific performance or
replevin.
(a) Specific performance may be decreed if the goods are
unique or in other proper circumstances.
(b) A decree for specific performance may include any
terms and conditions as to payment of the rent, damages, or
other relief that the court deems just.
(c) A lessee has a right of replevin, detinue,
sequestration, claim and delivery, or the like for goods
identified to the lease contract if after reasonable effort the
lessee is unable to effect cover for those goods or the
circumstances reasonably indicate that the effort will be
unavailing.
34.1-2.A-522. Lessee's right to goods on lessor's
insolvency.
(a) Subject to subsection (b) and even though the goods
have not been shipped, a lessee who has paid a part or all of
the rent and security for goods identified to a lease contract
(section 34.1-2.A-217) on making and keeping good a tender of
any unpaid portion of the rent and security due under the lease
contract may recover the goods identified from the lessor if the
lessor becomes insolvent within ten (10) days after receipt of
the first installment of rent and security.
(b) A lessee acquires the right to recover goods
identified to a lease contract only if they conform to the lease
contract.
34.1-2.A-523. Lessor's remedies.
(a) If a lessee wrongfully rejects or revokes acceptance
of goods or fails to make a payment when due or repudiates with
respect to a part or the whole, then, with respect to any goods
involved, and with respect to all of the goods if under an
installment lease contract the value of the whole lease contract
is substantially impaired (section 34.1-2.A-510), the lessee is
in default under the lease contract and the lessor may:
(i) Cancel the lease contract (section
34.1-2.A-505(a));
(ii) Proceed respecting goods not identified to the
lease contract (section 34.1-2.A-524);
(iii) Withhold delivery of the goods and take
possession of goods previously delivered (section 34.1-2.A-525);
(iv) Stop delivery of the goods by any bailee
(section 34.1-2.A-526);
(v) Dispose of the goods and recover damages (section
34.1-2.A-527), or retain the goods and recover damages (section
34.1-2.A-528), or in a proper case recover rent (section
34.1-2.A-529);
(vi) Exercise any other rights or pursue any other
remedies provided in the lease contract.
(b) If a lessor does not fully exercise a right or obtain
a remedy to which the lessor is entitled under subsection (a),
the lessor may recover the loss resulting in the ordinary course
of events from the lessee's default as determined in any
reasonable manner, together with incidental damages, less
expenses saved in consequence of the lessee's default.
(c) If a lessee is otherwise in default under a lease
contract, the lessor may exercise the rights and pursue the
remedies provided in the lease contract, which may include a
right to cancel the lease. In addition, unless otherwise
provided in the lease contract:
(i) If the default substantially impairs the value of
the lease contract to the lessor, the lessor may exercise the
rights and pursue the remedies provided in subsection (a) or
(b); or
(ii) If the default does not substantially impair the
value of the lease contract to the lessor, the lessor may
recover as provided in subsection (b).
34.1-2.A-524. Lessor's right to identify goods to lease
contract.
(a) A lessor aggrieved under section 34.1-2.A-523(a) may:
(i) Identify to the lease contract conforming goods
not already identified if at the time the lessor learned of the
default they were in the lessor's or the supplier's possession
or control; and
(ii) Dispose of goods (section 34.1-2.A-527(a)) that
demonstrably have been intended for the particular lease
contract even though those goods are unfinished.
(b) If the goods are unfinished, in the exercise of
reasonable commercial judgment for the purposes of avoiding loss
and of effective realization, an aggrieved lessor or the
supplier may either complete manufacture and wholly identify the
goods to the lease contract or cease manufacture and lease,
sell, or otherwise dispose of the goods for scrap or salvage
value or proceed in any other reasonable manner.
34.1-2.A-525. Lessor's right to possession of goods.
(a) If a lessor discovers the lessee to be insolvent, the
lessor may refuse to deliver the goods.
(b) After a default by the lessee under the lease contract
of the type described in section 34.1-2.A-523(a) or
34.1-2.A-523(c)(i) or, if agreed, after other default by the
lessee, the lessor has the right to take possession of the
goods. If the lease contract so provides, the lessor may
require the lessee to assemble the goods and make them available
to the lessor at a place to be designated by the lessor which is
reasonably convenient to both parties. Without removal, the
lessor may render unusable any goods employed in trade or
business, and may dispose of goods on the lessee's premises
(section 34.1-2.A-527).
(c) The lessor may proceed under subsection (b) without
judicial process if it can be done without breach of the peace
or the lessor may proceed by action.
