ARTICLE 2A
LEASES

Table of Contents

Sec. 42a-2A-102. Definitions and index of definitions.
Sec. 42a-2A-301. Course of performance or practical construction.
Sec. 42a-2A-704. Remedies in general.
Sec. 42a-2A-721. Lessor's damages for nonacceptance, failure to pay or repudiation.

PART 1
GENERAL PROVISIONS AND DEFINITIONS

      Sec. 42a-2A-102. Definitions and index of definitions. (a) In this article:

      (1) "Authenticate" means:

      (A) To sign; or

      (B) To execute or otherwise adopt a symbol, or encrypt or similarly process a record in whole or in part, with the present intent of the authenticating person to identify the person and adopt or accept a record.

      (2) "Cancellation" means an act by either party which ends a lease contract because of a default by the other party.

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

      (4) "Computer" means an electronic device that can perform substantial computations, including numerous arithmetic operations or logic operations, without human intervention during the computation or operation.

      (5) "Conforming" goods or conduct under a lease contract means goods or performance that are in accordance with the obligations under the contract.

      (6) "Conspicuous", with reference to a term, means so written, displayed or otherwise presented that a reasonable person against which it is to operate ought to have noticed it. A term in an electronic record intended to evoke a response by an electronic agent is conspicuous if it is presented in a form that would enable a reasonably configured electronic agent to take it into account or react without review of the record by an individual. Conspicuous terms include the following:

      (A) With respect to a person:

      (i) A heading in capitals in a size equal to or greater than, or in contrasting type, font or color to, the surrounding text;

      (ii) Language in the body of a record or display in larger or other contrasting type, font or color or set off from the surrounding text by symbols or other marks that call attention to the language; and

      (iii) A term prominently referenced in an electronic record or display which is readily accessible and reviewable from the record or display; and

      (B) With respect to a person or an electronic agent, a term or reference to a term that is so placed in a record or display that the person or electronic agent can not proceed without taking some action with respect to the term or reference.

      (7) "Consumer" means an individual who leases or contracts to lease goods that, at the time of contracting, are intended by the individual to be used primarily for personal, family or household purposes. Personal, family or household use does not include professional or commercial purposes, including agriculture, business management and investment management, other than management of the individual's personal or family investments.

      (8) "Consumer lease" means a lease between a merchant lessor and a consumer.

      (9) "Delivery" means the voluntary transfer of physical possession or control of goods.

      (10) "Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical or electromagnetic capabilities or similar capabilities.

      (11) "Electronic agent" means a computer program or electronic or other automated means used to initiate an action or to respond to electronic messages or performances without intervention by an individual at the time of the action or response.

      (12) "Electronic message" means an electronic record or display stored, generated or transmitted by electronic means for purposes of communication to another person or electronic agent.

      (13) "Electronic event" means an electronic authentication, message, record or performance.

      (14) "Finance lease" means a lease with respect to which:

      (A) The lessor does not select, manufacture or supply the goods;

      (B) The lessor acquires the goods or the right to possession and use of the goods in connection with the lease or, in the case of goods that have been leased previously by the lessor and are not being leased to a consumer, in connection with another lease; and

      (C) One of the following occurs:

      (i) The lessee receives a copy of the agreement by which the lessor acquired, or proposes to acquire, the goods or the right to possession and use of the goods before authenticating the lease agreement;

      (ii) The lessee's approval of the agreement or of the general contractual terms under which the lessor acquired or proposes to acquire the goods or the right to possession and use of the goods is a condition to the effectiveness of the lease contract;

      (iii) The lessee, before authenticating the lease agreement, 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 a 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

      (iv) If the lease is not a consumer lease, before the lessee authenticates the lease agreement, the lessor informs the lessee in writing:

      (I) Of the identity of the person supplying the goods to the lessor, unless the lessee has selected such person and directed the lessor to acquire the goods or the right to possession and use of the goods from such person;

      (II) 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

      (III) That the lessee may communicate with the person supplying the goods to the lessor and receive an accurate and complete statement of such promises and warranties, including any disclaimers and limitations of such promises and warranties, or a statement of remedies.

      (15) "Goods" means all things that are movable at the time of identification to a lease contract or that are fixtures. The term includes the unborn young of animals. The term does not include money in which the rent is to be paid, the subject of foreign exchange transactions, documents, letters of credit, instruments, investment property, accounts, chattel paper or general intangibles, payment intangibles or minerals, or the like, including oil and gas, before extraction.

