ARTICLE 2A

LEASES

Table of Contents

Sec. 42a-2A-101. Short title: Uniform Commercial Code–Leases.

Sec. 42a-2A-102. *(See end of section for amended version of subsection (b) and effective date.) Definitions and index of definitions.

Sec. 42a-2A-103. Scope.

Sec. 42a-2A-104. Transactions subject to other law.

Sec. 42a-2A-105. Territorial application of article to goods covered by certificate of title.

Sec. 42a-2A-106. Limitation on power of parties to consumer lease to choose applicable law or judicial forum.

Sec. 42a-2A-107. Unconscionability.

Sec. 42a-2A-108. Option to accelerate at will.

Sec. 42a-2A-109. Effect of agreement; questions determined by court.

Sec. 42a-2A-201. Formal requirements.

Sec. 42a-2A-202. Parol or extrinsic evidence.

Sec. 42a-2A-203. Formation in general.

Sec. 42a-2A-204. Firm offers.

Sec. 42a-2A-205. Offer and acceptance.

Sec. 42a-2A-206. Electronic contracting; formation.

Sec. 42a-2A-207. Legal recognition of electronic records and authentications.

Sec. 42a-2A-208. Attribution.

Sec. 42a-2A-209. Contract formation; electronic record.

Sec. 42a-2A-210. Contract formation; electronic agents.

Sec. 42a-2A-301. Course of performance or practical construction.

Sec. 42a-2A-302. Modification, rescission and waiver.

Sec. 42a-2A-303. Lessee under finance lease as beneficiary of supply contract.

Sec. 42a-2A-304. Identification.

Sec. 42a-2A-305. Insurance and proceeds.

Sec. 42a-2A-306. Risk of loss.

Sec. 42a-2A-307. Casualty to identified goods.

Sec. 42a-2A-308. Termination; survival of obligations.

Sec. 42a-2A-401. Enforceability of lease contract.

Sec. 42a-2A-402. Title to and possession of goods.

Sec. 42a-2A-403. Alienability of party’s interest under lease contract or of lessor’s residual interest in goods; delegation of performance; transfer of rights.

Sec. 42a-2A-404. Subsequent lease of goods by lessor.

Sec. 42a-2A-405. Sale or sublease of goods by lessee.

Sec. 42a-2A-406. Priority of certain liens arising by operation of law.

Sec. 42a-2A-407. Priority of liens arising by attachment or levy on goods.

Sec. 42a-2A-408. Special rights of creditors.

Sec. 42a-2A-409. Rights of lessor and lessee when goods become fixures.

Sec. 42a-2A-410. Lessor’s and lessee’s rights when goods become accessions.

Sec. 42a-2A-411. Priority subject to subordination.

Sec. 42a-2A-501. Definitions.

Sec. 42a-2A-502. Warranty against interference and against infringement; lessee’s obligation against infringement.

Sec. 42a-2A-503. Express warranties to lessee.

Sec. 42a-2A-504. Implied warranty of merchantability.

Sec. 42a-2A-505. Implied warranty of fitness for particular purpose.

Sec. 42a-2A-506. Disclaimer or modification of warranty.

Sec. 42a-2A-507. Cumulation and conflict of warranties.

Sec. 42a-2A-508. Extension of express or implied warranty.

Sec. 42a-2A-601. Right to adequate assurance of performance.

Sec. 42a-2A-602. Anticipatory repudiation.

Sec. 42a-2A-603. Retraction of anticipatory repudiation.

Sec. 42a-2A-604. Substituted performance.

Sec. 42a-2A-605. Excuse by failure of presupposed conditions.

Sec. 42a-2A-606. Procedure on notice claiming excuse.

Sec. 42a-2A-607. Irrevocable promises: Finance leases.

Sec. 42a-2A-701. Subject to general limitations.

Sec. 42a-2A-702. Default: Procedure.

Sec. 42a-2A-703. Notice after default.

Sec. 42a-2A-704. Remedies in general.

Sec. 42a-2A-705. Measurement of damages in general.

Sec. 42a-2A-706. Incidental damages.

Sec. 42a-2A-707. Consequential damages.

Sec. 42a-2A-708. Specific performance.

Sec. 42a-2A-709. Cancellation; effect.

Sec. 42a-2A-710. Liquidation of damages; deposits.

Sec. 42a-2A-711. Contractual modification of remedy.

Sec. 42a-2A-712. Remedies for misrepresentation or fraud.

Sec. 42a-2A-713. Proof of market rent.

Sec. 42a-2A-714. Liability of third parties for injury to goods.

Sec. 42a-2A-715. Statute of limitations.

Sec. 42a-2A-716. Lessor’s remedies in general.

Sec. 42a-2A-717. Lessor’s right to possession of goods.

Sec. 42a-2A-718. Lessor’s right to identify goods to lease contract despite default or to salvage unfinished goods.

Sec. 42a-2A-719. Lessor’s refusal to deliver because of lessee’s insolvency; stoppage in transit or otherwise.

Sec. 42a-2A-720. Lessor’s rights to dispose of goods.

Sec. 42a-2A-721. Lessor’s damages for nonacceptance, failure to pay or repudiation.

Sec. 42a-2A-722. Lessor’s action for the rent.

Sec. 42a-2A-723. Lessor’s rights to residual interest.

Sec. 42a-2A-724. Lessee’s remedies in general; lessee’s security interest in rejected goods.

Sec. 42a-2A-725. Lessee’s rights on nonconforming delivery; rightful rejection.

Sec. 42a-2A-726. Installment lease contract: Default.

Sec. 42a-2A-727. Merchant lessee’s duties; lessee’s options as to salvage.

Sec. 42a-2A-728. Lessee’s duties as to rightfully rejected goods.

Sec. 42a-2A-729. Cure.

Sec. 42a-2A-730. What constitutes acceptance of goods.

Sec. 42a-2A-731. Waiver of default; particularization of nonconformity.

Sec. 42a-2A-732. Effect of acceptance; notice of default; burden of establishing default after acceptance; notice of claim or litigation to person answerable over.

Sec. 42a-2A-733. Revocation of acceptance of goods.

Sec. 42a-2A-734. Cover; lessee’s acquisition of substitute goods.

Sec. 42a-2A-735. Lessee’s damages for nondelivery, repudiation, default and breach of warranty in regard to accepted goods.

Sec. 42a-2A-736. Lessee’s damages for default regarding accepted goods.

Sec. 42a-2A-737. Prepaying lessee’s right to goods.


PART 1

GENERAL PROVISIONS AND DEFINITIONS

Sec. 42a-2A-101. Short title: Uniform Commercial Code–Leases. This article may be cited as “Uniform Commercial Code–Leases”.

(P.A. 02-131, S. 1.)

Sec. 42a-2A-102. *(See end of section for amended version of subsection (b) and effective date.) 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.)

*Note: On and after July 1, 2013, subsection (b) of this section, as amended by section 29 of public act 11-108, is to read as follows:

“(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)(69).

“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).”

(P.A. 02-131, S. 2; P.A. 04-64, S. 55; P.A. 05-109, S. 26; P.A. 11-108, S. 29.)

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; P.A. 11-108 amended Subsec. (b) to replace Sec. 42a-9-102(a)(68) with Sec. 42a-9-102(69) as the statutory reference for the definition of “pursuant to commitment”, effective July 1, 2013 (Revisor’s note: In Subsec. (b), a reference to “Section 42a-9-102(69)” was changed editorially by the Revisors to “Section 42a-9-102(a)(69)” for accuracy).

Sec. 42a-2A-103. Scope. This article applies to any transaction regardless of form which creates a lease.

(P.A. 02-131, S. 3.)

