CHAPTER 2A. LEASES
BUSINESS AND COMMERCE CODE
TITLE 1. UNIFORM COMMERCIAL CODE
CHAPTER 2A. LEASES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2A.101. SHORT TITLE. This chapter shall be known and may
be cited as the Uniform Commercial Code--Leases.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.102. SCOPE. This chapter applies to any transaction,
regardless of form, that creates a lease of goods. This chapter
does not apply to a transaction that creates an interest in or
lease of real estate, except to the extent that provision is made
for leases of fixtures by Section 2A.309.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.103. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In this
chapter unless the context otherwise requires:
(1) "Buyer in the ordinary course of business" means a person
who in good faith and without knowledge that the sale to him or
her is in violation of the ownership rights or security interest
or leasehold interest of a third party in the goods buys in the
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
preexisting 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.
(2) "Cancellation" occurs when either party puts an end to the
lease contract for default by the other party.
(3) "Commercial unit" means 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.
(4) "Conforming" goods or performance under a lease contract
means performance or goods that are in accordance with the
obligations under the lease contract.
(5) "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 $25,000.
(6) "Fault" means a wrongful act, omission, breach, or default.
(7) "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 (a) 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, (b) that the
lessee is entitled under this chapter 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 (c) 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.
(8) "Goods" means all things that are moveable at the time of
identification to the lease contract, or are fixtures (Section
2A.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.
(9) "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
the clause "each delivery is a separate lease" or its equivalent.
(10) "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.
(11) "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 by this chapter. Unless the context clearly indicates
otherwise, the term includes a sublease agreement.
(12) "Lease contract" means the total legal obligation that
results from the lease agreement as affected by this chapter and
any other applicable rules of law. Unless the context clearly
indicates otherwise, the term includes a sublease contract.
(13) "Leasehold interest" means the interest of the lessor or
the lessee under a lease contract.
(14) "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.
(15) "Lessee in ordinary course of business" means a person who
in good faith and without knowledge that the lease to him or her
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 preexisting lease contract but does
not include a transfer in bulk or as security for or in total or
partial satisfaction of a money debt.
(16) "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.
(17) "Lessor's residual interest" means the lessor's interest in
the goods after the expiration, termination, or cancellation of
the lease contract.
(18) "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.
(19) "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.
(20) "Merchant lessee" means a lessee that is a merchant with
respect to goods of the kind subject to the lease.
(21) "Present value" means the amount as of a date certain of
one 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.
(22) "Purchase" includes taking by sale, lease, mortgage,
security interest, pledge, gift, or any other voluntary
transaction creating an interest in goods.
(23) "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.
(24) "Supplier" means a person from whom a lessor buys or leases
goods to be leased under a finance lease.
(25) "Supply contract" means a contract under which a lessor
buys or leases goods to be leased.
(26) "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 chapter and the sections
in which they appear are:
"Accessions". Section 2A.310(a).
"Construction mortgage". Section 2A.309(a)(4).
"Encumbrance". Section 2A.309(a)(5).
"Fixtures". Section 2A.309(a)(1).
"Fixture filing". Section 2A.309(a)(2).
"Purchase money lease". Section 2A.309(a)(3).
(c) The following definitions in other chapters apply to this
chapter:
"Account". Section 9.102(a)(2).
"Between merchants". Section 2.104(c).
"Buyer". Section 2.103(a)(1).
"Chattel paper". Section 9.102(a)(11).
"Consumer goods". Section 9.102(a)(23).
"Document". Section 9.102(a)(30).
"Entrusting". Section 2.403(c).
"General intangible". Section 9.102(a)(42).
"Instrument". Section 9.102(a)(47).
"Merchant". Section 2.104(a).
"Mortgage". Section 9.102(a)(55).
"Pursuant to commitment". Section 9.102(a)(69).
"Receipt". Section 2.103(a)(3).
"Sale". Section 2.106(a).
"Sale on approval". Section 2.326.
"Sale or return". Section 2.326.
"Seller". Section 2.103(a)(4).
(d) In addition Chapter 1 contains general definitions and
principles of construction and interpretation applicable
throughout this chapter.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1999, 76th Leg., ch. 414, Sec. 2.19, eff.
July 1, 2001; Acts 2003, 78th Leg., ch. 542, Sec. 4, eff. Sept.