      (16) "Information processing system" means an electronic system for creating, generating, sending, receiving, storing, displaying or processing information.

      (17) "Lease" means the transfer of the right to possession and use of goods for a period in return for consideration. The term includes a sublease unless the context clearly indicates otherwise. The term does not include a sale, including a sale on approval or a sale or return, or retention or creation of a security interest.

      (18) "Lease agreement" means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade as provided in this article. The term includes a sublease agreement unless the context clearly indicates otherwise.

      (19) "Lease contract" means the total legal obligation resulting from the lease agreement as affected by this article and other applicable law. The term includes a sublease contract unless the context clearly indicates otherwise.

      (20) "Leasehold interest" means the interest of the lessor or the lessee under a lease contract.

      (21) "Lessee" means a person that acquires the right to possession and use of goods under a lease. The term includes a sublessee unless the context clearly indicates otherwise.

      (22) "Lessee in ordinary course of business" means a person that, in good faith and without knowledge that the person's lease is in violation of ownership rights, a security interest or a leasehold interest of a third party in the goods, leases in the ordinary course from a person in the business of selling or leasing goods of that kind for cash or by exchange of other property or on secured or unsecured credit, including acquiring goods or documents of title under a preexisting lease contract, but not including a transfer in bulk, or as security for or in total or partial satisfaction of a money debt. The term does not include a pawnbroker.

      (23) "Lessor" means a person that transfers the right to possession and use of goods under a lease. The term includes a sublessor unless the context clearly indicates otherwise.

      (24) "Lessor's residual interest" means the lessor's interest in goods after expiration, termination or cancellation of a lease contract.

      (25) "Lien" means a charge against or interest in goods to secure payment of a debt or performance of an obligation. The term does not include a security interest.

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

      (27) "Merchant lessee" means a lessee that is a merchant with respect to goods of the kind subject to the lease.

      (28) "Present value" means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. In determining present value, 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.

      (29) "Receive" means:

      (A) With respect to goods, to take delivery; or

      (B) With respect to a notice:

      (i) To come to a person's attention; or

      (ii) To be delivered to and available at a location designated by agreement for the purpose of notice, or, in the absence of an agreed location:

      (I) To be delivered at the person's residence, or the person's place of business through which the contract was made, or at any other place held out by the person as a place for the receipt of such notices; or

      (II) In the case of an electronic record, to come into existence in an information processing system in a form capable of being processed by or perceived from a system of that type, if the recipient uses, has designated or holds out that system as a place for the receipt of the notices.

      (30) "Send" means, with any costs provided for and properly addressed or directed as reasonable under the circumstances or as otherwise agreed, to (A) deposit in the mail or with a commercially reasonable carrier, (B) deliver for transmission to or creation in another location or system, or (C) take the steps necessary to initiate transmission to or creation in another location or system. In addition, with respect to an electronic message, the term means to initiate operations that in the ordinary course will cause the record to come into existence in an information processing system in a form capable of being processed by or perceived from a system of that type by the recipient, if the recipient uses, has designated or holds out that system or address as a place for the receipt of communications of the kind. Receipt within the time in which it would have arrived if properly sent has the effect of a proper sending.

      (31) "Sublease" means a lease of goods whose right to possession and use is acquired by the lessor as a lessee under an existing lease.

      (32) "Supplier" means a person from which a lessor buys or leases goods to be leased under a finance lease.

      (33) "Supply contract" means a contract under which a lessor buys or leases goods to be leased.

      (34) "Termination" means the ending of a contract or a part thereof by an act by a party under a power created by agreement or law, or by operation of the terms of the agreement for a reason other than for a default by the other party.

      (b) The following definitions in other articles apply to this article:

      "Account". Section 42a-9-102(a)(2).
      "Between merchants". Section 42a-2-104(3).
      "Buyer". Section 42a-2-103(1)(a).
      "Chattel paper". Section 42a-9-102(a)(11).
      "Consumer goods". Section 42a-9-102(a)(23).
      "Document". Section 42a-9-102(a)(30).
      "Entrusting". Section 42a-2-403(3).
      "General intangible". Section 42a-9-102(a)(42).
      "Instrument". Section 42a-9-102(a)(47).
      "Merchant". Section 42a-2-104(1).
      "Mortgage". Section 42a-9-102(a)(55).
      "Pursuant to commitment". Section 42a-9-102(a)(68).
      "Sale". Section 42a-2-106(1).
      "Sale on approval". Section 42a-2-326(1)(a).
      "Sale or return". Section 42a-2-326(1)(b).
      "Seller". Section 42a-2-103(1)(c).