Sec. 42a-2A-104. Transactions subject to other law. (a) A transaction subject to this article is also subject to:

(1) Any certificate of title statute covering automobiles, trailers, mobile homes, boats, farm tractors or the like, including chapters 247, 282 and 283 and sections 21-67a and 49-5, except as to the rights of a lessee in the ordinary course of business under subsection (d) of section 42a-2A-404 and subsection (d) of section 42a-2A-405 whose rights arise before a certificate of title covering the goods is effective in the name of any other purchaser;

(2) Any applicable certificate of title statute of another jurisdiction;

(3) Any applicable law which establishes a different rule for consumer leases; and

(4) Any other law of this state to which the transaction is subject, such as laws dealing with:

(A) The sale or lease of agricultural products;

(B) The consignment or transfer by artists of works of art or fine prints;

(C) Distribution agreements, franchises and other relationships through which goods are leased;

(D) Liability for products which cause injury to person or property;

(E) The making and disclaimer of warranties;

(F) Dealers in particular products, such as automobiles, motorized wheelchairs, agricultural equipment and hearing aids; and

(G) Noncommercial motor vehicles leases subject to chapter 742a.

(b) If a law of this state applies to a transaction subject to this article, the following rules apply:

(1) A requirement that a term, waiver, notice or disclaimer be in a writing is satisfied by a record.

(2) A requirement that a writing or a term be signed is satisfied by an authentication.

(c) Except for the rights of a lessee in the ordinary course of business under subdivision (1) of subsection (a) of this section, in the event of a conflict between this article, other than section 42a-2A-105, 42a-2A-401 or 42a-2A-402, and a law referred to in subsection (a) of this section, the law referred to in subsection (a) of this section governs.

(d) Failure to comply with the laws referred to in subsection (a) of this section has only the effect specified therein.

(P.A. 02-131, S. 4.)

Sec. 42a-2A-105. Territorial application of article to goods covered by certificate of title. (a) This section applies to goods covered by a certificate of title, even if there is no other relationship between the jurisdiction under whose certificate of title law the goods are covered and the goods or the lessee or lessor.

(b) Goods become covered by a certificate of title when a valid application for the certificate of title and the application fee are delivered to the appropriate authority. Goods cease to be covered by a certificate of title at the earlier of the time the certificate of title ceases to be effective under the law of the issuing jurisdiction or the time the goods become covered subsequently by a certificate of title issued by another jurisdiction.

(c) Subject to subsection (d) of section 42a-2A-404 and subsection (d) of section 42a-2A-405, with respect to goods covered by a certificate of title under a statute of this state or of another jurisdiction, compliance and the effect of compliance or noncompliance with the certificate of title statute are governed by the local law of the jurisdiction whose certificate covers the goods from the time the goods become covered by the certificate until the goods cease to be covered by the certificate.

(P.A. 02-131, S. 5.)

Sec. 42a-2A-106. Limitation on power of parties to consumer lease to choose applicable law or judicial forum. (a) A choice-of-law term in a consumer lease contract is not enforceable if the law chosen is that of a jurisdiction other than one in which the lessee resides at the time the lease agreement becomes enforceable or within thirty days thereafter or in which the goods are to be used.

(b) The parties may choose an exclusive judicial forum. However, in a consumer lease, the law of the forum is governed by subsection (d) of section 51-345 and any choice of forum in a term of a consumer lease must comply with said section. A choice of forum in a term of an agreement is not exclusive unless the agreement expressly so provides.

(P.A. 02-131, S. 6.)

Sec. 42a-2A-107. Unconscionability. (a) If a court as a matter of law finds a lease contract or any term thereof to have been unconscionable at the time it was made, the court may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable term or so limit the application of an unconscionable term as to avoid an unconscionable result.

(b) With respect to a consumer lease, if the court finds as a matter of law that a lease contract or a term of the contract was induced by unconscionable conduct or that unconscionable conduct has occurred in the collection of a claim arising from the lease contract, the court may grant appropriate relief.

(c) If it is claimed or appears to the court that a lease contract or any term thereof, or any conduct that induced a lease contract or any term thereof or that occurred in the collection of a claim arising from the lease contract, may be unconscionable, the parties must be afforded a reasonable opportunity to present evidence as to the commercial setting, purpose and effect of the lease contract, term or conduct to aid the court in making the determination.

(d) In an action in which a lessee claims unconscionability with respect to a consumer lease, the following rules apply:

(1) If the court finds unconscionability under subsection (a) or (b) of this section, the court shall award reasonable attorney’s fees to the lessee.

(2) In determining attorney’s fees, the amount of the recovery on behalf of the claimant under subsection (a) or (b) of this section is not controlling.

(P.A. 02-131, S. 7.)

History: (Revisor’s note: In Subsec. (a), “that” was deleted editorially by the Revisors after “matter of law finds” for grammatical accuracy).

Sec. 42a-2A-108. Option to accelerate at will. (a) A term in a lease agreement 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 “deems itself insecure”, or words of similar import, shall be construed to mean that the party shall have power to do so only if the party in good faith believes that the prospect of payment or performance is impaired.

(b) In a consumer lease, the burden of establishing good faith under subsection (a) of this section is on the party that exercised the power. In all other leases, the burden of establishing lack of good faith is on the party against which the power has been exercised.

(P.A. 02-131, S. 8.)

Sec. 42a-2A-109. Effect of agreement; questions determined by court. (a) Unless a section in this article otherwise provides, the effect of any provision of this article may be varied by agreement.

(b) The presence of mandatory language, such as “must” or “shall”, or the absence of enabling language, such as “unless otherwise agreed”, does not by itself preclude the parties from varying by agreement a provision of this article.

(c) Whenever this article allocates a risk or imposes a burden as between the parties, they may agree to shift the allocation and apportion the risk or burden.

(P.A. 02-131, S. 9.)

PART 2

FORMATION, TERMS AND READJUSTMENT
OF LEASE CONTRACT. ELECTRONIC CONTRACTS

(A)

FORMATION, TERMS AND READJUSTMENT

Sec. 42a-2A-201. Formal requirements. (a) Except as otherwise provided in this section, a lease contract is not enforceable by way of action or defense unless:

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

(2) There is a record, authenticated by the party against which enforcement is sought or by such party’s authorized agent as the record of such person, which is sufficient to indicate that a lease contract has been made between the parties and to describe the goods leased and the duration of the lease.

(b) A record is not insufficient merely because it omits a term, including a quantity term, or incorrectly states a term agreed upon, but, if the record contains a quantity term, the contract is not enforceable beyond the quantity of goods shown in the record.

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

(d) An otherwise valid lease contract that does not satisfy the requirements of subsection (a) of this section is nevertheless enforceable:

(1) If the goods are to be specially manufactured or obtained for the lessee and are not suitable for lease or sale by the lessor to others in the ordinary course of 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;

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

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

(e) The duration of a lease under a lease contract referred to in subsection (d) of this section is:

(1) If there is a record authenticated by the party against which enforcement is sought or by such party’s authorized agent specifying the duration of the lease, the period so specified;

(2) If the party against which enforcement is sought admits in such party’s pleading or testimony, or otherwise in court, the duration of the lease, the period so admitted; or

(3) A reasonable duration.

(f) An enforceable lease contract under this section is not unenforceable merely because it is not capable of being performed within one year or any other applicable period after its making.

(g) The affixing of a seal to a record evidencing a lease contract or offer does not make the record a sealed instrument. The law with respect to sealed instruments does not apply to the lease contract or offer.

(P.A. 02-131, S. 10.)

Sec. 42a-2A-202. Parol or extrinsic evidence. (a) Terms on which the confirmatory records of the parties agree, or which are otherwise set forth in a record intended by the parties as a final expression of their agreement with respect to the included terms, may not be contradicted by evidence of any previous agreement or of a contemporaneous oral agreement. However, terms in such a record may be supplemented by evidence of:

(1) Consistent additional terms, unless the court finds that the record was intended as a complete and exclusive statement of the terms of the agreement; and

(2) Course of performance, course of dealing or usage of trade.

