US Laws, Codes, Statutes & Cases

Chapter 72A — Leases

 

2007 EDITION

 

LEASES

 

COMMERCIAL TRANSACTIONS

 

GENERAL PROVISIONS

 

72A.1010  Short title

 

72A.1020  Scope

 

72A.1030  Definitions and index of definitions

 

72A.1040  Leases subject to other statutes

 

72A.1050  Territorial application of act to goods covered by certificate of title

 

72A.1060  Limitation on power of parties to consumer lease to choose applicable law and judicial forum

 

72A.1070  Waiver or renunciation of claim or right after default

 

72A.1080  Unconscionability

 

72A.1090  Option to accelerate at will

 

72A.1095  Subordination by agreement

 

FORMATION AND CONSTRUCTION OF LEASE CONTRACT

 

72A.2010  Statute of frauds

 

72A.2020  Final written expression; parol or extrinsic evidence

 

72A.2030  Seals inoperative

 

72A.2040  Formation in general

 

72A.2050  Firm offers

 

72A.2060  Offer and acceptance in formation of lease contract

 

72A.2070  Course of performance or practical construction

 

72A.2080  Modification, rescission and waiver

 

72A.2090  Lessee under finance lease as beneficiary of supply contract

 

72A.2100  Express warranties

 

72A.2110  Warranties against interference and against infringement; lessee’s obligation against infringement

 

72A.2120  Implied warranty of merchantability

 

72A.2130  Implied warranty of fitness for particular purpose

 

72A.2140  Exclusion or modification of warranties

 

72A.2150  Cumulation and conflict of warranties express or implied

 

72A.2160  Third-party beneficiaries of express and implied warranties

 

72A.2170  Identification

 

72A.2180  Insurance and proceeds

 

72A.2190  Risk of loss

 

72A.2200  Effect of default on risk of loss

 

72A.2210  Casualty to identified goods

 

EFFECT OF LEASE CONTRACT

 

72A.3010  Enforceability of lease contract

 

72A.3020  Title to and possession of goods

 

72A.3030  Alienability of party’s interest under lease contract or of lessor’s residual interest in goods; delegation of performance; transfer of rights

 

72A.3040  Subsequent lease of goods by lessor

 

72A.3050  Sale or sublease of goods by lessee

 

72A.3060  Priority of certain liens arising by operation of law

 

72A.3070  Priority of liens arising by attachment or levy on goods; priority of certain security interests in goods

 

72A.3080  Special rights of creditors

 

72A.3090  Lessor’s and lessee’s rights when goods become fixtures

 

72A.3095  Fixture filing recorded and indexed as mortgage

 

72A.3100  Lessor’s and lessee’s rights when goods become accessions

 

PERFORMANCE OF LEASE CONTRACT: REPUDIATED, SUBSTITUTED AND EXCUSED

 

72A.4010  Insecurity; adequate assurance of performance

 

72A.4020  Anticipatory repudiation

 

72A.4030  Retraction of anticipatory repudiation

 

72A.4040  Substituted performance

 

72A.4050  Excused performance

 

72A.4060  Procedure on excused performance

 

72A.4070  Irrevocable promises; finance leases

 

DEFAULT

 

72A.5010  Default; procedure

 

72A.5020  Notice after default

 

72A.5030  Modification or impairment of rights and remedies

 

72A.5040  Liquidation of damages

 

72A.5050  Cancellation and termination and effect of cancellation, termination, rescission or fraud on rights and remedies

 

72A.5060  Statute of limitations

 

72A.5070  Proof of market rent; time and place

 

72A.5080  Lessee’s remedies

 

72A.5090  Lessee’s rights on improper delivery; rightful rejection

 

72A.5100  Installment lease contracts; rejection and default

 

72A.5110  Merchant lessee’s duties as to rightfully rejected goods

 

72A.5120  Lessee’s duties as to rightfully rejected goods

 

72A.5130  Cure by lessor of improper tender or delivery; replacement

 

72A.5140  Waiver of lessee’s objections

 

