Complete Home & Office Legal Guide/Complete Home and Office Legal Guide (Chestnut) (1993).ISO/stat/ucc/ucc2a_2.ws

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     2A-307. Priority of Liens Arising by Attachment or Levy on,
Security Interests in, and Other Claims to Goods.

     (1)  Except as otherwise provided in Section 2A-306, a
creditor of a lessee takes subject to the lease contract.

     (2)  Except as otherwise provided in subsections (3) and (4)
and in Sections 2A-306 and 2A-308, a creditor of a lessor takes
subject to the lease contract unless:

     (a)  the creditor holds a lien that attached to the goods
before the lease contract became enforceable,

     (b)  the creditor holds a security interest in the goods and
the lessee did not give value and receive delivery of the goods
without knowledge of the security interest; or

     (c)  the creditor holds a security interest in the goods
which was perfected (Section 9-303) before the lease contract
became enforceable.

     (3)  A lessee in the ordinary course of business takes the
leasehold interest free of a security interest in the goods
created by the lessor even though the security interest is
perfected (Section 9-303) and the lessee knows of its existence.

     (4)  A lessee other than a lessee in the ordinary course of
business takes the leasehold interest free of a security
interest to the extent that it secures future advances made after
the secured party acquires knowledge of the lease or more than 45
days after the lease contract becomes enforceable, whichever
first occurs, unless the future advances are made pursuant to a
commitment entered into without knowledge of the lease and before
the expiration of the 45-day period.

     2A-308. Special Rights of Creditors.

     (1)  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.

     (2)  Nothing in this Article impairs the rights of creditors
of a lessor if the lease contract (a) 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 (b) 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.

     (3)  A creditor of a seller may treat a sale or an ≡7É3
 èidentification 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.

     2A-309. Lessor's and Lessee's Rights When Goods Become
Fixtures.

     (1)  In this section:

     (a)  "goods are fixtures" when they become so related to
particular real estate that an interest in them arises under real
estate law;

     (b)  a "fixture filing" is the filing, in the office where 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 9- 402(5);

     (c)  a lease is a "purchase money lease" unless the lessee ì
has possession or use of the goods or the right to possession or ì
use of the goods before the lease agreement is enforceable;

     (d)  a mortgage is a "construction mortgage" to the extent ì
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

     (e)  "encumbrance" includes real estate mortgages and other
liens on real estate and all other rights in real estate that are
not ownership interests.

     (2)  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.

/* Ordinary materialmen's liens apply to the construction ì
materials. */

     (3)  This Article does not prevent creation of a lease of
fixtures pursuant to real estate law.

     (4)  The perfected interest of a lessor of fixtures has
priority over a conflicting interest of an encumbrancer or owner
of the real estate if:

     (a)  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
days thereafter, and the lessee has an interest of record in the ≡7É3
 èreal estate or is in possession of the real estate; or

/* Purchase money liens so far as it is properly perfected would ì
be a windfall to prior lienors. Accordingly, as in other ì
chapters, these liens take priority. */

     (b)  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.

     (5)  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:

     (a)  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; or

     (b)  the conflicting interest is a lien on the real estate
obtained by legal or equitable proceedings after the lease
contract is enforceable; or

     (c)  the encumbrancer or owner has consented in writing to
the lease or has disclaimed an interest in the goods as fixtures;
or

     (d)  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.

     (6)  Notwithstanding subsection (4)(a) but otherwise subject
to subsections (4) and (5), 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.

     (7)  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. ≡7É3
 è
     (8)  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

(i) on default, expiration, termination, or cancellation of the ì
lease agreement but subject to the lease agreement and this ì
Article, or

(ii) if necessary to enforce other rights and remedies of the ì
lessor or lessee under this Article, remove the goods from the ì
real estate, free and clear of all conflicting interests of all ì
owners and encumbrancers of the real estate, but the lessor or ì
lessee must reimburse any encumbrancer or owner of the real ì
estate who is not the lessee and who has not otherwise agreed fur ì
the cost of repair of any physical injury, but not for any ì
diminution in value of the real estate caused by the absence of ì
the goods removed or by any necessity of replacing them. A person ì
entitled to reimbursement may refuse permission to remove until ì
the party seeking removal gives adequate security for the ì
performance of this obligation.

     (9)  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).

     2A-310. Lessor's and Lessee's Rights When Goods Become
Accessions.