1, 2003.
Amended by:
Acts 2005, 79th Leg., Ch.
122, Sec. 13, eff. September 1, 2005.
Sec. 2A.104. LEASES SUBJECT TO OTHER LAWS. (a) A lease,
although subject to this chapter, is also subject to any
applicable:
(1) certificate of title statute of this state, including
Chapter 501, Transportation Code, Chapter 31, Parks and Wildlife
Code, and Subchapter E, Chapter 1201, Occupations Code;
(2) certificate of title statute of another jurisdiction
(Section 2A.105); or
(3) consumer law of this state, both decisional and statutory,
including, to the extent that they apply to a lease transaction:
(A) Titles 6, 7, 8, 9, and 14;
(B) Subtitle A, Title 11;
(C) Chapters 17, 53, 54, 72, 92, 101, 103, 305, 323, 522, 523,
602, 603, 604, and 2001;
(D) Section 65.017, Civil Practice and Remedies Code;
(E) Chapter 1201, Occupations Code; and
(F) Chapter 25, Transportation Code.
(b) In case of conflict between this chapter, other than
Sections 2A.105, 2A.304(c) and 2A.305(c), and any statute or law
referred to in Subsection (a), the statute or law controls.
(c) Failure to comply with any applicable statute has only the
effect specified therein.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 30.176, eff.
Sept. 1, 1997; Acts 2003, 78th Leg., ch. 1276, Sec. 14A.753, eff.
Sept. 1, 2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.03, eff. April 1, 2009.
Sec. 2A.105. TERRITORIAL APPLICATION OF CHAPTER TO GOODS COVERED
BY CERTIFICATE OF TITLE. Subject to the provisions of Sections
2A.304(c) and 2A.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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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 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 located in a jurisdiction other than the
jurisdiction in which the lessee in fact signed the lease
agreement, resides at the commencement of the action, or resided
at the time the lease contract became enforceable or in which the
goods are in fact used by the lessee, the choice is not
enforceable.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.107. WAIVER OR RENUNCIATION OF CLAIM OR RIGHT AFTER
DEFAULT. A 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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:
(1) if the court finds unconscionability under Subsection (a) or
(b), the court shall award reasonable attorney's fees to the
lessee;
(2) if the court does not find unconscionability and the lessee
claiming unconscionability has brought or maintained an action he
or she knew to be groundless, the court shall award reasonable
attorney's fees to the party against whom the claim is made; and
(3) in determining attorney's fees, the amount of the recovery
on behalf of the claimant under Subsections (a) and (b) is not
controlling.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.109. OPTION TO ACCELERATE AT WILL. (a) A term
providing that one party or the party's successor in interest may
accelerate payment or performance or require collateral or
additional collateral "at will" or "when the party deems himself
or herself insecure" or in words of similar import must be
construed to mean that the party has power to do so only if the
party 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 exercises the
power; otherwise the burden of establishing lack of good faith is
on the party against whom the power has been exercised.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
SUBCHAPTER B. FORMATION AND CONSTRUCTION OF LEASE CONTRACT
Sec. 2A.201. STATUTE OF FRAUDS. (a) A lease contract is not
enforceable by way of action or defense unless:
(1) the total payments to be made under the lease contract,
excluding payments for options to renew or buy, are less than
$1,000; or
(2) 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)(2), 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)(2) 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:
(1) 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;
(2) 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;
(3) with respect to goods that have been received and accepted
by the lessee; or
(4) if the lease contract would otherwise be enforceable under
general principles of equitable estoppel, detrimental reliance or
unjust enrichment.
(e) The lease term under a lease contract referred to in
Subsection (d) is:
(1) 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;
(2) 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
(3) a reasonable lease term.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.202. FINAL WRITTEN EXPRESSION; PAROL OR EXTRINSIC
EVIDENCE. 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 a prior agreement or of a
contemporaneous oral agreement but may be explained or
supplemented:
(1) by course of dealing or usage of trade or by course of
performance; and
(2) 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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 months. Any such term of assurance on
a form supplied by the offeree must be separately signed by the
offeror.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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
method of acceptance, an offeror who is not notified of
acceptance within a reasonable time may treat the offer as having
lapsed before acceptance.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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 a retraction would be
unjust in view of a material change of position in reliance on
the waiver.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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 2A.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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.210. EXPRESS WARRANTIES. (a) Express warranties by the
lessor are created as follows:
(1) Any affirmation of fact or promise made by the lessor to the
lessee that 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.