72A.5150  Acceptance of goods

 

72A.5160  Effect of acceptance of goods; notice of default; burden of establishing default after acceptance; notice of claim or litigation to person answerable

 

72A.5170  Revocation of acceptance of goods

 

72A.5180  Cover; substitute goods

 

72A.5190  Lessee’s damages for nondelivery, repudiation, default and breach of warranty in regard to accepted goods

 

72A.5200  Lessee’s incidental and consequential damages

 

72A.5210  Lessee’s right to specific performance or replevin

 

72A.5220  Lessee’s right to goods on lessor’s insolvency

 

72A.5230  Lessor’s remedies

 

72A.5240  Lessor’s right to identify goods to lease contract

 

72A.5250  Lessor’s right to possession of goods

 

72A.5260  Lessor’s stoppage of delivery in transit or otherwise

 

72A.5270  Lessor’s rights to dispose of goods

 

72A.5280  Lessor’s damages for default

 

72A.5290  Lessor’s action for the rent

 

72A.5295  Lessor’s recovery for loss of or damage to residual interest in goods

 

72A.5300  Lessor’s incidental damages

 

72A.5310  Standing to sue third parties for injury to goods

 

GENERAL PROVISIONS

 

      72A.1010 Short title. This chapter may be cited as the Uniform Commercial Code–Leases. [1989 c.676 §1; 1995 c.79 §21]

 

      72A.1020 Scope. This chapter applies to any transaction, regardless of form, that creates a lease. [1989 c.676 §2]

 

      72A.1030 Definitions and index of definitions. (1) As used in this chapter, unless the context otherwise requires:

      (a) “Buyer in ordinary course of business” means a person who in good faith and without knowledge that the sale to the person is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. “Buying” may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving goods or documents of title under a preexisting contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

      (b) “Cancellation” occurs when either party puts an end to the lease contract for default by the other party.

      (c) “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A “commercial unit” may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole.

      (d) “Conforming goods” or “performance under a lease contract” means goods or performance that are in accordance with the obligations under the lease contract.

      (e) “Consumer lease” means a lease that a lessor regularly engaged in the business of leasing or selling makes to a lessee who is an individual and who takes under the lease primarily for a personal, family or household purpose, if the total payments to be made under the lease contract, excluding payments for options to renew or buy, do not exceed $25,000.

      (f) “Fault” means wrongful act, omission, breach or default.

      (g) “Finance lease” means a lease in which the lessor does not select, manufacture or supply the goods, the lessor acquires the goods or the right to possession and use of the goods in connection with the lease, and either:

      (A) The lessee receives a copy of the contract evidencing the lessor’s purchase of the goods on or before signing the lease contract;

      (B) The lessee’s approval of the contract evidencing the lessor’s purchase of the goods is a condition to effectiveness of the lease contract;

      (C) The lessor informs the lessee in writing of the identity of the supplier unless the lessee has selected the supplier and directed the lessor to purchase the goods from the supplier;

      (D) The lessor informs the lessee in writing that the lessee may have rights under the contract evidencing the lessor’s purchase of the goods and the lessor advises the lessee in writing to contact the supplier for a description of any such rights; or

      (E) The lease contract discloses all warranties and other rights provided to the lessee by the lessor and supplier in connection with the lease contract and informs the lessee that there are no warranties or other rights provided to the lessee by the lessor and supplier other than those disclosed in the lease contract.

      (h) “Goods” means all things that are movable at the time of identification to the lease contract, or are fixtures as provided in ORS 72A.3090, but “goods” does not include money, documents, instruments, accounts, chattel paper, general intangibles or minerals or the like, including oil and gas, before extraction. “Goods” also includes the unborn young of animals.

      (i) “Installment lease contract” means a lease contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause “each delivery is a separate lease” or its equivalent.

      (j) “Lease” means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. Unless the context clearly indicates otherwise, “lease” includes a sublease.

      (k) “Lease agreement” means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in the language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this chapter. Unless the context clearly indicates otherwise, “lease agreement” includes a sublease agreement.