(b) Terms in a record may be explained by evidence of course of performance, course of dealing or usage of trade without a preliminary determination by the court that the language used is ambiguous. Terms in a record may also be explained from other sources as determined by the court under applicable law.

(P.A. 02-131, S. 11.)

Sec. 42a-2A-203. Formation in general. (a) A lease contract may be made in any manner sufficient to show agreement, including by offer and acceptance, conduct of both parties which recognizes the existence of a lease contract or the interaction of electronic agents.

(b) If the parties so intend, an agreement sufficient to constitute a lease contract may be found even if the time of its making is undetermined, one or more terms are left open or to be agreed upon, the records of the parties do not otherwise establish a lease contract or one party reserves the right to modify terms.

(c) Even if one or more terms are left open or to be agreed upon, a lease contract does not fail for indefiniteness if the parties intended to make a lease contract and there is a reasonably certain basis for giving an appropriate remedy.

(P.A. 02-131, S. 12.)

Sec. 42a-2A-204. Firm offers. An offer by a merchant to enter into a lease contract made in an authenticated record that by its terms gives assurance that the offer will be held open is not revocable for lack of consideration during the time stated. If a time is not stated, the offer is irrevocable for a reasonable time not exceeding ninety days. A term of assurance in a record supplied by the offeree is ineffective unless the term is conspicuous.

(P.A. 02-131, S. 13.)

Sec. 42a-2A-205. Offer and acceptance. (a) 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 under the circumstances.

(b) If the beginning of a requested performance is a reasonable mode of acceptance, an offeror that is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

(P.A. 02-131, S. 14.)

(B)

ELECTRONIC CONTRACTS

Sec. 42a-2A-206. Electronic contracting; formation. Except as otherwise provided in sections 42a-2A-207 to 42a-2A-210, inclusive, the following rules apply:

(1) A lease contract may be formed by the interaction of electronic agents. If the interaction resulting from the electronic agents’ engaging in operations is sufficient to show an agreement under section 42a-2A-203 or 42a-2A-205, a lease contract is formed unless the operations resulted from fraud, electronic mistake or the like.

(2) A lease contract may be formed by the interaction of an electronic agent and an individual, acting on the individual’s own behalf or for another person. A lease contract is formed if the individual takes actions that the individual is free to refuse to take or makes a statement that the individual has reason to know will:

(A) Cause the electronic agent to complete the transaction or performance; or

(B) Indicate acceptance of an offer, regardless of other expressions or actions by the individual to which the electronic agent cannot react.

(3) In an interaction between individuals, if an offer evokes an electronic message in response, a lease contract is formed:

(A) If the offer is accepted under section 42a-2A-205, when the acceptance is received; or

(B) If the offer is accepted by an electronic performance, when the performance is received, unless the originating message required acceptance in a different manner.

(P.A. 02-131, S. 15.)

Sec. 42a-2A-207. Legal recognition of electronic records and authentications. (a) A record or authentication may not be denied legal effect or enforceability solely because it is in electronic form.

(b) This article does not require that a record or authentication be generated, stored, sent, received or otherwise processed by electronic means or in electronic form.

(c) In any transaction, a person may establish reasonable requirements regarding the type of authentication or record acceptable to such person.

(P.A. 02-131, S. 16.)

Sec. 42a-2A-208. Attribution. An electronic record is attributed to a person if it was the act of the person or such person’s electronic agent, or if the person is otherwise bound by it under the law of agency. The party relying on attribution of an electronic record to another person has the burden of establishing attribution.

(P.A. 02-131, S. 17.)

Sec. 42a-2A-209. Contract formation; electronic record. (a) Except as otherwise provided in subsection (b) of this section, an electronic record is effective when received, even if no other person is aware of its receipt.

(b) If an offer in an electronic message evokes an electronic message in response, a lease contract, if any, is formed as determined in section 42a-2A-206.

(c) Receipt of an electronic acknowledgment establishes that the message was received but does not establish by itself that the content sent corresponds to the content received.

(P.A. 02-131, S. 18.)

Sec. 42a-2A-210. Contract formation; electronic agents. (a) A person that uses an electronic agent for authentication, agreement or performance is bound by the operations of the electronic agent even if no person was aware of or reviewed the electronic agent’s actions or the results of the operations.

(b) Whether a lease contract is formed by the interaction of electronic agents or the interaction of an electronic agent and a person is determined by section 42a-2A-206.

(P.A. 02-131, S. 19.)

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.)

Sec. 42a-2A-302. Modification, rescission and waiver. (a) An agreement made in good faith modifying a lease contract needs no consideration to be binding.

(b) An authenticated record containing a term that prohibits modification or rescission except by an authenticated record may not be otherwise modified or rescinded. Such a term in a form or record supplied by a merchant to a nonmerchant must be separately authenticated. A party whose language or conduct is inconsistent with the term is precluded from asserting the term if the assertion is unjust in view of a material change of position in reliance on the language or conduct.

(c) A condition in a lease contract may be waived by the party for whose benefit it was included. Language or conduct is relevant to show a waiver. A party that has made a waiver affecting an executory portion of a lease contract may retract the waiver by reasonable notice 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.

(P.A. 02-131, S. 21.)

Sec. 42a-2A-303. Lessee under finance lease as beneficiary of supply contract. (a) The benefit of the supplier’s promises to the lessor under a 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 supply contract and all defenses or claims arising therefrom.

(b) The extension of the benefit of a supplier’s promises and of warranties to the lessee does not modify the rights and obligations of the parties to the supply contract, whether arising therefrom or otherwise, or impose any duty or liability under the supply contract on the lessee.

(c) A modification or rescission of a 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 assumes, in addition to the obligations of the lessor to the lessee under the lease contract, the 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.

(d) In addition to the extension of the benefit of the supplier’s promises and of warranties to the lessee under subsection (a) of this section, the lessee retains all rights that the lessee may have against the supplier which arise from a contract between the lessee and the supplier or under other law.

(P.A. 02-131, S. 22.)

Sec. 42a-2A-304. Identification. Identification of existing goods as goods to which a lease contract refers may be made at any time and in any manner expressly agreed to by the parties. In the absence of express agreement, identification occurs:

(1) If the contract is for the lease of already existing and designated goods, when the lease contract is made;

(2) If the contract is for the lease of future goods other than those described in subdivision (3) of this section, 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) If the lease contract is for a lease of unborn young of animals, when the young are conceived.

(P.A. 02-131, S. 23.)

Sec. 42a-2A-305. Insurance and proceeds. (a) A lessee obtains an insurable interest in existing goods identified to the lease contract even if the goods are nonconforming and the lessee has an option to return or reject them.

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

(c) 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.

(d) This section does not affect any insurable interest recognized under any other law.

(e) The parties, by agreement, may determine that one or more parties have an obligation to obtain and pay for insurance covering the goods and determine the beneficiary of the proceeds of the insurance.

(P.A. 02-131, S. 24.)

See Sec. 42-500 re insurance disclosures.

Sec. 42a-2A-306. Risk of loss. (a) 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.

(b) If under the lease contract risk of loss will pass to the lessee but the agreement does not specify when the risk passes, except as otherwise provided in subsection (c) of this section, risk of loss passes to the lessee, regardless of the conformity of the goods to the lease contract, as follows:

(1) Subject to this subsection, the risk of loss passes to a lessee upon receipt of the goods. If the lessee does not intend to take possession, risk of loss passes to the lessee when the lessee receives control of the goods.

(2) If the lease contract requires or authorizes a lessor to ship goods by carrier, the following rules apply:

(A) If the lease contract 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.

(B) If the lease contract requires delivery at a particular destination and the goods arrive there in the possession of the carrier, the risk of loss passes to the lessee when the goods are so tendered as to enable the lessee to take delivery.

(3) If 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 to the lessee of the lessee’s right to possession of the goods.