(2) 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.
(3) 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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
a claim by way of infringement or the like that arises out of
compliance with the specifications.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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:
(1) pass without objection in the trade under the description in
the lease agreement;
(2) in the case of fungible goods, are of fair average quality
within the description;
(3) are fit for the ordinary purposes for which goods of that
type are used;
(4) run, within the variation permitted by the lease agreement,
of even kind, quality, and quantity within each unit and among
all units involved;
(5) are adequately contained, packaged, and labeled as the lease
agreement may require; and
(6) 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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 whenever reasonable, as consistent with each other;
but, subject to the provisions of Section 2A.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 an 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):
(1) 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;
(2) 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
(3) an implied warranty also may 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 2A.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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.215. ACCUMULATION AND CONFLICT OF WARRANTIES EXPRESS OR
IMPLIED. 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:
(1) exact or technical specifications displace an inconsistent
sample or model or general language of description;
(2) a sample from an existing bulk displaces inconsistent
general language of description; and
(3) express warranties displace inconsistent implied warranties
other than an implied warranty of fitness for a particular
purpose.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.216. THIRD-PARTY BENEFICIARIES OF EXPRESS AND IMPLIED
WARRANTIES. This chapter does not provide whether anyone other
than a lessee may take advantage of an express or implied
warranty of quality made to the lessee or whether the lessee or
anyone entitled to take advantage of a warranty made to the
lessee may sue a third party other than the immediate lessor, or
the supplier in a finance lease, for deficiencies in the quality
of the goods. These matters are left to the courts for their
determination.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.217. IDENTIFICATION. 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:
(1) when the lease contract is made if the lease contract is for
a lease of goods that are existing and identified;
(2) 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
(3) when the young are conceived, if the lease contract is for a
lease of the unborn young of animals.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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
during the existence of the lease contract.
(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 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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 chapter on the effect of
default on risk of loss (Section 2A.220), if risk of loss is to
pass to the lessee and the time of passage is not stated, the
following rules apply:
(1) 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.
(2) If the goods are held by a bailee to be delivered without
being moved, the risk of loss passes to the lessee on
acknowledgement by the bailee of the lessee's right to possession
of the goods.
(3) In any case not within Subdivision (1) or (2), the risk of
loss passes to the lessee on tender of delivery if the lessee is
a merchant; otherwise the risk of loss passes to the lessee on
the lessee's receipt of the goods.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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:
(1) 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; or
(2) if the lessee rightfully revokes acceptance, the lessee, to
the extent of any deficiency in the lessee's 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 the lessor's or the
supplier's effective insurance coverage may treat the risk of
loss as resting on the lessee for a commercially reasonable time.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.221. CASUALTY TO IDENTIFIED GOODS. 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 under the lease
agreement or Section 2A.219:
(1) if the loss is total, the lease contract is avoided; and
(2) 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 the lessee's 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
SUBCHAPTER C. EFFECT OF LEASE CONTRACT
Sec. 2A.301. ENFORCEABILITY OF LEASE CONTRACT. Except as
otherwise provided in this title, 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1.
1993.
Sec. 2A.302. TITLE TO AND POSSESSION OF GOODS. Except as
otherwise provided in this title, each provision of this chapter
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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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 Chapter 9 of this code, Secured
Transactions, by reason of Section 9.109(a)(3).
(b) Except as provided in Section 9.407(c), 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 (d), 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 Section 9.407(c):
(1) 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 2A.501(b); and
(2) if Subdivision (1) is not applicable and if a transfer is
made that (A) is prohibited under a lease agreement or (B)
materially impairs the prospect of obtaining return performance
by, materially changes the duty of, or materially increases the
burden of 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, (i) 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 (ii) 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. This 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1999, 76th Leg., ch. 414, Sec. 2.20, eff.
July 1, 2001.