      (L) “Lease contract” means the total legal obligation that results from the lease agreement as affected by this chapter and any other applicable rules of law. Unless the context clearly indicates otherwise, “lease contract” includes a sublease contract.

      (m) “Leasehold interest” means the interest of the lessor or the lessee under a lease contract.

      (n) “Lessee” means a person who acquires the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, “lessee” includes a sublessee.

      (o) “Lessee in ordinary course of business” means a person who in good faith and without knowledge that the lease to the person is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods leases in ordinary course from a person in the business of selling or leasing goods of that kind but does not include a pawnbroker. “Leasing” may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving goods or documents of title under a preexisting lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

      (p) “Lessor” means a person who transfers the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, “lessor” includes a sublessor.

      (q) “Lessor’s residual interest” means the lessor’s interest in the goods after expiration, termination or cancellation of the lease contract.

      (r) “Lien” means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but “lien” does not include a security interest.

      (s) “Lot” means a parcel or a single article that is the subject matter of a separate lease or delivery, whether or not it is sufficient to perform the lease contract.

      (t) “Merchant lessee” means a lessee that is a merchant with respect to goods of the kind subject to the lease.

      (u) “Present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.

      (v) “Purchase” includes taking by sale, lease, mortgage, security interest, pledge, gift or any other voluntary transaction creating an interest in goods.

      (w) “Sublease” means a lease of goods the right to possession and use of which was acquired by the lessor as a lessee under an existing lease.

      (x) “Supplier” means a person from whom a lessor buys or leases goods to be leased under a finance lease.

      (y) “Supply contract” means a contract under which a lessor buys or leases goods to be leased.

      (z) “Termination” occurs when either party pursuant to a power created by agreement or law puts an end to the lease contract otherwise than for default.

      (2) Other definitions applying to this chapter and the sections in which they appear are:

      (a) “Accessions” as defined in ORS 72A.3100.

      (b) “Account” as defined in ORS 79.0102.

      (c) “Between merchants” as defined in ORS 72.1040.

      (d) “Buyer” as defined in ORS 72.1030.

      (e) “Chattel paper” as defined in ORS 79.0102.

      (f) “Construction mortgage” as defined in ORS 72A.3090.

      (g) “Consumer goods” as defined in ORS 79.0102.

      (h) “Document” as defined in ORS 79.0102.

      (i) “Encumbrance” as defined in ORS 72A.3090.

      (j) “Entrusting” as defined in ORS 72.4030.

      (k) “Fixture filing” as defined in ORS 72A.3090.

      (L) “Fixtures” as defined in ORS 72A.3090.

      (m) “General intangible” as defined in ORS 79.0102.

      (n) “Good faith” as defined in ORS 72.1030.

      (o) “Instrument” as defined in ORS 79.0102.

      (p) “Merchant” as defined in ORS 72.1040.

      (q) “Mortgage” as defined in ORS 79.0102.

      (r) “Purchase money lease” as defined in ORS 72A.3090.

      (s) “Pursuant to commitment” as defined in ORS 79.0102.

      (t) “Receipt” as defined in ORS 72.1030.

      (u) “Sale” as defined in ORS 72.1060.

      (v) “Sale on approval” as defined in ORS 72.3260.

      (w) “Sale or return” as defined in ORS 72.3260.

      (x) “Seller” as defined in ORS 72.1030.

      (3) In addition, ORS chapter 71 contains general definitions and principles of construction and interpretation applicable throughout this chapter. [1989 c.676 §3; 1993 c.646 §1; 2001 c.445 §141]

 

      72A.1040 Leases subject to other statutes. (1) A lease, although subject to this chapter, is also subject to any applicable:

      (a) Certificate of title statute of this state;

      (b) Certificate of title statute of another jurisdiction as described in ORS 72A.1050; or

      (c) Consumer protection statute of this state, or final consumer protection decision of a court of this state existing on November 4, 1993.

      (2) In case of conflict between this chapter, other than ORS 72A.1050, 72A.3040 and 72A.3050, and a statute or decision referred to in subsection (1) of this section, the statute or decision controls.