(c) A default under the lease contract by either party affects the risk of loss only in the following cases:

(1) If the lessee rightfully rejects the goods or justifiably revokes acceptance of the goods, the lessor has the risk of loss from the time that the rejection or revocation is effective.

(2) If the lessor has tendered nonconforming goods so that the lessee would have the right to reject the goods or revoke acceptance of the goods, the goods are damaged or lost before the lessee effectively rejects or revokes acceptance, and the risk of loss would have otherwise passed to the lessee under subsection (b) or (c) of this section, the lessor has the risk of loss to the extent the nonconformity of the goods caused the damage or loss.

(3) If conforming goods are identified to the lease contract when the lessee repudiates or is otherwise in breach and the risk of loss has not otherwise passed to the lessee, the lessee has the risk of loss for such goods for a commercially reasonable time after the breach or repudiation.

(P.A. 02-131, S. 25.)

Sec. 42a-2A-307. Casualty to identified goods. If the lease contract requires for its performance goods identified when the lease contract is made and the goods suffer casualty without the fault of the lessee, the lessor or the supplier before delivery or if the goods suffer casualty before the risk of loss passes to the lessee under the lease agreement or section 42a-2A-306, the following rules apply:

(1) If the loss occurs before the goods are delivered to the lessee, the lessor or supplier shall seasonably notify the lessee of the nature and extent of the loss.

(2) If the loss is total, the lease contract is avoided.

(3) If the loss is partial or the goods no longer conform to the lease contract, the lessee may nevertheless demand inspection and may treat the lease contract as avoided or, except in a finance lease that is not a consumer lease, accept or retain the goods with due allowance from the rent payable for the balance of the duration of the lease for the nonconformity but without further right against the lessor.

(P.A. 02-131, S. 26.)

Sec. 42a-2A-308. Termination; survival of obligations. (a) Except as otherwise provided in subsection (b) of this section, on the termination of a lease contract, all obligations that are still executory on both sides are discharged.

(b) The following survive termination of a lease contract:

(1) A right based on a previous default or performance of the lease contract;

(2) A term limiting the scope, manner, method or location of the exercise of rights in the goods;

(3) An obligation of confidentiality, nondisclosure or noncompetition;

(4) A choice of law or forum;

(5) An obligation to return or dispose of goods or return any unearned part of the rent;

(6) An obligation to arbitrate or otherwise resolve disputes through alternative dispute resolution procedures;

(7) A term limiting the time for bringing an action or for providing notice;

(8) An indemnity term;

(9) A limitation of remedy or disclaimer of warranty;

(10) An obligation to provide an accounting and make any payment due under the accounting;

(11) Other rights, remedies or limitations stated in the agreement as surviving to the extent enforceable under applicable law; and

(12) Other rights, remedies or limitations if in the circumstances their survival is necessary to achieve the purposes of the parties.

(P.A. 02-131, S. 27.)

PART 4

EFFECT OF LEASE CONTRACT

Sec. 42a-2A-401. Enforceability of lease contract. Except as otherwise provided in this title, a lease contract is effective and enforceable according to its terms between the parties, against purchasers of the goods and against creditors.

(P.A. 02-131, S. 28.)

Sec. 42a-2A-402. Title to and possession of goods. Except as otherwise provided in this article, the application of this article is not affected by whether the lessor or a third party has title to the goods, by whether the lessor, the lessee, or a third party has possession of the goods or by any statute or rule of law that possession or the absence of possession is fraudulent.

(P.A. 02-131, S. 29.)

Sec. 42a-2A-403. Alienability of party’s interest under lease contract or of lessor’s residual interest in goods; delegation of performance; transfer of rights. (a) In this section, “creation of a security interest” includes the sale of a lease contract that is subject to article 9 by reason of subdivision (3) of subsection (a) of section 42a-9-109.

(b) Except as otherwise provided in subsection (c) of this section and section 42a-9-407, a provision in a lease agreement which (1) 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 (2) makes such a transfer an event of default, gives rise to the rights and remedies provided in subsection (e) of this section. However, a transfer that is prohibited or is an event of default under the lease agreement is otherwise effective.

(c) Language in a consumer lease prohibiting the transfer of an interest of a party under the lease contract or making a transfer an event of default must be specific, be in a record and be conspicuous.

(d) A term in a lease agreement which (1) 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 (2) makes such a transfer an event of default, is not enforceable. 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 meaning of subsection (e) of this section.

(e) Subject to subsection (d) of this section and section 42a-9-407:

(1) If a transfer is made that is an event of default under a lease agreement, the other party to the lease contract has the rights and remedies described in subsection (c) of section 42a-2A-702, unless such party waives the default or otherwise agrees; and

(2) If subdivision (1) of this subsection does not apply and a transfer is made that (A) is prohibited under a lease agreement, or (B) 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 or unless limited by contract:

(i) 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

(ii) A court having jurisdiction may grant other appropriate relief, including cancellation of the lease contract or an injunction against the transfer.

(f) 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 such duties. The promise is enforceable by either the transferor or the other party to the lease contract.

(g) 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 liability for default.

(P.A. 02-131, S. 30.)

Sec. 42a-2A-404. Subsequent lease of goods by lessor. (a) Subject to section 42a-2A-403, a subsequent lessee from a lessor of goods under an existing lease contract obtains, to the extent of the leasehold interest transferred, the leasehold interest that the lessor had or had power to transfer and, except as otherwise provided in subsection (b) of this section and subsection (d) of section 42a-2A-720, takes subject to the existing lease contract.

(b) A lessor with voidable rights or voidable title acquired in a purchase of goods from a transferor has power to transfer a good leasehold interest to a good faith subsequent lessee for value. Under this subsection, voidable rights or voidable title is acquired when the goods have been delivered under a transaction of purchase even if:

(1) The transferor was deceived as to the identity of the lessor;

(2) The delivery was in exchange for a check later dishonored;

(3) It was agreed that the transaction was to be a cash sale; or

(4) The delivery was procured through fraud punishable under criminal law.

(c) A subsequent lessee in the ordinary course of business from a lessor that is a merchant dealing in goods of that kind to which the goods were entrusted by the existing lessee of such lessor before the interest of the subsequent lessee became enforceable against such lessor obtains, to the extent of the leasehold interest transferred, all rights to the goods of such lessor and the existing lessee, and takes free of the existing lease contract.

(d) A subsequent lessee from the lessor of goods that are subject to an existing lease contract and are covered by a certificate of title issued under a statute of this state or of another jurisdiction takes no greater rights than those provided both by this section and by the certificate of title statute.

(P.A. 02-131, S. 31.)

Sec. 42a-2A-405. Sale or sublease of goods by lessee. (a) Subject to section 42a-2A-403, a buyer or sublessee from the lessee of goods under an existing lease contract obtains, to the extent of the interest transferred, the leasehold interest in the goods that the lessee had or had power to transfer and, except as otherwise provided in subsection (b) of this section and in subsection (e) of section 42a-2A-727, takes subject to the existing lease contract.

(b) A lessee with a voidable leasehold interest acquired in a lease transaction from a lessor has power to transfer a good leasehold interest to a good faith subsequent lessee for value to which the goods have been delivered. Under this subsection, a voidable leasehold interest is acquired when the goods have been delivered under the lease contract even if:

(1) The lessor was deceived as to the identity of the lessee;

(2) The delivery was in exchange for a check later dishonored; or

(3) The delivery was procured through fraud punishable under criminal law.

(c) A buyer in the ordinary course of business or a sublessee in the ordinary course of business from a lessee that is a merchant dealing in goods of that kind to which the goods were entrusted by the lessor obtains, to the extent of the interest transferred, all of the rights of the lessor and lessee to the goods and takes free of the existing lease contract.

(d) A buyer or sublessee from the lessee of goods that are subject to an existing lease contract and are covered by a certificate of title issued under a statute of this state or of another jurisdiction takes no greater rights than those provided both by this section and by the certificate of title statute.

(P.A. 02-131, S. 32.)