34.1-2.A-526. Lessor's stoppage of delivery in transit or
otherwise.
(a) A lessor may stop delivery of goods in the possession
of a carrier or other bailee if the lessor discovers the lessee
to be insolvent and may stop delivery of carload, truckload,
planeload, or larger shipments of express or freight if the
lessee repudiates or fails to make a payment due before
delivery, whether for rent, security or otherwise under the
lease contract, or for any other reason the lessor has a right
to withhold or take possession of the goods.
(b) In pursuing its remedies under subsection (a), the
lessor may stop delivery until:
(i) Receipt of the goods by the lessee;
(ii) Acknowledgment to the lessee by any bailee of
the goods, except a carrier, that the bailee holds the goods for
the lessee; or
(iii) Such an acknowledgment to the lessee by a
carrier via reshipment or as a warehouse.
(c)(i) To stop delivery, a lessor shall so notify as
to enable the bailee by reasonable diligence to prevent delivery
of the goods;
(ii) After notification, the bailee shall hold and
deliver the goods according to the directions of the lessor, but
the lessor is liable to the bailee for any ensuing charges or
damages;
(iii) A carrier who has issued a nonnegotiable bill
of lading is not obliged to obey a notification to stop received
from a person other than the consignor.
34.1-2.A-527. Lessor's rights to dispose of goods.
(a) After a default by a lessee under the lease contract
of the type described in section 34.1-2.A-523(a) or
34.1-2.A-523(c)(i) or after the lessor refuses to deliver or
takes possession of goods (section 34.1-2.A-525 or
34.1-2.A-526), or, if agreed, after other default by a lessee,
the lessor may dispose of the goods concerned or the undelivered
balance thereof by lease, sale, or otherwise.
(b) Except as otherwise provided with respect to damages
liquidated in the lease agreement (section 34.1-2.A-504) or
otherwise determined pursuant to agreement of the parties
(sections 34.1-1-302 and 34.1-2.A-503), if the disposition is by
lease agreement substantially similar to the original lease
agreement and the new lease agreement is made in good faith and
in a commercially reasonable manner, the lessor may recover from
the lessee as damages (1) accrued and unpaid rent as of the date
of the commencement of the term of the new lease agreement, (2)
the present value, as of the same date, of the total rent for
the then remaining lease term of the original lease agreement
minus the present value, as of the same date, of the rent under
the new lease agreement applicable to that period of the new
lease term which is comparable to the then remaining term of the
original lease agreement, and (3) any incidental damages allowed
under section 34.1-2.A-530, less expenses saved in consequence
of the lessee's default.
(c) If the lessor's disposition is by lease agreement that
for any reason does not qualify for treatment under subsection
(b), or is by sale or otherwise, the lessor may recover from the
lessee as if the lessor had elected not to dispose of the goods
and section 34.1-2.A-528 governs.
(d) A subsequent buyer or lessee who buys or leases from
the lessor in good faith for value as a result of a disposition
under this section takes the goods free of the original lease
contract and any rights of the original lessee even though the
lessor fails to comply with one or more of the requirements of
this article.
(e) The lessor is not accountable to the lessee for any
profit made on any disposition. A lessee who has rightfully
rejected or justifiably revoked acceptance shall account to the
lessor for any excess over the amount of the lessee's security
interest (section 34.1-2.A-508(e)).
34.1-2.A-528. Lessor's damages for non-acceptance, failure
to pay, repudiation, or other default.
(a) Except as otherwise provided with respect to damages
liquidated in the lease agreement (section 34.1-2.A-504) or
otherwise determined pursuant to agreement of the parties
(sections 34.1-1-302 and 34.1-2.A-503), if a lessor elects to
retain the goods or a lessor elects to dispose of the goods and
the disposition is by lease agreement that for any reason does
not qualify for treatment under section 34.1-2.A-527(b), or is
by sale or otherwise, the lessor may recover from the lessee as
damages for a default of the type described in section
34.1-2.A-523(a) or 34.1-2.A-523(c)(i), or, if agreed, for other
default of the lessee, (1) accrued and unpaid rent as of the
date of default if the lessee has never taken possession of the
goods, or, if the lessee has taken possession of the goods, as
of the date the lessor repossesses the goods or an earlier date
on which the lessee makes a tender of the goods to the lessor,
(2) the present value as of the date determined under clause (1)
of the total rent for the then remaining lease term of the
original lease agreement minus the present value as of the same
date of the market rent at the place where the goods are located
computed for the same lease term, and (3) any incidental damages
allowed under section 34.1-2.A-530, less expenses saved in
consequence of the lessee's default.
