2006 Ohio Revised Code - 1310.65. (UCC 2A-519) Lessee\'s damages for non-delivery, repudiation, default and breach of warranty in regard to accepted goods.

§ 1310.65. (UCC 2A-519) Lessee's damages for non-delivery, repudiation, default and breach of warranty in regard to accepted goods.
 

(A)  Except as otherwise provided in section 1310.50 of the Revised Code with respect to damages liquidated in the lease agreement or as otherwise determined pursuant to the agreement of the parties as provided in division (C) of section 1301.02 and section 1310.49 of the Revised Code, if a lessee elects not to cover or a lessee elects to cover and the cover is by lease agreement that for any reason does not qualify for treatment under division (B) of section 1310.64 of the Revised Code or is by purchase or otherwise, the measure of damages for nondelivery or repudiation by the lessor or for rejection or revocation of acceptance by the lessee is the present value, as of the date of the default, of the then market rent minus the present value, as of the same date, of the original rent, computed for the remaining lease term of the original lease agreement, together with incidental and consequential damages, less expenses saved in consequence of the lessor's default. 

(B)  Market rent is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival. 

(C)  Except as otherwise agreed, if the lessee has accepted goods and given notification as provided in division (C) of section 1310.62 of the Revised Code, the measure of damages for nonconforming tender or delivery or other default by a lessor is the loss resulting in the ordinary course of events from the lessor's default as determined in any manner that is reasonable, together with incidental and consequential damages, less expenses saved in consequence of the lessor's default. 

(D)  Except as otherwise agreed, the measure of damages for breach of warranty is the present value, at the time and place of acceptance, of the difference between the value of the use of the goods accepted and that value if they had been as warranted for the lease term, unless special circumstances show proximate damages of a different amount, together with incidental and consequential damages, less expenses saved in consequence of the lessor's default or breach of warranty. 
 

HISTORY: 144 v H 693. Eff 11-6-92.

 

Official Comment

Substantially revised. 

1. Subsection (1), a revised version of the provisions of Section 2-713(1), states the basic rule governing the measure of lessee's damages for nondelivery or repudiation by the lessor or for rightful rejection or revocation of acceptance by the lessee. This measure will apply, absent agreement to the contrary, if the lessee does not cover or if the cover does not qualify under Section 2A-518. There is no sanction for cover that does not qualify. 

2. The measure of damage is the present value, as of the date of default, of the market rent for the remaining term of the lease less the present value of the original rent for the remaining term of the lease, plus incidental and consequential damages less expenses saved in consequence of the default. Note that the reference in Section 2A-519(1) is to the date of default not to the date of an event of default. An event of default under a lease agreement becomes a default under a lease agreement only after the expiration of any relevant period of grace and compliance with any notice requirements under this Article and the lease agreement. American Bar Foundation, Commentaries on Indentures, § 5-1, at 216-217 (1971). Section 2A-501(1). This conclusion is also a function of whether, as a matter of fact or law, the event of default has been waived, suspended or cured. Sections 2A-103(4) and 1-103. 

3. Subsection (2), a revised version of the provisions of Section 2-713(2), states the rule with respect to determining market rent. 

4. Subsection (3), a revised version of the provisions of Section 2-714(1) and (3), states the measure of damages where goods have been accepted and acceptance is not revoked. The subsection applies both to defaults which occur at the inception of the lease and to defaults which occur subsequently, such as failure to comply with an obligation to maintain the leased goods. The measure in essence is the loss, in the ordinary course of events, flowing from the default. 

5. Subsection (4), a revised version of the provisions of Section 2-714(2), states the measure of damages for breach of warranty. The measure in essence is the present value of the difference between the value of the goods accepted and of the goods if they had been as warranted. 

6. Subsections (1), (3) and (4) specifically state that the parties may by contract vary the damages rules stated in those subsections. 

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