Sec. 42a-2A-406. Priority of certain liens arising by operation of law. If a person in the ordinary course of the person’s business furnishes services or materials with respect to goods subject to a lease contract, a lien upon such goods in the possession of such person given by statute or rule of law for such services or materials has priority over any interest of the lessor or lessee under the lease contract or this article, unless the lien is created by statute and the statute provides otherwise or the lien is created by rule of law and the rule of law provides otherwise.

(P.A. 02-131, S. 33.)

Sec. 42a-2A-407. Priority of liens arising by attachment or levy on goods. (a) Except as otherwise provided in section 42a-2A-406, a creditor of a lessee takes subject to the lease contract.

(b) Except as otherwise provided in subsection (c) of this section and sections 42a-2A-406 and 42a-2A-408, a creditor of a lessor takes subject to the lease contract unless the creditor holds a lien that attached to the goods before the lease contract became enforceable.

(c) Except as otherwise provided in sections 42a-9-317, 42a-9-321 and 42a-9-323, a lessee takes a leasehold interest subject to a security interest held by a creditor of the lessor.

(P.A. 02-131, S. 34.)

Sec. 42a-2A-408. Special rights of creditors. (a) Except as otherwise provided in subsections (b) and (c) of this section, the rights of creditors of the lessor with respect to goods identified to a lease contract and retained by the lessor are subject to the lessee’s rights under section 42a-2A-708, subsection (d) of section 42a-2A-724 and section 42a-2A-737 if the lessee’s rights vest before a creditor’s claim in rem attaches to the goods.

(b) A creditor of a lessor may treat a lease or an identification of goods to a lease contract as void if, as against the creditor, a retention of possession or identification by the lessor is fraudulent under any law of the state in which the goods are situated. However, the retention of possession in good faith and current course of trade by a merchant lessor for a commercially reasonable time after a lease or identification is not fraudulent.

(c) Except as otherwise provided in subsection (a) of this section and sections 42a-2A-404 and 42a-2A-405, this article does not impair the rights of creditors of the lessor if identification to the lease contract or delivery is not made in current course of trade but is made in satisfaction of or as security for a preexisting claim for money, security or the like under circumstances that under any law of the state where the goods are situated, apart from this article, would constitute a fraudulent transfer or a voidable preference.

(d) A creditor of a seller may treat a sale or an identification of goods to a contract for sale as void if, as against the creditor, a retention of possession by the seller is fraudulent under any law of the state where the goods are situated. However, it is not fraudulent for a seller to retain possession of the goods pursuant to a lease contract entered into by the seller as lessee and the buyer as lessor in connection with the sale or identification of the goods if the buyer bought for value and in good faith.

(P.A. 02-131, S. 35.)

Sec. 42a-2A-409. Rights of lessor and lessee when goods become fixures. (a) In this section:

(1) “Construction mortgage” means a mortgage to the extent that it secures an obligation incurred for the construction of an improvement on land, including the acquisition cost of the land, if a recorded record of the mortgage so indicates.

(2) “Encumbrance” includes a real property mortgage, other lien on real estate and any other right in real property which is not an ownership interest.

(3) “Fixture filing” means a filing, in the office where a mortgage on the real property would be filed or recorded, of a financing statement covering goods that are or are to become fixtures and conforming to the requirements of subsections (a) and (b) of section 42a-9-502.

(4) “Fixtures” means goods that have become so related to particular real property that an interest in them arises under real property law.

(5) “Purchase money lease” means a lease in which the lessee does not have possession or use of the goods or the right to possession or use of the goods before the lease agreement is enforceable.

(b) A lease under this article may be of goods that are fixtures or may continue in goods that become fixtures, but there may be no lease under this article of ordinary building materials incorporated into an improvement on land.

(c) This article does not prevent creation of a lease of fixtures under real property law.

(d) The perfected interest of a lessor of fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if the lessee has an interest of record in or is in possession of the real property and:

(1) Except as otherwise provided in subsection (f) of this section, the lease is a purchase money lease, the interest of the encumbrancer or owner arises before the goods become fixtures and the interest of the lessor is perfected by a fixture filing before the goods become fixtures or within twenty days thereafter; or

(2) The interest of the lessor is perfected by a fixture filing before the interest of the encumbrancer or owner is of record and the lessor’s interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner.

(e) The interest of a lessor of fixtures, whether or not perfected, has priority over the conflicting interest of an encumbrancer or owner of the real property if:

(1) The fixtures are readily removable factory or office machines, readily removable equipment that is not primarily used or leased for use in the operation of the real property or readily removable replacements of domestic appliances that are goods subject to a consumer lease, and, before the goods become fixtures, the lease contract is enforceable;

(2) The conflicting interest is a lien on the real property obtained by legal or equitable proceedings after the lease contract is enforceable;

(3) The encumbrancer or owner has, in an authenticated record, consented to the lease or has disclaimed an interest in the goods as fixtures; or

(4) The lessee has a right to remove the goods as against the encumbrancer or owner, but if the lessee’s right to remove terminates, the priority of the interest of the lessor continues for a reasonable time.

(f) Except as otherwise provided in subsections (d) and (e) of this section, the interest of a lessor of fixtures, including the lessor’s residual interest, is subordinate to the conflicting interest of an encumbrancer of the real property under a construction mortgage recorded before the goods become fixtures if the goods become fixtures before the completion of the construction. A mortgage has this priority to the same extent as a construction mortgage to the extent that it is given to refinance a construction mortgage.

(g) In cases not covered by subsections (c) to (f), inclusive, of this section, priority between the interest of a lessor of fixtures, including the lessor’s residual interest, and the conflicting interest of an encumbrancer or owner of the real property which is not the lessee is determined by the priority rules governing conflicting interests in real property.

(h) If the interest of a lessor of fixtures, including the lessor’s residual interest, has priority over all owners and encumbrancers of the real property, the lessor or the lessee may on default, expiration, termination or cancellation of the lease contract, but subject to the lease agreement and this article, or if necessary to enforce other rights of the lessor or lessee under this article, remove the goods from the real property, free and clear of all conflicting interests of all owners and encumbrancers of the real property. However, the lessor or lessee shall reimburse any encumbrancer or owner of the real property which is not the lessee and which has not otherwise agreed for the cost of repair of any physical injury, but not for any diminution in value of the real property, caused by the absence of the goods removed or by any necessity of replacing them. A person entitled to reimbursement may refuse permission to remove until the party seeking removal gives adequate security for the performance of this obligation.

(i) Even if the lease agreement does not create a security interest, the interest of a lessor of fixtures, including the lessor’s residual interest, is perfected by filing a financing statement as a fixture filing for leased goods that are or are to become fixtures in accordance with the pertinent provisions of article 9.

(P.A. 02-131, S. 36.)

Sec. 42a-2A-410. Lessor’s and lessee’s rights when goods become accessions. (a) In this section, “accessions” means goods that are installed in or affixed to other goods.

(b) Except as otherwise provided in subsection (c) of this section, the interest of a lessor or a lessee under a lease contract entered into before the goods become accessions is superior to all interests in the whole and valid against all persons subsequently acquiring interests in the whole, but is invalid against any person with an interest in the whole that has not in a record consented to the lease or disclaimed an interest in the goods as part of the whole.

(c) The interest of a lessor or a lessee under a lease contract described in subsection (b) of this section is subordinate to the interest of:

(1) A buyer in the ordinary course of business or a lessee in the ordinary course of business of any interest in the whole acquired after the goods became accessions; or

(2) A creditor with a security interest in the whole perfected before the lease contract was made to the extent that the creditor makes subsequent advances without knowledge of the lease contract.

