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This entry was published on 2014-09-22
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Subsequent Lease of Goods by Lessor
Uniform Commercial Code (UCC) CHAPTER 38, ARTICLE 2-A, PART 3
Section 2-A-304. Subsequent Lease of Goods by Lessor.

(1) Subject to Section 2-A-303, 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 in
subsection (2) and Section 2-A-527(4), 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:

(a) the lessor's transferor was deceived as to the identity of

the lessor;

(b) the delivery was in exchange for a check which is later


(c) it was agreed that the transaction was to be a "cash sale";


(d) the delivery was procured through fraud punishable as

larcenous under the criminal law.

(2) 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 a prior lessee 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 prior
lessee's rights to the goods and takes free of the existing lease

(3) 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.