     (1)  Goods are "accessions" when they are installed in or
affixed to other goods.

     (2)  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 (4).

     (3)  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 (4) 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.

     (4)  The interest of a lessor or a lessee under a lease
contract described in subsection (2) or (3) is subordinate to the
interest of

     (a)  a buyer in the ordinary course of business or a lessee ≡7É3
 èin the ordinary course of business of any interest in the whole
acquired after the goods became accessions; or

     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.

     (5)  When under subsections (2) or (3) and (4) 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

     (a) on default, expiration, termination, or cancellation of ì
the lease contract by the other party but subject to the ì
provisions of the lease contract and this Article, or

     (b)  if necessary to enforce his [or her] other rights and
remedies under this Article, remove the goods from the whole,
free and clear of all interests in the whole, but he [or she]
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.

     2A-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: EPUDIATED, SUBSTITUTED AND EXCUSED

     2A-401. Insecurity: Adequate Assurance of Performance.

     (1)  A lease contract imposes an obligation, on each party
that the other's expectation of receiving due performance will
not be impaired.

     (2)  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 [or she] has not already received the agreed return.

     (3)  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 30 days after receipt of a demand
by the other party.

     (4)  Between merchants, the reasonableness of grounds for ≡7É3
 èinsecurity and the adequacy of any assurance offered must be
determined according to commercial standards.

     (5)  Acceptance of any nonconforming delivery or payment
does not prejudice the aggrieved party's right to demand adequate
assurance of future performance.

     2A-402. Anticipatory Repudiation.

     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:

     (a)  for a commercially reasonable time, await retraction of
repudiation and performance by the repudiating party;

     (b)  make demand pursuant to Section 2A-401 and await
assurance of future performance adequate under the circumstances
of the particular case; or

     (c)  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
2A-524).

     2A-403. Retraction of Anticipatory Repudiation.

     (1)  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.

     (2)  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 2A-401.

     (3)  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.

     2A-404. Substituted Performance.

     (1)  If without fault of the lessee, the lessor and the
supplier, the agreed berthing, loading, or unloading facilities ≡7É3
 èfail 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.

     (2)  If the agreed means or manner of payment fails because
of domestic or foreign governmental regulation:

     (a)  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

     (b)  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.

2A-405. Excused Performance.

     Subject to Section 2A-404 on substituted performance, the
following rules apply:

     (a)  Delay in delivery or non delivery in whole or in part
by a lessor or a supplier who complies with paragraphs (b) and
(c) 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.

     (b)  If the causes mentioned in paragraph (a) affect only
part of the lessor's or the supplier's capacity to perform, he
[or she] shall allocate production and deliveries among his [or
her] customers but at his [or her} option may include regular
customers not then under contract for sale or lease as well as
his [or her] own requirements for further manufacture. He [or
she] may so allocate in any manner that is fair and reasonable.

     (c)  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 (b),
of the estimated quota thus made available for the lessee.

2A-406. Procedure on Excused Performance.

     (1)  If the lessee receives notification of a material or
indefinite delay or an allocation justified under Section 2A-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 ≡7É3
 èis substantially impaired (Section 2A-510):

     (a)  terminate the lease contract (Section 2A-505(2)); or

    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.

     (2)  If, after receipt of a notification from the lessor
under Section 2A-405, the lessee fails so to modify the lease
agreement within a reasonable time not exceeding 30 days, the
lease contract lapses with respect to any deliveries affected.

     2A-407. Irrevocable Promises: Finance Leases.

     (1)  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.

     (2)  A promise that has become irrevocable and independent
under subsection (1):

     (a)  is effective and enforceable between the panics, and by
or against third patties including assignees of the parties; and

     (b)  is not subject to cancellation, termination,
modification, repudiation, excuse, or substitution without the
consent of the party to whom the promise runs.

     (3)  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
A.   IN GENERAL

     2A-501.   Default: Procedure.

     (1)  Whether the lessor or the lessee is in default under a
lease contract is determined by the lease agreement and this
Article.

     (2)  If the lessor or the lessee is in default under the
lease contract, the parry seeking enforcement has rights and
remedies as provided in this Article and, except as limited by
this Article, as provided in the lease agreement.

     (3)  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 ≡7É3
 ècontract by self-help or any available judicial procedure or
nonjudicial procedure, including administrative proceeding,
arbitration, or the like, in accordance with this Article.

