70A-2a-303 - Transfer of party's interest under lease contract or of lessor's residual interest in goods -- Transfer as event of default -- Creation or enforcement of security interest -- Tran
70A-2a-303. Transfer of party's interest under lease contract or of lessor's residualinterest in goods -- Transfer as event of default -- Creation or enforcement of securityinterest -- Transfer of right to damages for default.
(1) As used in this section, "creation of a security interest" includes the sale of a leasecontract subject to Title 70A, Chapter 9a, Uniform Commercial Code -- Secured Transactions, byreason of Subsection 70A-9a-109(1)(c).
(2) Except as provided in Subsection (3) and Section 70A-9a-407, a provision in a leaseagreement that prohibits the voluntary or involuntary transfer (including a transfer by sale,sublease, creation or enforcement of a security interest, or attachment, levy, or other judicialprocess) of an interest of a party under the lease contract or of the lessor's residual interest in thegoods, or that makes such a transfer an event of default, gives rise to the rights and remediesprovided in Subsection (4), but a transfer that is prohibited or is an event of default under thelease agreement is otherwise effective.
(3) A provision in a lease agreement that prohibits a transfer of a right to damages fordefault with respect to the whole lease contract or of a right to payment arising out of thetransferor's due performance of the transferor's entire obligation, or makes such a transfer an eventof default, is not enforceable, and such a transfer is not a transfer that materially impairs theprospect of obtaining return performance by, materially changes the duty of, or materiallyincreases the burden or risk imposed on, the other party to the lease contract within the purviewof Subsection (4).
(4) Subject to Subsection (3) and Section 70A-9a-407:
(a) if a transfer is made that is made an event of default under a lease agreement, theparty to the lease contract not making the transfer, unless that party waives the default orotherwise agrees, has the rights and remedies described in Section 70A-2a-501; and
(b) if Subsection (4)(a) is not applicable and if a transfer is made that is prohibited undera lease agreement, or materially impairs the prospect of obtaining return performance by,materially changes the duty of, or materially increases the burden or risk imposed on, the otherparty to the lease contract, unless the party not making the transfer agrees at any time to thetransfer in the lease contract or otherwise, then, except as limited by contract, the transferor isliable to the party not making the transfer for damages caused by the transfer to the extent that thedamages could not reasonably be prevented by the party not making the transfer, and a courthaving jurisdiction may grant other appropriate relief, including cancellation of the lease contractor an injunction against the transfer.
(5) A transfer of "the lease" or of "all my rights under the lease" or a transfer in similargeneral terms, is a transfer of rights, and unless the language or the circumstances, as in a transferfor security, indicate the contrary, the transfer is a delegation of duties by the transferor to thetransferee. Acceptance by the transferee constitutes a promise by the transferee to perform thoseduties. The promise is enforceable by either the transferor or the other party to the lease contract.
(6) Unless otherwise agreed by the lessor and the lessee, a delegation of performancedoes not relieve the transferor as against the other party of any duty to perform or any liability fordefault.
(7) In a consumer lease, to prohibit the transfer of an interest of a party under the leasecontract, or to make a transfer an event of default, the language must be specific, by writing, andconspicuous.
Amended by Chapter 252, 2000 General Session