2016 Kentucky Revised Statutes CHAPTER 355 - UNIFORM COMMERCIAL CODE Article 2A - Leases 355.2A-303 Alienability of party's interest under lease contract or of lessor's residual interest in goods -- Delegation of performance -- Transfer of rights.
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355.2A-303
Alienability of party's interest under lease contract or of lessor's
residual interest in goods -- Delegation of performance -- Transfer of rights.
(1)
(2)
(3)
(4)
As used in this section, "creation of a security interest" includes the sale of a lease
contract that is subject to Article 9, Secured Transactions, by reason of KRS 355.9109(1)(c).
Except as provided in subsection (3) of this section and KRS 355.9-407, a provision
in a lease agreement which:
(a) 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
(b) Makes such a transfer an event of default,
gives rise to the rights and remedies provided in subsection (4) of this section, but a
transfer that is prohibited or is an event of default under the lease agreement is
otherwise effective.
A provision in a lease agreement which:
(a) 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
(b) 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 (5).
Subject to subsection (3) of this section and KRS 355.9-407:
(a) 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 KRS 355.2A-501(2);
(b) If paragraph (a) is not applicable and if a transfer is made that:
1.
Is prohibited under a lease agreement; or
2.
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, 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:
3.
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
4.
A court having jurisdiction may grant other appropriate relief, including
(5)
(6)
(7)
cancellation of the lease contract or an injunction against the transfer.
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. The promise is enforceable by
either the transferor or the other party to the lease contract.
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.
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.
Effective: July 1, 2001
History: Amended 2000 Ky. Acts ch. 408, sec. 164, effective July 1, 2001. -- Amended
1992 Ky. Acts ch. 116, sec. 4, effective January 1, 1993 -- Created 1990 Ky. Acts ch.
363, sec. 33, effective January 1, 1991.
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