     (4)  Except as otherwise provided in Section 1-106(1) or
this Article or the lease agreement, the rights and remedies
referred to in subsections (2) and (3) are cumulative.

     (5)  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.

2A-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.

2A-503. Modification or Impairment of Rights and Remedies.

    (1)  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.

     (2)  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.

     (3)  Consequential damages may be liquidated under Section
2A-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.

     (4)  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.

     2A-504.   Liquidation of Damages.

     (1)  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 ≡7É3
 èresidual 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.

     (2)  If the lease agreement provides for liquidation of
damages, and such provision does not comply with subsection (1),
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.

     (3)  If the lessor justifiably withholds or stops delivery
of goods because of the lessee's default or insolvency (Section
2A-525 or 2A-526), the lessee is entitled to restitution of any
amount by which the sum of his [or her] payments exceeds:

     (a)  the amount to which the lessor is entitled by virtue of
terms liquidating the lessor's damages in accordance with
subsection (1); or

     (b)  in the absence of those terms, 20 percent 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 $500

     (4)  A lessee's right to restitution under subsection (3) is
subject to offset to the extent the lessor establishes:

     (a)  a right to recover damages under the provisions of this
Article other than subsection (1); and

     (b)  the amount or value of any benefits received by the
lessee directly or indirectly by reason of the lease contract.

     2A-505. Cancellation and Termination and Effect of
Cancellation, Termination, Rescission, or Fraud on Rights and
Remedies.

     (1)  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.

     (2)  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.

     (3)  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.

     (4)  Rights and remedies for material misrepresentation or
fraud include all rights and remedies available under this ≡7É3
 èArticle for default.

     (5)  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.

2A-506. Statute of Limitations.

     (1)  An action for default under a lease contract, including
breach of warranty or indemnity, must be commenced within 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 year.

/* This section will often be changed in certain jurisdictions. ì
*/

     (2)  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.

     (3)  If an action commenced within the time limited by
subsection (1) 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

     the time limited and within 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.

     (4)  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.

     2A-507.   Proof of Market Rent: Time and Place.

     (1)  Damages based on market rent (Section 2A-519 or 2A-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 times
specified in Sections 2A-519 and 2A-528.

     (2)  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 ≡7É3
 èas 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.

     (3)  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 [or she] has given the other party notice the court finds
sufficient to prevent unfair surprise.

     (4)  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.

B.   DEFAULT BY LESSOR

     2A-508.   Lessee's Remedies.

     (1)  If a lessor fails to deliver the goods in conformity to
the lease contract (Section 2A-509) or repudiates the lease
contract (Section 2A-402), or a lessee rightfully rejects the
goods (Section 2A-509) or justifiably revokes acceptance of the
goods (Section 2A-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 2A-510), the lessor is in default
under the lease contract and the lessee may:

     (a)  cancel the lease contract (Section 2A-505(1));

     (b)  recover so much of the rent and security as has been ì
paid and is just under the circumstances

     (c)  cover and recover damages as to all goods affected ì
whether or not they have been identified to the lease contract ì
(Sections 2A-518 and 2A-520), or recover damages for nondelivery ì
(Sections 2A-519 and 2A-520);

     (d)  exercise any other rights or pursue any other remedies
provided in the lease contract.

     (2)  If a lessor fails to deliver the goods in conformity to
the lease contract or repudiates the lease contract, the lessee
may also:

     (a)  if the goods have been identified, recover them
(Section 2A-522); or

     (b)  in a proper case, obtain specific performance or
replevy the goods (Section 2A-521).
 ≡7É3
 è     (3)  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 2A-519(3).

     (4)  If a lessor has breached a warranty, whether express or
implied, the lessee may recover damages (Section 2A-519(4)).

     (5)  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 2A-527(5).

     (6)  Subject to the provisions of Section 2A-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.

     2A-509.   Lessee's Rights on Improper Delivery; Rightful
Rejection.

     (1)  Subject to the provisions of Section 2A-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.

     (2)  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.

     2A-510.   Installment Lease Contracts: Rejection and
Default.

     (1)  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 (2) and
the lessor or the supplier gives adequate assurance of its cure,
the lessee must accept that delivery.

     (2)  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.
 ≡7É3
 è     2A-511. Merchant Lessee's Duties as to Rightfully Rejected
Goods.

     (1)  Subject to any security interest of a lessee (Section
2A-508(5)), 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 [or her] 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.