Sec. 2A.304. SUBSEQUENT LEASE OF GOODS BY LESSOR. (a) Subject
to Section 2A.303 of this chapter, 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 by Subsection (b) or Section
2A.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:
(1) the lessor's transferor was deceived as to the identity of
the lessor;
(2) the delivery was in exchange for a check which is later
dishonored;
(3) it was agreed that the transaction was to be a "cash sale";
or
(4) 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.305. SALE OR SUBLEASE OF GOODS BY LESSEE. (a) Subject
to the provisions of Section 2A.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 by Subsection (b) and Section 2A.511, 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:
(1) the lessor was deceived as to the identity of the lessee;
(2) the delivery was in exchange for a check which is later
dishonored; or
(3) 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.306. PRIORITY OF CERTAIN LIENS ARISING BY OPERATION OF
LAW. If a person in the ordinary course of the person's 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 chapter 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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 2A.306, a creditor of a lessee
takes subject to the lease contract.
(b) Except as otherwise provided in Subsection (c) and Sections
2A.306 and 2A.308, a creditor of a lessor takes subject to the
lease contract unless the creditor holds a lien that attached to
the goods before the lease contract became enforceable.
(c) Except as otherwise provided in Sections 9.317, 9.321, and
9.323, a lessee takes a leasehold interest subject to a security
interest held by a creditor of the lessor.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1999, 76th Leg., ch. 414, Sec. 2.21, eff.
July 1, 2001.
Sec. 2A.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 or voids the
lease contract 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 and does not void
the lease contract.
(b) Nothing in this chapter impairs the rights of creditors of a
lessor if the lease contract is made under circumstances which
under any statute or rule of law apart from this chapter 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.309. LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS BECOME
FIXTURES. (a) In this section:
(1) goods are "fixtures" when they become so related to
particular real estate that an interest in them arises under real
estate law;
(2) 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 Sections
9.502(a) and (b);
(3) 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;
(4) 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
(5) "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 chapter a lease may be of goods that are fixtures
or may continue in goods that become fixtures, but no lease
exists under this chapter of ordinary building materials
incorporated into an improvement on land.
(c) This chapter does not prevent the 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:
(1) the lease is a purchase money lease, the conflicting
interest of the encumbrancer or owner arises before the goods
become fixtures, a fixture filing covering the fixtures is filed
or recorded before the goods become fixtures or within 10 days
thereafter, and the lessee has an interest of record in the real
estate or is in possession of the real estate; or
(2) 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:
(1) 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
(2) the conflicting interest is a lien on the real estate
obtained by legal or equitable proceedings after the lease
contract is enforceable; or
(3) the encumbrancer or owner has consented in writing to the
lease or has disclaimed an interest in the goods as fixtures; or
(4) 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 Subsection (d)(1) 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 chapter, or (2) if necessary to enforce other
rights and remedies of the lessor or lessee under this chapter,
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.
(i) 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
Chapter 9.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1999, 76th Leg., ch. 414, Sec. 2.22, eff.
July 1, 2001.
Sec. 2A.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 lessor's residual interest in the accessions and the
interest of a lessor or a lessee under a lease contract entered
into before the goods became accessions are superior to all
interests in the whole except as stated in Subsection (d).
(c) The lessor's residual interest in the accessions and the
interest of a lessor or a lessee under a lease contract entered
into at the time or after the goods became accessions are
superior to all subsequently acquired interests in the whole
except as stated in Subsection (d) but are 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 lessor's residual interest in the accessions and the
interest of a lessor or a lessee under a lease contract described
by Subsection (b) or (c) are subordinate to the interest of:
(1) 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
(2) 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 chapter, or (2) if necessary to enforce
the lessor's or lessee's other rights and remedies under this
chapter, remove the goods from the whole, free and clear of all
interests in the whole, but the party 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
SUBCHAPTER D. PERFORMANCE OF LEASE CONTRACT: REPUDIATED,
SUBSTITUTED AND EXCUSED
Sec. 2A.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 the party
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 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 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:
(1) for a commercially reasonable time, await retraction of
repudiation and performance by the repudiating party;
(2) make demand pursuant to Section 2A.401 and await assurance
of future performance adequate under the circumstances of the
particular case; or
(3) resort to any right or remedy on default under the lease
contract or this chapter, 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 chapter on the
lessor's right to identify goods to the lease contract
notwithstanding default or to salvage unfinished goods (Section
2A.524).
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,
1993.
Sec. 2A.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 canceled 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 c