70A-2a-305 - Sale or sublease of goods by lessee.
70A-2a-305. Sale or sublease of goods by lessee.
(1) Subject to the provisions of Section 70A-2a-303, a buyer or sublessee from the lesseeof goods under an existing lease contract obtains, to the extent of the interest transferred, theleasehold interest in the goods that the lessee had or had power to transfer, and except asprovided in Subsection (2) and Subsection 70A-2a-511(4), takes subject to the existing leasecontract. A lessee with a voidable leasehold interest has power to transfer a good leaseholdinterest to a good faith buyer for value or a good faith sublessee for value, but only to the extentset forth in the preceding sentence. When goods have been delivered under a transaction oflease, the lessee has that power even though:
(a) the lessor was deceived as to the identity of the lessee;
(b) the delivery was in exchange for a check which is later dishonored; or
(c) the delivery was procured through fraud punishable as larcenous under the criminallaw.
(2) A buyer in the ordinary course of business or a sublessee in the ordinary course ofbusiness from a lessee who is a merchant dealing in goods of that kind to whom the goods wereentrusted by the lessor obtains, to the extent of the interest transferred, all of the lessor's andlessee's rights to the goods, and takes free of the existing lease contract.
(3) A buyer or sublessee from the lessee of goods that are subject to an existing leasecontract and are covered by a certificate of title issued under a statute of this state or of anotherjurisdiction takes no greater rights than those provided both by this section and by the certificateof title statute.
Enacted by Chapter 197, 1990 General Session