(d) If, under this section, a lessor or lessee holds an interest in accessions which has priority over the claims of all persons that have interests in the whole, the lessor or lessee on default, expiration, termination or cancellation of the lease contract by the other party but subject to the provisions of the lease contract and this article, or if necessary to enforce other rights under this article, may remove the goods from the whole. However, the lessor or lessee shall reimburse any holder of an interest in the whole which is not the lessee and which has not otherwise agreed for the cost of repair of any physical injury, but not for any diminution in value of the whole, caused by the absence of the goods removed or by any necessity for replacing them. A person entitled to reimbursement may refuse permission to remove the goods until the party seeking removal gives adequate security for the performance of this obligation.

(P.A. 02-131, S. 37.)

Sec. 42a-2A-411. Priority subject to subordination. Nothing in this article prevents subordination by agreement by any person entitled to priority.

(P.A. 02-131, S. 38.)

PART 5

WARRANTIES

Sec. 42a-2A-501. Definitions. In this part:

(1) “Damage” means all loss resulting from a breach of warranty, including incidental and consequential damages.

(2) “Goods” includes a component incorporated into other goods.

(3) “Immediate lessee” means a lessee that has a contract with the lessor.

(4) “Remote lessee” means a lessee from a lessor other than the lessor or seller against which a claim under this part is asserted.

(5) “Representation” means a description of the goods, an affirmation of fact or promise about the quality or performance of the goods to be delivered, or a sample or model of the goods.

(P.A. 02-131, S. 39.)

Sec. 42a-2A-502. Warranty against interference and against infringement; lessee’s obligation against infringement. (a) Except in a finance lease, a lessor in a lease contract warrants that, except for claims by any person by way of infringement or the like, for the duration of the lease no person holds:

(1) A claim to or interest in the goods which will interfere with the lessee’s enjoyment of the lessee’s leasehold interest; or

(2) A colorable claim to or interest in the goods which will unreasonably expose the lessee to litigation.

(b) A finance lessor warrants that, except for claims by way of infringement or the like, for the duration of the lease no person holds:

(1) A claim or interest in the goods that arose from an act or omission of the lessor which will interfere with the lessee’s enjoyment of the lessee’s leasehold interest; or

(2) A colorable claim to or interest in the goods that arose from an act or omission of the lessor which will unreasonably expose the lessee to litigation.

(c) Except in a finance lease, a lessor that is a merchant regularly dealing in goods of the kind warrants that the goods will be delivered free of the rightful claim of a third party by way of infringement or the like. However, a lessee that furnishes specifications to the lessor holds the lessor harmless against any claim of infringement or the like that arises out of compliance with the specifications.

(d) A warranty under subsections (a) to (c), inclusive, of this section may be disclaimed or modified only by specific language or by circumstances that give the lessee reason to know that the lessor purports to transfer only such right as the lessor or a third party may have.

(P.A. 02-131, S. 40.)

Sec. 42a-2A-503. Express warranties to lessee. (a) Any representation made by the lessor to the lessee, including a representation made in any medium of communication to the public, such as advertising, 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 representation or, with respect to a sample or model, that the whole of the goods will conform to the sample or model.

(b) To create an express warranty, it is not necessary that the lessor use formal words such as “warranty” or “guaranty” or have a specific intention to make a warranty. However, a representation merely of the value of the goods or an affirmation purporting to be merely the lessor’s opinion or commendation of the goods does not create an express warranty under subsection (a) of this section.

(c) A representation, including a representation made in any medium of communication to the public, such as advertising, which was made to the lessee and which relates to the goods becomes part of the basis of the bargain unless:

(1) The lessee knew that the representation was not true;

(2) A reasonable person in the position of the lessee would not believe that the representation was part of the agreement; or

(3) In the case of a representation made in a medium for communication to the public, including advertising, the lessee did not know of the representation at the time of the agreement.

(d) A right of action for breach of warranty under this section accrues as provided under subsection (c) of section 42a-2A-715.

(P.A. 02-131, S. 41.)

Sec. 42a-2A-504. Implied warranty of merchantability. (a) Except in a finance lease and subject to sections 42a-2A-506 and 42a-2A-507, a warranty that the goods are merchantable is implied in a contract for their lease if the lessor is a merchant with respect to goods of that kind.

(b) Goods, to be merchantable, must:

(1) Pass without objection in the trade under the contract description;

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

(3) Be fit for the ordinary purposes for which goods of that description are used;

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

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

(6) Conform to any representations made on the container or label.

(c) Subject to section 42a-2A-506, other implied warranties may arise from course of dealing or usage of trade.

(P.A. 02-131, S. 42.)

Sec. 42a-2A-505. Implied warranty of fitness for particular purpose. Except in a finance lease and subject to section 42a-2A-506, if a lessor at the time of contracting has reason to know 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 an implied warranty that the goods are fit for such purpose.

(P.A. 02-131, S. 43.)

Sec. 42a-2A-506. Disclaimer or modification of warranty. (a) Words or conduct relevant to the creation of an express warranty and words or conduct tending to disclaim or modify an express warranty must be construed wherever reasonable as consistent with each other. However, subject to section 42a-2A-202, words or conduct disclaiming or modifying an express warranty are ineffective to the extent that such construction is unreasonable.

(b) Subject to subsection (c) of this section, to disclaim or modify an implied warranty of merchantability or fitness, or any part of either implied warranty, the following rules apply:

(1) The language must be in a record and be conspicuous.

(2) In other than a consumer lease contract, the language is sufficient if:

(A) In the case of an implied warranty of merchantability, it mentions merchantability; and

(B) In the case of an implied warranty of fitness, the language states, for example, that “There are no warranties which extend beyond the description on the face hereof”.

(c) Unless the circumstances indicate otherwise, all implied warranties are disclaimed by expressions such as “as is” or “with all faults”, or similar language, or conduct that in common understanding makes it clear to the lessee that the lessor assumes no responsibility for the quality or fitness of the goods. In a consumer contract, the requirements of this subsection must be satisfied by conspicuous language in a record.

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

(e) If a lessee before entering into the contract has examined the goods or the sample or model as fully as desired or has refused to examine the goods or the sample or model, there is no implied warranty with regard to defects which a reasonable examination ought in the circumstances to have revealed to the lessee.

(f) Remedies for breach of warranty may be limited in accordance with this article with respect to liquidation or limitation of damages and contractual modification of remedy.

(g) Subsections (b) to (f), inclusive, of this section shall not apply to leases of new or used consumer goods, except for those goods clearly marked “irregular”, “factory seconds” or “damaged”. Any language, oral or written, used by a lessor or manufacturer of consumer goods that attempts to exclude or modify any implied warranties of merchantability and fitness for a particular purpose, or to exclude or modify the consumer’s remedies for breach of such warranties, shall be unenforceable.

(P.A. 02-131, S. 44.)

Sec. 42a-2A-507. Cumulation and conflict of warranties. Warranties, whether express or implied, must be construed as consistent with each other and as cumulative. However, if such construction is unreasonable, the intention of the parties determines which warranty is dominant. In ascertaining such intention, the following rules apply:

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

(2) A sample from an existing bulk or a model prevails over inconsistent general language of description.

(3) Except in a consumer lease, an express warranty prevails over inconsistent implied warranties other than an implied warranty of fitness for a particular purpose.

(P.A. 02-131, S. 45.)

Sec. 42a-2A-508. Extension of express or implied warranty. (a) In a consumer lease contract, a lessor’s express or implied warranty made to an immediate consumer lessee extends to any member of the family or household or an invitee to the household of the immediate consumer lessee or a transferee from the immediate consumer lessee who may reasonably be expected to use or be affected by the goods and who suffers damage other than injury to the person resulting from a breach of warranty. The lessor may not disclaim, modify or limit damages arising under this section.

(b) A lessor’s warranty, whether express or implied, extends to any individual who may reasonably be expected to use, consume or be affected by the goods and who is injured in person by breach of the warranty. A lessor may not disclaim or limit the operation of this subsection.

(c) Nothing in this article diminishes the rights and remedies of any third party beneficiary or assignee under the law of contracts or of persons to which goods are transferred by operation of law or displaces any other law that extends a warranty to or for the benefit of any other person.

