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

Summary of Appendix B B-37 to B-40: Performance, Default, and Remedies in Lease Contracts Excused and Substituted Performance 1. Substituted Performance (§2A-404): o If delivery becomes commercially impracticable, a reasonable substitute must be tendered and accepted. o Payment through a regulated means discharges obligations unless the regulation is discriminatory or oppressive. 2. Excused Performance (§2A-405): o Performance delays or nondelivery are excused if:  Due to unforeseen contingencies or governmental regulations. o Allocation of goods among customers is allowed if partial performance is possible, provided it is fair and reasonable. o The lessor or supplier must notify affected parties of delays and allocations. 3. Lessee’s Options on Excused Performance (§2A-406): o Upon receiving notice of delay or allocation:  The lessee may terminate the lease or accept the available allocation with rent adjustments.  Failure to act within 30 days leads to lapse of the contract for affected deliveries. Irrevocable Promises and Finance Leases 1. Irrevocable Promises (§2A-407): o In finance leases (non-consumer), the lessee’s promises become irrevocable upon acceptance of goods. o These promises cannot be modified or canceled without mutual consent. Default Provisions 1. Default by Either Party (§2A-501): o A party in default is subject to remedies as defined by the lease agreement or this Article. o Remedies include judicial, nonjudicial, or self-help measures, and are cumulative unless limited by the lease. 2. Notice of Default (§2A-502): o Defaulting parties are not entitled to notice unless the lease agreement specifies otherwise. Remedies for Lessor Default 1. Lessee Remedies (§2A-508): For nonconforming delivery, repudiation, or breach of warranty:  Lessee may cancel the lease, recover damages, or seek specific performance or replevy.  Lessees have a security interest in goods they possess to recover payments or expenses and may dispose of goods commercially. 2. Rejection of Improper Delivery (§2A-509): o Lessees can reject goods if they fail to conform to the lease. Rejection must be timely and notified to the lessor. 3. Installment Lease Contracts (§2A-510): o Lessees may reject deliveries that substantially impair their value. o Defaults impairing the contract as a whole allow termination unless remedied by acceptance or actions inconsistent with cancellation. o Liquidation and Limitation of Damages 1. Modification of Rights (§2A-503): o Lease agreements may modify default remedies or limit damages unless unconscionable. o Excluding damages for personal injury in consumer leases is prima facie unconscionable. 2. Liquidated Damages (§2A-504): o Damages must be reasonable in light of anticipated harm. Unreasonable clauses may be unenforceable. o Lessees are entitled to restitution for overpaid sums, subject to the lessor’s offset for damages or benefits received. Statute of Limitations and Proof of Market Rent 1. Limitations (§2A-506): o Actions for default must begin within four years of accrual, which may be reduced to one year by agreement. o Causes of action accrue when the default or breach is or should have been discovered. 2. Market Rent Evidence (§2A-507): o Damages based on market rent are calculated using prevailing rents for comparable terms and conditions. o Substitute rents from similar times, places, or terms may be used with adjustments for differences.