N.Y. Uniform Commercial Code 2-A-220 – Effect of Default on Risk of Loss
Section 2-A-220. Effect of Default on Risk of Loss.
Terms Used In N.Y. Uniform Commercial Code 2-A-220
- Contract: A legal written agreement that becomes binding when signed.
- Finance lease: means a lease with respect to which: (i) the
lessor does not select, manufacture, or supply the goods;
(ii) the lessor acquires the goods or the right to possession
and use of the goods in connection with the lease; and (iii)
one of the following occurs: (A) the lessee receives a copy
of the contract by which the lessor acquired the goods or the
right to possession and use of the goods before signing the
lease contract; (B) the lessee's approval of the contract by
which the lessor acquired the goods or the right to
possession and use of the goods is a condition to
effectiveness of the lease contract; (C) the lessee, before
signing the lease contract, receives an accurate and complete
statement designating the promises and warranties, and any
disclaimers of warranties, limitations or modifications of
remedies, or liquidated damages, including those of any third
party, such as the manufacturer of the goods, provided to the
lessor by the person supplying the goods in connection with
or as part of the contract by which the lessor acquired the
goods or the right to possession and use of the goods; or (D)
if the lease is not a consumer lease, the lessor, before the
lessee signs the lease contract, informs the lessee in
writing (a) of the identity of the person supplying the goods
to the lessor, unless the lessee has selected that person and
directed the lessor to acquire the goods or the right to
possession and use of the goods from that person, (b) that
the lessee is entitled under this Article to the promises and
warranties, including those of any third party, provided to
the lessor by the person supplying the goods in connection
with or as part of the contract by which the lessor acquired
the goods or the right to possession and use of the goods,
and (c) that the lessee may communicate with the person
supplying the goods to the lessor and receive an accurate and
complete statement of those promises and warranties,
including any disclaimers and limitations of them or of
remedies. See N.Y. Uniform Commercial Code 2-A-103 - Goods: means all things that are movable at the time of
identification to the lease contract, or are fixtures
(Section 2-A-309), but the term does not include money,
documents, instruments, accounts, chattel paper, general
intangibles, or minerals or the like, including oil and gas,
before extraction. See N.Y. Uniform Commercial Code 2-A-103 - 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. See N.Y. Uniform Commercial Code 2-A-103 - Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Lease contract: means the total legal obligation that
results from the lease agreement as affected by this Article
and any other applicable rules of law. See N.Y. Uniform Commercial Code 2-A-103 - Lessee: means a person who acquires the right to possession
and use of goods under a lease. See N.Y. Uniform Commercial Code 2-A-103 - Lessor: means a person who transfers the right to possession
and use of goods under a lease. See N.Y. Uniform Commercial Code 2-A-103 - Supplier: means a person from whom a lessor buys or leases
goods to be leased under a finance lease. See N.Y. Uniform Commercial Code 2-A-103
(1) Where risk of loss is to pass to the lessee and the time of passage is not stated:
(a) if a tender or delivery of goods so fails to conform to the
lease contract as to give a right of rejection, the risk of
their loss remains with the lessor, or, in the case of a
finance lease, the supplier, until cure or acceptance.
(b) if the lessee rightfully revokes acceptance, he or she, to
the extent of any deficiency in his or her effective
insurance coverage, may treat the risk of loss as having
remained with the lessor from the beginning.
(2) Whether or not risk of loss is to pass to the lessee, if the lessee as to conforming goods already identified to a lease contract repudiates or is otherwise in default under the lease contract, the lessor, or, in the case of a finance lease, the supplier, to the extent of any deficiency in his or her effective insurance coverage may treat the risk of loss as resting on the lessee for a commercially reasonable time.