      (c) In addition, article 1 contains general definitions and principles of construction that apply throughout this article.

      (P.A. 02-131, S. 2; P.A. 04-64, S. 55; P.A. 05-109, S. 26.)

      History: P.A. 04-64 amended Subsec. (a)(23) by replacing "receiving" with "acquiring" in definition of "lessee in ordinary course of business" to conform to revisions made to article 7 by the same act; P.A. 05-109 amended Subsec. (a) by deleting definitions of "good faith" and "record" and making technical changes and amended Subsec. (b) by making a technical change in reference to definition of "seller" to conform to revisions made to article 1 by the same act.

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PART 3
CONSTRUCTION OF LEASE CONTRACT

      Sec. 42a-2A-301. Course of performance or practical construction. Section 42a-2A-301 is repealed, effective October 1, 2005.

      (P.A. 02-131, S. 20; P.A. 05-109, S. 56.)

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PART 7
DEFAULT

(A)

GENERAL PROVISIONS

      Sec. 42a-2A-704. Remedies in general. (a) In accordance with section 42a-1-305, the remedies provided in this article must be liberally administered with the purpose of placing the aggrieved party in as good a position as if the other party had fully performed.

      (b) Unless the lease contract provides for liquidated damages enforceable under section 42a-2A-710 or a limited remedy enforceable under section 42a-2A-711, an aggrieved party may not recover that part of a loss resulting from a default that could have been avoided by reasonable measures under the circumstances. The burden of establishing that reasonable measures under the circumstances were not taken is on the defaulting party.

      (c) The rights and remedies provided in this article are cumulative, but a party may not recover more than once for the same injury.

      (d) This article does not impair a remedy for breach of an obligation or promise collateral or ancillary to a lease contract.

      (P.A. 02-131, S. 57; P.A. 05-109, S. 27.)

      History: P.A. 05-109 amended Subsec. (a) by replacing reference to Sec. 42a-1-106 with reference to Sec. 42a-1-305 to conform to revisions made to article 1 by the same act.

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(B)

LESSOR'S REMEDIES

      Sec. 42a-2A-721. Lessor's damages for nonacceptance, failure to pay or repudiation. (a) Except as otherwise provided with respect to damages liquidated in the lease agreement under section 42a-2A-710 or otherwise determined by agreement of the parties under sections 42a-1-302 and 42a-2A-711, if a lessor elects to retain the goods or elects to dispose of the goods and the disposition is by lease agreement that for any reason does not qualify for treatment under subsection (b) of section 42a-2A-720 or is by sale or otherwise, the lessor may recover from the lessee as damages for a default of the type described in subsection (a) or subdivision (1) of subsection (c) of section 42a-2A-716 or, if agreed, for other default of the lessee:

      (1) Accrued and unpaid rent as of the date of default if the lessee has never taken possession of the goods, or, if the lessee has taken possession of the goods, as of the date the lessor repossesses the goods or an earlier date on which the lessee makes a tender of the goods to the lessor;

      (2) The present value, as of the date determined under subdivision (1) of this subsection, of the total rent for the then remaining period of the original lease agreement, minus the present value as of the same date of the market rent at the place where the goods are located computed for the same lease term; and

      (3) Any incidental or consequential damages allowed under section 42a-2A-706 or 42a-2A-707, less expenses saved in consequence of the lessee's default.

      (b) If the measure of damages provided in subsection (a) of this section or section 42a-2A-720 is inadequate under subsection (a) of section 42a-2A-704, a lessor may recover damages measured by other than the market price or the amount received on a disposition of the goods, together with incidental and consequential damages, including:

      (1) The present value of lost profits, including reasonable overhead, resulting from the default of the lessee determined in any reasonable manner; and

      (2) Reasonable expenditures made in preparing for or performing the contract.

      (P.A. 02-131, S. 74; P.A. 05-109, S. 28.)

      History: P.A. 05-109 amended Subsec. (a) by replacing reference to Sec. 42a-1-102(3) with reference to Sec. 42a-1-302 to conform to revisions made to article 1 by the same act.

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