      (3) Failure to comply with an applicable law has only the effect specified therein. [1989 c.676 §4; 1993 c.646 §2]

 

      72A.1050 Territorial application of act to goods covered by certificate of title. Subject to the provisions of ORS 72A.3040 and 72A.3050, with respect to goods covered by a certificate of title issued under a statute of this state or of another jurisdiction, compliance and the effect of compliance or noncompliance with a certificate of title statute are governed by the law, including the conflict of laws rules, of the jurisdiction issuing the certificate until the earlier of:

      (1) Surrender of the certificate; or

      (2) Four months after the goods are removed from that jurisdiction and thereafter until a new certificate of title is issued by another jurisdiction. [1989 c.676 §5]

 

      72A.1060 Limitation on power of parties to consumer lease to choose applicable law and judicial forum. (1) If the law chosen by the parties to a consumer lease is that of a jurisdiction other than a jurisdiction in which the lessee or lessor resides at the time the lease agreement becomes enforceable or within 30 days thereafter or in which the goods are to be used, the choice is not enforceable.

      (2) If the judicial forum chosen by the parties to a consumer lease is a forum that would not otherwise have jurisdiction over the lessee, the choice is not enforceable. [1989 c.676 §6]

 

      72A.1070 Waiver or renunciation of claim or right after default. Any claim or right arising out of an alleged default or breach of warranty may be discharged in whole or in part without consideration by a written waiver or renunciation signed and delivered by the aggrieved party. [1989 c.676 §7]

 

      72A.1080 Unconscionability. (1) If the court as a matter of law finds a lease contract or any clause of a lease contract to have been unconscionable at the time it was made the court may refuse to enforce the lease contract, or it may enforce the remainder of the lease contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

      (2) When it is claimed or appears to the court that the lease contract or any clause thereof may be unconscionable, the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination. [1989 c.676 §8]

 

      72A.1090 Option to accelerate at will. A term providing that one party or the party’s successor in interest may accelerate payment or performance or require collateral or additional collateral “at will” or “when the party purports to be insecure” or in words of similar import must be construed to mean that the party has power to do so only if the party in good faith believes that the prospect of payment or performance is impaired. [1989 c.676 §9]

 

      72A.1095 Subordination by agreement. Nothing in this chapter prevents subordination by agreement by any person entitled to priority. [1993 c.646 §22]

 

FORMATION AND CONSTRUCTION OF LEASE CONTRACT

 

      72A.2010 Statute of frauds. (1) A lease contract is not enforceable by way of action or defense unless:

      (a) The total payments to be made under the lease contract, excluding payments for options to renew or buy, are less than $1,000; or

      (b) There is a writing, signed by the party against whom enforcement is sought or by that party’s authorized agent, sufficient to indicate that a lease contract has been made between the parties and to describe the goods leased and the lease term.

      (2) Any description of leased goods or of the lease term is sufficient and satisfies subsection (1)(b) of this section, whether or not it is specific, if it reasonably identifies what is described.

      (3) A writing is not insufficient because it omits or incorrectly states a term agreed upon, but the lease contract is not enforceable under subsection (1)(b) of this section beyond the lease term and the quantity of goods shown in the writing.

      (4) A lease contract that does not satisfy the requirements of subsection (1) of this section, but which is valid in other respects, is enforceable:

      (a) If the goods are to be specially manufactured or obtained for the lessee and are not suitable for lease or sale to others in the ordinary course of the lessor’s business, and the lessor, before notice of repudiation is received and under circumstances that reasonably indicate that the goods are for the lessee, has made either a substantial beginning of their manufacture or commitments for their procurement;

      (b) If the party against whom enforcement is sought admits in that party’s pleading, testimony or otherwise in court that a lease contract was made, but the lease contract is not enforceable under this provision beyond the quantity of goods admitted; or

      (c) With respect to goods that have been received and accepted by the lessee.