(b) If the measure of damages provided in subsection (a)
is inadequate to put a lessor in as good a position as
performance would have, the measure of damages is the present
value of the profit, including reasonable overhead, the lessor
would have made from full performance by the lessee, together
with any incidental damages allowed under section 34.1-2.A-530,
due allowance for costs reasonably incurred and due credit for
payments or proceeds of disposition.
34.1-2.A-529. Lessor's action for the rent.
(a) After default by the lessee under the lease contract
of the type described in section 34.1-2.A-523(a) or
34.1-2.A-523(c)(i) or, if agreed, after other default by the
lessee, if the lessor complies with subsection (b), the lessor
may recover from the lessee as damages:
(i) For goods accepted by the lessee and not
repossessed by or tendered to the lessor, and for conforming
goods lost or damaged within a commercially reasonable time
after risk of loss passes to the lessee (section 34.1-2.A-219),
(1) accrued and unpaid rent as of the date of entry of judgment
in favor of the lessor, (2) the present value as of the same
date of the rent for the then remaining lease term of the lease
agreement, and (3) any incidental damages allowed under section
34.1-2.A-530, less expenses saved in consequence of the lessee's
default; and
(ii) For goods identified to the lease contract if
the lessor is unable after reasonable effort to dispose of them
at a reasonable price or the circumstances reasonably indicate
that effort will be unavailing, (1) accrued and unpaid rent as
of the date of entry of judgment in favor of the lessor, (2) the
present value as of the same date of the rent for the then
remaining lease term of the lease agreement, and (3) any
incidental damages allowed under section 34.1-2.A-530, less
expenses saved in consequence of the lessee's default.
(b) Except as provided in subsection (c), the lessor shall
hold for the lessee for the remaining lease term of the lease
agreement any goods that have been identified to the lease
contract and are in the lessor's control.
(c) The lessor may dispose of the goods at any time before
collection of the judgment for damages obtained pursuant to
subsection (a). If the disposition is before the end of the
remaining lease term of the lease agreement, the lessor's
recovery against the lessee for damages is governed by section
34.1-2.A-527 or 34.1-2.A-528, and the lessor will cause an
appropriate credit to be provided against a judgment for damages
to the extent that the amount of the judgment exceeds the
recovery available pursuant to section 34.1-2.A-527 or
34.1-2.A-528.
(d) Payment of the judgment for damages obtained pursuant
to subsection (a) entitles the lessee to the use and possession
of the goods not then disposed of for the remaining lease term
of and in accordance with the lease agreement.
(e) After a lessee has wrongfully rejected or revoked
acceptance of goods, has failed to pay rent then due, or has
repudiated (section 34.1-2.A-402), a lessor who is held not
entitled to rent under this section must nevertheless be awarded
damages for non-acceptance under sections 34.1-2.A-527 and
34.1-2.A-528.
34.1-2.A-530. Lessor's incidental damages.
Incidental damages to an aggrieved lessor include any
commercially reasonable charges, expenses, or commissions
incurred in stopping delivery, in the transportation, care and
custody of goods after the lessee's default, in connection with
return or disposition of the goods, or otherwise resulting from
the default.
34.1-2.A-531. Standing to sue third parties for injury to
goods.
(a) If a third party so deals with goods that have been
identified to a lease contract as to cause actionable injury to
a party to the lease contract (1) the lessor has a right of
action against the third party, and (2) the lessee also has a
right of action against the third party if the lessee:
(i) Has a security interest in the goods;
(ii) Has an insurable interest in the goods; or
(iii) Bears the risk of loss under the lease contract
or has since the injury assumed that risk as against the lessor
and the goods have been converted or destroyed.
(b) If at the time of the injury the party plaintiff did
not bear the risk of loss as against the other party to the
lease contract and there is no arrangement between them for
disposition of the recovery, his suit or settlement, subject to
his own interest, is as a fiduciary for the other party to the
lease contract.
(c) Either party with the consent of the other may sue for
the benefit of whom it may concern.
34.1-2.A-532. Lessor's rights to residual interest.
In addition to any other recovery permitted by this article or
other law, the lessor may recover from the lessee an amount that
will fully compensate the lessor for any loss of or damage to
the lessor's residual interest in the goods caused by the
default of the lessee.