(d) The scope of any warranty extended under this section to other than the immediate lessee and the remedies for breach of such warranty may be limited by the enforceable terms of the contract between the lessor and the immediate lessee. To the extent not limited:

(1) The scope of the warranty is determined by sections 42a-2A-402, 42a-2A-403, 42a-2A-404 and 42a-2A-405; and

(2) The remedies for breach of warranty for other than the immediate lessee are determined by the terms of the contract between the lessor and the lessee and by this article.

(e) A right of action for breach of warranty under this section accrues under section 42a-2A-705.

(P.A. 02-131, S. 46.)

PART 6

PERFORMANCE OF LEASE CONTRACT:
REPUDIATION, SUBSTITUTION AND EXCUSE

Sec. 42a-2A-601. Right to adequate assurance of performance. (a) A lease contract imposes an obligation on each party not to impair the other’s expectation of receiving due performance. If reasonable grounds for insecurity arise with respect to the performance of either party, the other party may demand in a record adequate assurance of due performance and, until that assurance is received, if commercially reasonable, may suspend any performance for which the agreed return has not already been received.

(b) Between merchants, the reasonableness of grounds for insecurity and the adequacy of any assurance offered is determined according to commercial standards.

(c) Acceptance of improper delivery or payment does not prejudice an aggrieved party’s right to demand adequate assurance of future performance.

(d) After receipt of a demand under subsection (a) of this section, failure to provide within a reasonable time, not exceeding thirty days, assurance of due performance which is adequate under the circumstances of the particular case is a repudiation of the contract under section 42a-2A-602.

(P.A. 02-131, S. 47.)

Sec. 42a-2A-602. Anticipatory repudiation. (a) If either party to a lease contract repudiates a performance not yet due and the loss of performance will substantially impair the value of the lease contract to the other, the aggrieved party may:

(1) Await performance by the repudiating party for a commercially reasonable time, or resort to any remedy for default, even if the aggrieved party has urged the repudiating party to retract the repudiation or has notified the repudiating party that the aggrieved party would await the agreed performance; and

(2) In either case, suspend the aggrieved party’s own performance or, if a lessor, proceed in accordance with section 42a-2A-718.

(b) Repudiation includes language that one party will not or cannot make a performance still due under the contract or voluntary, affirmative conduct that reasonably appears to the other party to make a future performance impossible.

(P.A. 02-131, S. 48.)

Sec. 42a-2A-603. Retraction of anticipatory repudiation. (a) A repudiating party may retract a repudiation until the repudiating party’s next performance is due unless the aggrieved party, after the repudiation, has canceled the lease contract, materially changed the aggrieved party’s position or otherwise indicated that the repudiation is considered to be final.

(b) A retraction may be by any method that clearly indicates to the aggrieved party that the repudiating party intends to perform the contract. However, a retraction must include any assurance justifiably demanded under section 42a-2A-601.

(c) Retraction reinstates a repudiating party’s rights under the lease contract with due excuse and allowance to the aggrieved party for any delay caused by the repudiation.

(P.A. 02-131, S. 49.)

Sec. 42a-2A-604. Substituted performance. (a) If, without the fault of the lessee, lessor or supplier, agreed berthing, loading or unloading facilities or an agreed type of carrier becomes unavailable, or an agreed manner of delivery otherwise becomes commercially impracticable, a party may claim excuse under section 42a-2A-605 unless a commercially reasonable substitute is available. In such case, reasonable substitute performance must be tendered and accepted.

(b) If an agreed means or manner of payment fails because of domestic or foreign governmental statute, regulation or order, the lessor may withhold or stop delivery, or cause the supplier to withhold or stop delivery, until the lessee provides a means or manner of payment which is commercially a substantial equivalent. If delivery has already been made, payment by the means or in the manner provided by such statute, regulation or order discharges the lessee’s obligation unless such statute, regulation or order is discriminatory, oppressive or predatory.

(P.A. 02-131, S. 50.)

Sec. 42a-2A-605. Excuse by failure of presupposed conditions. (a) Subject to section 42a-2A-604 and subsection (b) of this section, delay in performance or nonperformance by the lessor or supplier is not a default under the lease contract if performance as agreed has been made impracticable by:

(1) The occurrence of a contingency the nonoccurrence of which was a basic assumption on which the lease contract was made; or

(2) Compliance in good faith with any applicable foreign or domestic governmental statute, regulation or order, whether or not such statute, regulation or order later proves to be invalid.

(b) A party claiming excuse under subsection (a) of this section shall seasonably notify the other party that there will be delay or nonperformance. If a finance lessor claims excuse under subsection (a) of this section, the finance lessor shall seasonably notify both the lessor and the lessee that there will be delay or nonperformance. If the claimed excuse affects only a part of the lessor’s or supplier’s capacity to perform, the lessor or supplier shall also allocate production and deliveries among its customers in a manner that is fair and reasonable and notify the lessee of the estimated quota made available. In allocating production and deliveries, the lessor or supplier may include regular customers not then under contract as well as its own requirements for further manufacture.

(P.A. 02-131, S. 51.)

Sec. 42a-2A-606. Procedure on notice claiming excuse. (a) A party that receives notice of a material or indefinite delay in performance or an allocation permitted under section 42a-2A-307 or 42a-2A-605 as to any delivery concerned, or of a breach of the whole lease contract under subsection (c) of section 42a-2A-726, by notice in a record may:

(1) Terminate and thereby discharge any unexecuted portion of the lease contract; or

(2) Except in a finance lease that is not a consumer lease, modify the lease contract by agreeing to take the available allocation in substitution under section 42a-2A-605 or by accepting the goods with due allowance from the rent payable for the balance of the lease period for the deficiency as provided in section 42a-2A-604.

(b) If, after receipt of a notice under section 42a-2A-604 or 42a-2A-605, a party does not terminate or modify the lease contract within a reasonable time, not exceeding thirty days, the lease contract is terminated with respect to any performance affected.

(c) This section may be varied by agreement only to the extent that the parties have assumed a different obligation under sections 42a-2A-604 and 42a-2A-605.

(P.A. 02-131, S. 52.)

Sec. 42a-2A-607. Irrevocable promises: Finance leases. (a) In a finance lease that is not a consumer lease, the lessee’s promises under the lease contract become irrevocable and independent upon the lessee’s acceptance of the goods.

(b) A promise that has become irrevocable and independent under subsection (a) of this section:

(1) Is effective and enforceable between the parties and by or against third parties including assignees of the parties; and

(2) Is not subject to cancellation, termination, modification, repudiation, excuse or substitution without the consent of the party to which the promise runs.

(c) This section does not affect the validity under any other law of a covenant in any lease agreement making the lessee’s promises irrevocable and independent upon the lessee’s acceptance of the goods.

(P.A. 02-131, S. 53.)

PART 7

DEFAULT

(A)

GENERAL PROVISIONS

Sec. 42a-2A-701. Subject to general limitations. The remedies of the lessee, lessor and other protected persons under this article are subject to the general limitations and principles stated in sections 42a-2A-702 to 42a-2A-715, inclusive.

(P.A. 02-131, S. 54.)

Sec. 42a-2A-702. Default: Procedure. (a) Whether the lessor or the lessee is in default under a lease contract is determined by the lease agreement and this article.

(b) The cumulative effect of individual, insubstantial defaults may substantially impair the value of the whole lease contract to the other party.

(c) If a party is in default under the lease contract, the party seeking enforcement:

(1) Has the rights and remedies under this article and, except as limited by this article, under the lease agreement.

(2) May reduce its claim to judgment or otherwise enforce the lease contract by self-help or any available administrative or judicial procedure or the like, including arbitration or other dispute resolution procedure if agreed to by the parties; and

(3) May enforce the rights granted by and remedies available under other law.