      (5) The lease term under a lease contract referred to in subsection (4) of this section is:

      (a) If there is a writing signed by the party against whom enforcement is sought or by that party’s authorized agent specifying the lease term, the term so specified;

      (b) If the party against whom enforcement is sought admits in that party’s pleading, testimony or otherwise in court a lease term, the term so admitted; or

      (c) A reasonable lease term. [1989 c.676 §10]

 

      72A.2020 Final written expression; parol or extrinsic evidence. Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:

      (1) By course of dealing or usage of trade or by course of performance; and

      (2) By evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement. [1989 c.676 §11]

 

      72A.2030 Seals inoperative. The affixing of a seal to a writing evidencing a lease contract or an offer to enter into a lease contract does not render the writing a sealed instrument and the law with respect to sealed instruments does not apply to the lease contract or offer. [1989 c.676 §12]

 

      72A.2040 Formation in general. (1) A lease contract may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of a lease contract.

      (2) An agreement sufficient to constitute a lease contract may be found although the moment of its making is undetermined.

      (3) Although one or more terms are left open, a lease contract does not fail for indefiniteness if the parties have intended to make a lease contract and there is a reasonably certain basis for giving an appropriate remedy. [1989 c.676 §13]

 

      72A.2050 Firm offers. An offer by a merchant to lease goods to or from another person in a signed writing that by its terms gives assurance it will be held open is not revocable, for lack of consideration, during the time stated or, if no time is stated, for a reasonable time, but in no event may the period of irrevocability exceed three months. Any such term of assurance on a form supplied by the offeree must be separately signed by the offeror. [1989 c.676 §14]

 

      72A.2060 Offer and acceptance in formation of lease contract. (1) Unless otherwise unambiguously indicated by the language or circumstances, an offer to make a lease contract must be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances.

      (2) If the beginning of a requested performance is a reasonable mode of acceptance, an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance. [1989 c.676 §15]

 

      72A.2070 Course of performance or practical construction. (1) If a lease contract involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection is relevant to determine the meaning of the lease agreement.

      (2) The express terms of a lease agreement and any course of performance, as well as any course of dealing and usage of trade, must be construed whenever reasonable as consistent with each other; but if that construction is unreasonable, express terms control course of performance, course of performance controls both course of dealing and usage of trade, and course of dealing controls usage of trade.

      (3) Subject to the provisions of ORS 72A.2080 on modification and waiver, course of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance. [1989 c.676 §16]

 

      72A.2080 Modification, rescission and waiver. (1) An agreement modifying a lease contract needs no consideration to be binding.

      (2) A signed lease agreement that excludes modification or rescission except by a signed writing may not be otherwise modified or rescinded, but, except as between merchants, such a requirement on a form supplied by a merchant must be separately signed by the other party.

      (3) Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) of this section, it may operate as a waiver.

      (4) A party who has made a waiver affecting an executory portion of a lease contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver. [1989 c.676 §17]

 

      72A.2090 Lessee under finance lease as beneficiary of supply contract. (1) The benefit of a supplier’s promises to the lessor under the supply contract and of all warranties, whether express or implied, including those of any third party provided in connection with or as part of the supply contract, extends to the lessee to the extent of the lessee’s leasehold interest under a finance lease related to the supply contract, but is subject to the terms of the warranty and of the supply contract and all defenses or claims arising therefrom.

      (2) The extension of the benefit of a supplier’s promises and of warranties to the lessee under subsection (1) of this section does not:

      (a) Modify the rights and obligations of the parties to the supply contract, whether arising therefrom or otherwise; or

      (b) Impose any duty or liability under the supply contract on the lessee.

      (3) Any modification or rescission of the supply contract by the supplier and the lessor is effective between the supplier and the lessee unless, before the modification or rescission, the supplier has received notice that the lessee has entered into a finance lease related to the supply contract. If the modification or rescission is effective between the supplier and the lessee, the lessor is deemed to have assumed, in addition to the obligations of the lessor to the lessee under the lease contract, promises of the supplier to the lessor and warranties that were so modified or rescinded as they existed and were available to the lessee before modification or rescission.