     (2)  If a merchant lessee (subsection (1)) or any other
lessee (Section 2A-512) disposes of goods, he [or she] 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 10
percent of the gross proceeds.

     (3)  In complying with this section or Section 2A-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.

     (4)  A purchaser who purchases in good faith from a lessee
pursuant to this section or Section 2A-512 takes the goods free
of any rights of the lessor and the supplier even though the
lessee fails to comply with one or more of the requirements of
this Article.

     2A-512. Lessee's Duties as to Rightfully Rejected Goods.

     (1)  Except as otherwise provided with respect to goods that
threaten to decline in value speedily (Section 2A-511) and
subject to any security interest of a lessee (Section 2A-508(5)):

     (a)  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;

     (b)  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 2A-511; but

     (c)  the lessee has no further obligations with regard to
goods rightfully rejected. ≡7É3
 è
     (2)  Action by the lessee pursuant to subsection (1) is not
acceptance or conversion.

     2A-513.   Cure by Lessor of Improper Tender or Delivery;
Replacement.

     (1)  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.

     (2)  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 [or she] seasonably notifies the lessee.

     2A-514. Waiver of Lessee's Objections.

     (1)  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:

     (a)  if, stated seasonably, the lessor or the supplier could
have cured it (Section 2A-513); or

     (b)  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.

     (2)  A lessee's failure to reserve rights when paying rent
or other consideration against documents precludes recovery of
the payment for defects apparent on the face of the documents.

     2A-515. Acceptance of Goods.

     (1)  Acceptance of goods occurs after the lessee has had a
reasonable opportunity to inspect the goods and

     (a)  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

     (b)  the lessee fails to make an effective rejection of the
goods (Section 2A- 509(2)).

     (2)  Acceptance of a part of any commercial unit is
acceptance of that entire unit.
 ≡7É3
 è     2A-516.   Effect of Acceptance of Goods; Notice of Default;
Burden of Establishing Default After Acceptance; Notice of Claim
or Litigation to Person Answerable Over.

     (1)  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.

     (2)  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.

     (3)  If a tender has been accepted:

     (a)  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.

     (b)  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 2A-21 1) the lessee shall
notify the lessor or be barred from any remedy over for liability
established by the litigation; and

     (c)  the burden is on the lessee to establish any default.

     (4)  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:

     (a)  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 litigations, then unless the person notified
after seasonable receipt of the notice does come in and defend
that person is so bound.

     (b)  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 2A-21 1) 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.
 ≡7É3
 è     (5)  Subsections (3) and (4) apply to any obligation of a
lessee to hold the lessor or the supplier harmless against
infringement or the like (Section 2A-21 1).

     2A-517. Revocation of Acceptance of Goods.

     (1)  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:

     (a)  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

     (b)  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.

     (2)  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.

     (3)  If the lease agreement so provides, the lessee may
revoke acceptance of a lot or commercial unit because of other
defaults by the lessor.

     (4)  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.

     (5)  A lessee who so revokes has the same rights and duties
with regard to the goods involved as if the lessee had rejected
them.

     2A-518.   Cover; Substitute Goods.

     (1)  After a default by a lessor under the lease contract of
the type described in Section 2A-508(1), 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.

     (2)  Except as otherwise provided with respect to damages
liquidated in the lease agreement (Section 2A-504) or otherwise
determined pursuant to agreement of the parties (Sections 1-
102(3) and 2A-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 (i) the present value, as of the date of the commencement ≡7É3
 èof 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 (ii) any incidental or consequential
damages, less expenses saved in consequence of the lessor's
default.

     (3)  If a lessee's cover is by lease agreement that for any
reason does not qualify for treatment under subsection (2), or is
by purchase or otherwise, the lessee may recover from the lessor
as if the lessee had elected not to cover and Section 2A-519
governs.

     2A-519.   Lessee's Damages for Non-delivery, Repudiation,
Default, and Breach of Warranty in Regard to Accepted Goods.

     (1)  Except as otherwise provided with respect to damages
liquidated in the lease agreement (Section 2A-504) or otherwise
determined pursuant to agreement of the parties (Sections 1-
102(3) and 2A-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 2A-518(2), 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.

     (2)  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.

     (3)  Except as otherwise agreed, if the lessee has accepted
goods and given notification (Section 2A-516(3)), 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.

