Uniform Statutory Source: Sections 2-702(1) and 9-609.
Changes: Substantially revised.
1. Subsection (1), a revised version of the provisions of section 2-702(1), allows the lessor to refuse to deliver goods if the lessee is insolvent. Note that the provisions of section 2-702(2), granting the unpaid seller certain rights of reclamation, were not incorporated in this section. Subsection (2) made this unnecessary.
2. Subsection (2), a revised version of the provisions of section 9-609, allows the lessor, on a section 2A-523(1) or 2A-523(3)(a) default by the lessee, the right to take possession of or reclaim the goods. Also, the lessor can contract for the right to take possession of the goods for other defaults by the lessee. Therefor, since the lessee's insolvency is an event of default in a standard lease agreement, subsection (2) is the functional equivalent of section 2-702(2). Further, subsection (2) sanctions the classic crate-and-delivery clause obligating the lessee to assemble the goods and to make them available to the lessor. Finally, the lessor may leave the goods in place, render them unusable (if they are goods employed in trade or business), and dispose of them on the lessee's premises.
3. Subsection (3), a revised version of the provisions of section 9-609, allows the lessor to proceed under subsection (2) without judicial process, absent breach of the peace, or by action. Sections 1-201(1), 2A-103(4), and 2A-501(3). In the appropriate case action includes injunctive relief. Clark Equip. Co. v. Armstrong Equip. Co., 431 F.2d 54 (5th Cir. 1970), cert. denied, 402 U.S. 909 (1971). This section, as well as a number of other sections in this part, are included in the article to codify the lessor's common-law right to protect the lessor's reversionary interest in the goods. Section 2A-103(1)(q). These sections are intended to supplement and not displace principles of law and equity with respect to the protection of such interest. Sections 1-103 and 2A-103(4). Such principles apply in many instances, e.g., loss or damage to goods if risk of loss passes to the lessee, failure of the lessee to return goods to the lessor in the condition stipulated in the lease, and refusal of the lessee to return goods to the lessor after termination or cancellation of the lease. See also section 2A-532.
Sections 1-106(2), 2-702(1), 2-702(2), 2A-103(4), 2A-501(3), 2A-532, and 9-609.
Definitional Cross References:
"Action". Section 1-201(1).
"Delivery". Section 1-201(14).
"Discover". Section 1-201(25).
"Goods". Section 2A-103(1)(h).
"Insolvent". Section 1-201(23).
"Lease contract". Section 2A-103(1)(l).
"Lessee". Section 2A-103(1)(n).
"Lessor". Section 2A-103(1)(p).
"Party". Section 1-201(29).
"Rights". Section 1-201(36).