      (4) In addition to the extension of the benefit of the supplier’s promises and of warranties to the lessee under subsection (1) of this section, the lessee retains all rights that the lessee may have against the supplier that arise from an agreement between the lessee and the supplier or under other law. [1989 c.676 §18; 1993 c.646 §3]

 

      72A.2100 Express warranties. (1) Express warranties by the lessor are created as follows:

      (a) Any affirmation of fact or promise made by the lessor to the lessee which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods will conform to the affirmation or promise.

      (b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods will conform to the description.

      (c) Any sample or model that is made part of the basis of the bargain creates an express warranty that the whole of the goods will conform to the sample or model.

      (2) It is not necessary to the creation of an express warranty that the lessor use formal words, such as “warrant” or “guarantee,” or that the lessor have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the lessor’s opinion or commendation of the goods does not create a warranty. [1989 c.676 §19]

 

      72A.2110 Warranties against interference and against infringement; lessee’s obligation against infringement. (1) There is in a lease contract a warranty that for the lease term no person holds a claim to or interest in the goods that arose from an act or omission of the lessor, other than a claim by way of infringement or the like, which will interfere with the lessee’s enjoyment of its leasehold interest.

      (2) Except in a finance lease there is in a lease contract by a lessor who is a merchant regularly dealing in goods of the kind a warranty that the goods are delivered free of the rightful claim of any person by way of infringement or the like.

      (3) A lessee who furnishes specifications to a lessor or a supplier shall hold the lessor and the supplier harmless against any claim by way of infringement or the like that arises out of compliance with the specifications. [1989 c.676 §20]

 

      72A.2120 Implied warranty of merchantability. (1) Except in a finance lease, a warranty that the goods will be merchantable is implied in a lease contract if the lessor is a merchant with respect to goods of that kind.

      (2) Goods to be merchantable must at least:

      (a) Pass without objection in the trade under the description in the lease agreement;

      (b) In the case of fungible goods, be of fair average quality within the description;

      (c) Be fit for the ordinary purposes for which goods of that type are used;

      (d) Run, within the variation permitted by the lease agreement, of even kind, quality and quantity within each unit and among all units involved;

      (e) Be adequately contained, packaged and labeled as the lease agreement may require; and

      (f) Conform to any promises or affirmations of fact made on the container or label.

      (3) Other implied warranties may arise from course of dealing or usage of trade. [1989 c.676 §21]

 

      72A.2130 Implied warranty of fitness for particular purpose. Except in a finance lease, if the lessor at the time the lease contract is made has reason to know of any particular purpose for which the goods are required and that the lessee is relying on the lessor’s skill or judgment to select or furnish suitable goods, there is in the lease contract an implied warranty that the goods will be fit for that purpose. [1989 c.676 §22]

 

      72A.2140 Exclusion or modification of warranties. (1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit a warranty must be construed wherever reasonable as consistent with each other; but, subject to the provisions of ORS 72A.2020 on parol or extrinsic evidence, negation or limitation is inoperative to the extent that the construction is unreasonable.

      (2) Subject to subsection (3) of this section, to exclude or modify the implied warranty of merchantability or any part of it, the language must mention “merchantability,” be by a writing and be conspicuous. Subject to subsection (3) of this section, to exclude or modify any implied warranty of fitness the exclusion must be by a writing and be conspicuous. Language to exclude all implied warranties of fitness is sufficient if it is in writing, is conspicuous and states, for example, “There is no warranty that the goods will be fit for a particular purpose.”

      (3) Notwithstanding subsection (2) of this section, but subject to subsection (4) of this section:

      (a) Unless the circumstances indicate otherwise, all implied warranties are excluded by the expressions “as is,” or “with all faults,” or by other language that in common understanding calls the lessee’s attention to the exclusion of warranties and makes plain that there is no implied warranty, if in writing and conspicuous;

      (b) If the lessee before entering into the lease contract has examined the goods or the sample or model as fully as desired or has refused to examine the goods, there is no implied warranty with regard to defects that an examination ought in the circumstances to have revealed; and

      (c) An implied warranty may also be excluded or modified by course of dealing, course of performance or usage of trade.

