§ 25-2A-305. Sale or sublease of goods by lessee.
§25‑2A‑305. Sale or sublease of goods by lessee.
(1) Subject to theprovisions of G.S. 25‑2A‑303, a buyer or sublessee from the lesseeof goods under an existing lease contract obtains, to the extent of theinterest transferred, the leasehold interest in the goods that the lessee hador had power to transfer, and except as provided in subsection (2) of thissection and G.S. 25‑2A‑511(4), takes subject to the existing leasecontract. A lessee with a voidable leasehold interest has power to transfer agood leasehold interest to a good faith buyer for value or a good faithsublessee for value, but only to the extent set forth in the precedingsentence. When goods have been delivered under a transaction of lease, thelessee has that power even though:
(a) the lessor wasdeceived as to the identity of the lessee;
(b) the delivery was inexchange for a check which is later dishonored; or
(c) the delivery wasprocured through fraud punishable as larcenous under the criminal law.
(2) A buyer in theordinary course of business or a sublessee in the ordinary course of businessfrom a lessee who is a merchant dealing in goods of that kind to whom the goodswere entrusted by the lessor obtains, to the extent of the interesttransferred, all of the lessor's and lessee's rights to the goods, and takesfree of the existing lease contract.
(3) A buyer orsublessee from the lessee of goods that are subject to an existing leasecontract and are covered by a certificate of title issued under a statute ofthis State or of another jurisdiction takes no greater rights than thoseprovided both by this section and by the certificate of title statute. (1993,c. 463, s. 1; 1995, c. 509, s. 22.)