     (4)  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 a mount, together with incidental and
consequential damages, less expenses saved in consequence of the
lessor's default or breach of warranty.

     2A-520.   Lessee's Incidental and Consequential Damages. ≡7É3
 è
     (1)  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.

     (2)  Consequential damages resulting from a lessor's default
include:

     (a)  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

     (b)  injury to person or property proximately resulting from
any breach of warranty.

     2A-521. Lessee's Right to Specific Performance or Replevin.

     (1)  Specific performance may be decreed if the goods are
unique or in other proper circumstances.

     (2)  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.

     (3)  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.

     2A-522. Lessee's Right to Goods on Lessor's Insolvency.

     (1)  Subject to subsection (2) 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 2A-21 7) 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 10 days after receipt of the
first installment of rent and security.

     (2)  A lessee acquires the right to recover goods identified
to a lease contract only if they conform to the lease contract.

/* A provision for the protection of the buyer which mirrors the ì
provisions of the section allowing a seller/lessor to stop ì
performance in transit. */

C.   DEFAULT BY LESSEE ≡7É3
 è     2A-523. Lessor's Remedies.

     (1)  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 2A-510), the lessee is in
default under the lease contract and the lessor may:

     (a)  cancel the lease contract (Section 2A-505(1));

     (b)  proceed respecting goods not identified to the lease
contract (Section 2A- 524);

     (c)  withhold delivery of the goods and take possession of
goods previously delivered (Section 2A-525);

     (d)  stop delivery of the goods by any bailee (Section 2A-
526);

     (e)  dispose of the goods and recover damages (Section 2A-
527), or retain the goods and recover damages (Section 2A-528), ì
or in a proper case recover rent (Section 2A-529);

     (f)  exercise any other rights or pursue any other remedies
provided in the lease contract.

     (2)  If a lessor does not fully exercise a right or obtain a
remedy to which the lessor is entitled under subsection (1), 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.

     (3)  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:

     (a)  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 subsections (1) or (2); or

     (b)  if the default does not substantially impair the value
of the lease contract to the lessor, the lessor may recover as
provided in subsection (2).

     2A-524. Lessor's Right to Identify Goods to Lease Contract.

     (1)  After default by the lessee under the lease contract of
the type described in Section 2A-523(1) or Section 2A-523(3)(a)
or, if agreed, after other default by the lessee, the lessor may:
 ≡7É3
 è     (a)  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

     (b)  dispose of goods (Section 2A-527(1)) that demonstrably
have been intended for the particular lease contract even though
those goods are unfinished.

     (2)  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.

     2A-525.   Lessor's Right to Possession of Goods.

     (1)  If a lessor discovers the lessee to be insolvent, the
lessor may refuse to deliver the goods.

     (2)  After a default by the lessee under the lease contract
of the type described in Section 2A-523(1) or 2A-523(3)(a) or, if
agreed, after other default by the lessee, the lessor has the ì
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 2A- 527).

/* A melding of article 9's provisions into the law of leases. */

     (3)  The lessor may proceed under subsection (2) without
judicial process if it can be done without breach of the peace or
the lessor may proceed by action.

     2A-526. Lessor's Stoppage of Delivery in Transit or
Otherwise.

     (1)  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.

/* Similar to the provision on stoppage of sales. */

     (2)  In pursuing its remedies under subsection (1), the
lessor may stop delivery until ≡7É3
 è
     (a)  receipt of the goods by the lessee;

     (b)  acknowledgment to the lessee by any bailee of the
goods, except a carrier, that the bailee holds the goods for the
lessee; or

     (c)  such an acknowledgment to the lessee by a carrier via
reshipment or as warehouseman.

     (3)(a) To stop delivery, a lessor shall so notify as to ì
enable the bailee by reasonable diligence to prevent delivery of ì
the goods.

     (b)  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.

     (c)  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.

     2A-527.   Lessor's Rights to Dispose of Goods.

     (1)  After a default by a lessee under the lease contract of
the type described in Section 2A-523(1) or 2A-523(3)(a) or after
the lessor refuses to deliver or takes possession of goods
(Section 2A-525 or 2A-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.

