Part 11- Appendix B: Uniform Commercial Code, Note 8

Summary of Appendix B B-25 to B-28: Definitions and Key Provisions on Lease Contracts Key Definitions: 1. Lease Contract: The legal obligation arising from a lease agreement, including sublease contracts unless specified otherwise. 2. Leasehold Interest: The interests of both the lessor and lessee in the lease contract. 3. Lessee: A person acquiring rights to possession and use of goods under a lease, including sublessees. 4. Lessee in Ordinary Course of Business: Someone leasing in good faith without knowledge of violations of third-party rights, from a seller in the business of leasing such goods (excludes pawnbrokers). 5. Lessor: A person transferring possession and use of goods under a lease, including sublessors. 6. Lessor’s Residual Interest: The lessor’s rights in the goods after the lease ends. 7. Goods: Movable items or fixtures at the time of identification to a lease, excluding intangible items (e.g., money, accounts) and minerals preextraction. 8. Installment Lease Contract: A lease permitting or requiring goods to be delivered and accepted in separate lots. 9. Present Value: The discounted value of future payments calculated by a specified or reasonable interest rate. 10.Sublease: A lease where the lessor is also a lessee under a prior lease. 11.Termination: The lawful ending of a lease contract for reasons other than default. Governing Provisions: 1. Application of Other Laws (§2A-104): o Lease contracts must comply with certificate of title laws and consumer protection statutes. o Conflicts between lease provisions and state statutes are resolved in favor of the statutes. 2. Territorial Application (§2A-105): o Compliance with certificate of title laws is governed by the issuing jurisdiction until a certificate is surrendered or replaced. 3. Consumer Lease Restrictions (§2A-106): o Limitations on choosing applicable laws and judicial forums, favoring the lessee's place of residence or use of goods. 4. Waivers and Renunciations (§2A-107): o Claims or rights arising from defaults can be discharged via written agreements. 5. Unconscionability (§2A-108): o Courts may refuse to enforce or modify unconscionable terms or actions in lease contracts, especially in consumer leases, and may award attorney’s fees accordingly. 6. Option to Accelerate (§2A-109): o Any clause allowing payment or performance to be accelerated "at will" requires a good faith belief of impaired performance. Formation and Enforcement: 1. Statute of Frauds (§2A-201): o Lease contracts must be in writing if payments exceed $1,000 or lack a specific lease term. o Exceptions include specially manufactured goods or admissions of a contract in court. 2. Final Expression and Extrinsic Evidence (§2A-202): o Written agreements may not be contradicted by prior or contemporaneous evidence but may be supplemented by trade usage or consistent additional terms. 3. General Formation Rules (§2A-204): o Lease contracts may be formed through any conduct indicating agreement, even if terms are incomplete. 4. Course of Performance (§2A-207): o Repeated performances without objection shape the interpretation of the lease agreement. 5. Modification and Waiver (§2A-208): o Lease agreements can be modified without additional consideration unless restricted by the agreement’s terms. 6. Firm Offers (§2A-205): o Merchant offers to lease goods that assure to remain open are binding for a maximum of three months without consideration.