      (4) To exclude or modify a warranty against interference or against infringement as provided in ORS 72A.2110 or any part of it, the language must be specific, be by a writing, and be conspicuous, unless the circumstances, including course of performance, course of dealing or usage of trade, give the lessee reason to know that the goods are being leased subject to a claim or interest of any person. [1989 c.676 §23]

 

      72A.2150 Cumulation and conflict of warranties express or implied. Warranties, whether express or implied, must be construed as consistent with each other and as cumulative, but if that construction is unreasonable, the intention of the parties determines which warranty is dominant. In ascertaining that intention, the following rules apply:

      (1) Exact or technical specifications displace an inconsistent sample or model or general language of description.

      (2) A sample from an existing bulk displaces inconsistent general language of description.

      (3) Express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose. [1989 c.676 §24]

 

      72A.2160 Third-party beneficiaries of express and implied warranties. A warranty to or for the benefit of a lessee under this chapter, whether express or implied, extends to any natural person who is in the family or household of the lessee or who is a guest in the lessee’s home if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty. This section does not displace principles of law and equity that extend a warranty to or for the benefit of a lessee to other persons. The operation of this section may not be excluded, modified or limited, but an exclusion, modification or limitation of the warranty, including any with respect to rights and remedies, effective against the lessee is also effective against any beneficiary designated under this section. [1989 c.676 §25]

 

      72A.2170 Identification. Identification of goods as goods to which a lease contract refers may be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement, identification occurs:

      (1) When the lease contract is made if the lease contract is for a lease of goods that are existing and identified;

      (2) When the goods are shipped, marked or otherwise designated by the lessor as goods to which the lease contract refers, if the lease contract is for a lease of goods that are not existing and identified; or

      (3) When the young are conceived, if the lease contract is for a lease of unborn young of animals. [1989 c.676 §26]

 

      72A.2180 Insurance and proceeds. (1) A lessee obtains an insurable interest when existing goods are identified to the lease contract even though the goods identified are nonconforming and the lessee has an option to reject them.

      (2) If a lessee has an insurable interest only by reason of the lessor’s identification of the goods, the lessor, until default or insolvency or notification to the lessee that identification is final, may substitute other goods for those identified.

      (3) Notwithstanding a lessee’s insurable interest under subsections (1) and (2) of this section, the lessor retains an insurable interest until an option to buy has been exercised by the lessee and risk of loss has passed to the lessee.

      (4) Nothing in this section impairs any insurable interest recognized under any other statute or rule of law.

      (5) The parties by agreement may determine that one or more parties have an obligation to obtain and pay for insurance covering the goods and by agreement may determine the beneficiary of the proceeds of the insurance. [1989 c.676 §27]

 

      72A.2190 Risk of loss. (1) Except in the case of a finance lease, risk of loss is retained by the lessor and does not pass to the lessee. In the case of a finance lease, risk of loss passes to the lessee.

      (2) Subject to the provisions of ORS 72A.2200 on the effect of default on risk of loss, if risk of loss is to pass to the lessee and the time of passage is not stated, the following rules apply:

      (a) If the lease contract requires or authorizes the goods to be shipped by carrier, and it does not require delivery at a particular destination, the risk of loss passes to the lessee when the goods are duly delivered to the carrier; but if it does require delivery at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the lessee when the goods are there duly so tendered as to enable the lessee to take delivery.

      (b) If the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the lessee on acknowledgment by the bailee of the lessee’s right to possession of the goods.

      (c) In any case not described in paragraph (a) or (b) of this subsection, the risk of loss passes to the lessee on the lessee’s receipt of the goods if the lessor, or, in the case of a finance lease, the supplier, is a merchant, otherwise the risk passes to the lessee on tender of delivery. [1989 c.676 §28]

 

      72A.2200 Effect of default on risk of loss. (1) Where risk of loss is to pass to the lessee and the time of passage is not stated:</