     (2)  Except as otherwise provided with respect to damages
liquidated in the lease agreement (Section 2A-504) or otherwise
determined pursuant to agreement of the parties (Sections 1-
102(3) and 2A-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

(i) accrued and unpaid rent as of the date of the commencement of ì
the term of the new lease agreement,

(ii) the present value, as of the same date, of the total rent ì
for the then remaining lease term of the original lease agreement ì
minus the present value, as of the same date, of the rent under ì
the new lease agreement applicable to that period of the new ì
lease term which is comparable to the then remaining term of the ì
original lease agreement, and

(iii) any incidental damages allowed under
Section 2A-530, less expenses saved in consequence of the
lessee's default.
     (3)  If the lessor's disposition is by lease agreement that ≡7É3
 èfor any reason does not qualify for treatment under subsection
(2), 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 2A-528 governs.
     (4)  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 falls to comply with one or more of the requirements of
this Article.
     (5)  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 2A-508(5)).

     2A-528.   Lessor's Damages for Non-acceptance, Failure to
Pay, Repudiation, or Other Default,

     (1)  Except as otherwise provided with respect to damages
liquidated in the lease agreement (Section 2A-504) or otherwise
determined pursuant to agreement of the parties (Sections 1-
102(3) and 2A-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 2A-527(2), or is by sale or otherwise,
the lessor may recover from the lessee as damages for a default
of the type described in Section 2A-523(1) or 2A-523(3)(a), or,
if agreed, for other default of the lessee,

(i) accrued and unpaid rent as of the date of default if the ì
lessee has never taken possession of the goods, or, if the lessee ì
has taken possession of the goods, as of the date the lessor ì
repossesses the goods or an earlier date on which the lessee ì
makes a tender of the goods to the lessor,

(ii) the present value as of the date determined under clause (i) ì
of the total rent for the then remaining lease term of the ì
original lease agreement minus the present value as of the same ì
date of the market rent at the place where the goods are located ì
computed for the same lease term, and

(iii) any incidental damages allowed under Section 2A-530, less
expenses saved in consequence of the lessee's default.

     (2)  If the measure of damages provided in subsection (1) 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 2A-530, due allowance for costs
reasonably incurred and due credit for payments or proceeds of
disposition.

     2A-529. Lessor's Action for the Rent. ≡7É3
 è
     (1)  After default by the lessee under the lease contract of
the type described in Section 2A-523(1) or 2A-523(3)(a) or, if
agreed, after other default by the lessee, if the lessor complies
with subsection (2), the lessor may recover from the lessee as
damages:

     (a)  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 2A-21 9),

(i) accrued and unpaid rent as of the date of entry of judgment ì
in favor of the lessor,

(ii) the present value as of the same dare of the rent for the
then remaining lease term of the lease agreement, and

(iii) any incidental damages allowed under Section 2A-530, less ì
expenses saved in consequence of the lessee's default; and

     (b)  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,

(i) accrued and unpaid rent as of the date of entry of judgment ì
in favor of the lessor,

(ii) the present value as of the same date of the rent for the ì
then remaining lease term of the lease agreement, and

(iii) any incidental damages allowed under Section 2A-530, less ì
expenses saved in consequence of the lessee's default.

     (2)  Except as provided in subsection (3), 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.

     (3)  The lessor may dispose of the goods at any time before
collection of the judgment for damages obtained pursuant to ì
subsection (1). If the disposition is before the end of the ì
remaining lease term of the lease agreement, the lessor's ì
recovery against the lessee for damages is governed by Section ì
2A-527 or Section 2A-528, and the lessor will cause an ì
appropriate credit to be provided against a judgment for damages ì
to the extent that the amount of the judgment exceeds the ì
recovery available pursuant to Section 2A-527 or 2A-528.

     (4)  Payment of the judgment for damages obtained pursuant
to subsection (1) 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.
 ≡7É3
 è     (5)  After default by the lessee under the lease contract of
the type described in Section 2A-523(1) or Section 2A-523(3)(a)
or, if agreed, after other default by the lessee, a lessor who is
held not entitled to rent under this section must nevertheless be
awarded damages for non-acceptance under Section 2A-527 or
Section 2A-528.

     2A-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.

     2A-531. Standing to Sue Third Parties for Injury to Goods.

     (1)  If a third parry so deals with goods that have been
identified to a lease contract as to cause actionable injury to a
party to the lease contract (a) the lessor has a right of action
against the third party, and (b) 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.

     (2)  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 [or her] suit or settlement, subject to his
[or her] own interest, is as a fiduciary for the other party to
the lease contract.

     (3)  Either party with the consent of the other may sue for
the benefit of whom it may concern.

     2A-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.