(d) If the lease agreement covers both real property and goods, the party seeking enforcement may proceed (1) under this part as to the goods, or (2) under other applicable law as to both the real property and the goods in accordance with such party’s rights and remedies in respect of the real property, in which case this part does not apply.

(e) (1) In this subsection, “electronic self-help” means the use of electronic means to exercise a term of the lease agreement with respect to the lessor’s right to take possession of the leased goods or, without removal, to render the leased goods unusable on the lessee’s premises, and includes the use of electronic means to locate leased goods.

(2) Electronic self-help is permitted only if the lessee separately agrees to a term of the lease agreement authorizing electronic self-help that requires notice of exercise as provided in subdivision (3) of this subsection. Except in a consumer lease, the lessee is deemed to have separately agreed to a term of the lease agreement authorizing electronic self-help if a clause is included in the lease agreement that specifically states that electronic self-help is authorized.

(3) Before resorting to electronic self-help authorized by a term of the lease agreement, the lessor shall give notice to the lessee stating:

(A) That the lessor intends to resort to electronic self-help as a remedy on or after fifteen days following communication of the notice to the lessee;

(B) The nature of the claimed breach which entitled the lessor to resort to electronic self-help; and

(C) The name, title, address and telephone number of a person representing the lessor with whom the lessee may communicate concerning the lease agreement.

(4) A lessee may recover damages, including incidental damages, caused by wrongful use of electronic self-help. The lessee may also recover consequential damages for wrongful use of electronic self-help even if such damages are excluded by the terms of the lease agreement.

(5) Even if the lessor complies with subdivisions (2) and (3) of this subsection, electronic self-help may not be used if the lessor has reason to know that such use will result in substantial injury or harm to the public health or safety or grave harm to the public interest substantially affecting third parties not involved in the dispute.

(P.A. 02-131, S. 55; P.A. 03-62, S. 25.)

History: P.A. 03-62 amended Subsec. (e)(1) to replace “lessor’s rights” with “lessor’s right to take possession of the leased goods or, without removal, to render the leased goods unusable on the lessee’s premises” and (e)(2) to add provision that, except in a consumer lease, the lessee is deemed to have separately agreed to a term of the lease agreement authorizing electronic self-help if a clause is included in the lease agreement that specifically states that electronic self-help is authorized.

Sec. 42a-2A-703. Notice after default. Except as otherwise provided in this article or the lease agreement, a lessor or lessee in default under a lease contract is not entitled to notice of default or notice of enforcement from the other party.

(P.A. 02-131, S. 56.)

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.

Sec. 42a-2A-705. Measurement of damages in general. If a default occurs, the aggrieved party may recover compensation for the loss resulting in the ordinary course from the default as determined under sections 42a-2A-716 to 42a-2A-737, inclusive, or as determined in any reasonable manner, together with incidental damages and consequential damages, less expenses and costs saved as a result of the default.

(P.A. 02-131, S. 58.)

Sec. 42a-2A-706. Incidental damages. Incidental damages resulting from a default under a lease contract include compensation for any commercially reasonable charges, expenses or commissions with respect to:

(1) Inspection, receipt, transportation, care or custody of identified goods which are the subject of the default;

(2) Stopping delivery or shipment;

(3) Effecting cover, return or disposition of the goods;

(4) Reasonable efforts otherwise to minimize or avoid the consequences of default; and

(5) Effectuating other remedies after the default or otherwise dealing with the goods.

(P.A. 02-131, S. 59.)

Sec. 42a-2A-707. Consequential damages. Consequential damages resulting from a default include compensation for:

(1) Any loss resulting from the aggrieved party’s general or particular requirements and needs of which the defaulting party at the time of contracting had reason to know and which could not reasonably be prevented; and

(2) Injury to person or property proximately resulting from any breach of warranty.

(P.A. 02-131, S. 60.)

Sec. 42a-2A-708. Specific performance. (a) The court may enter a decree for specific performance if the goods or the agreed performance of the defaulting party are unique or in other proper circumstances. In a lease other than a consumer lease, the court may enter a decree for specific performance if the parties have agreed to such remedy. However, even if the parties agree to specific performance, the court may not enter a decree for specific performance if the breaching party’s sole remaining contractual obligation is the payment of money.

(b) The decree for specific performance may include terms and conditions as to payment of the rent, damages or other relief the court considers just.

(P.A. 02-131, S. 61.)

Sec. 42a-2A-709. Cancellation; effect. (a) An aggrieved party may cancel a lease contract if the conditions of section 42a-2A-716 or 42a-2A-724 are satisfied or the agreement so provides, unless there is a waiver of the default or the right to cancel under section 42a-2A-302 or there is a right to cure the default under section 42a-2A-729.

(b) Upon cancellation, the lessee is subject to the same obligations and duties with respect to goods in the lessee’s possession or control as the lessee would be if the lessee had rejected a nonconforming tender and remained in control of the goods of the lessor or if the lease contract had terminated according to its own terms.

(c) Except as otherwise provided in subsection (e) of this section, upon cancellation, all obligations that are still executory on both sides are discharged.

(d) The obligations surviving cancellation include:

(1) A right based on previous default or performance of the lease contract;

(2) Any term limiting disclosure of information;

(3) An obligation to return or dispose of goods;

(4) A term establishing a choice of law or forum;

(5) A term creating an obligation to arbitrate or otherwise resolve disputes by alternative dispute resolution procedures;

(6) A term limiting the time for commencing an action or for providing notice;

(7) A remedy for breach of the whole lease contract or any unperformed balance;

(8) Any other right, remedy or obligation stated in the agreement as surviving cancellation to the extent enforceable under law other than this article; and

(9) Other rights, remedies or limitations if under the circumstances their survival is necessary to achieve the purposes of the parties.

(e) Unless a contrary intention clearly appears, language of cancellation, rescission or avoidance of the lease contract, or similar language, is not a renunciation or discharge of any claim in damages for an antecedent default.

(P.A. 02-131, S. 62.)

Sec. 42a-2A-710. Liquidation of damages; deposits. (a) Damages for default or any other act or omission, including indemnity for loss or diminution of anticipated tax benefits or loss or damage to the lessor’s residual interest, may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of either the actual loss or the then anticipated loss caused by the default or other act or omission. If a term fixing liquidated damages is unenforceable under this subsection, the aggrieved party may pursue the remedies provided in this article. A term that does not liquidate damages but attempts to limit damages available to the aggrieved party must be evaluated under section 42a-2A-712.

(b) If the lessor justifiably withholds delivery of goods or stops performance because of the lessee’s default or insolvency, the lessee is entitled to restitution of the amount by which the sum of payments exceeds the amount to which the lessor is entitled under a term fixing liquidated damages in accordance with subsection (a) of this section, except that, in the case of a consumer lease, the lessor is entitled to the lesser of such restitution amount or five hundred dollars.

(c) The lessee’s right to restitution under subsection (b) of this section is subject to setoff to the extent that the lessor establishes a right to recover damages under the provisions of this article other than subsection (a) of this section and to the extent of the amount or value of any benefits received by the lessee directly or indirectly by reason of the lease contract.

(P.A. 02-131, S. 63.)

Sec. 42a-2A-711. Contractual modification of remedy. (a) Except as otherwise provided in this article, the lease agreement may include rights and remedies for default in addition to or in substitution for those provided in this article and may, except in a consumer lease, limit or alter the measure of damages recoverable under this article.

(b) Resort to a remedy provided under this article or in the lease agreement is optional unless the remedy is expressly agreed to be exclusive. If circumstances cause an exclusive or limited remedy to fail of its essential purpose, or provision for an exclusive remedy is unconscionable, remedies may be pursued as provided in this article.

(c) Consequential damages may be liquidated under section 42a-2A-710, or may otherwise be limited, altered or excluded unless the limitation, alteration or exclusion is unconscionable. Limitation, alteration or exclusion of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable, but limitation, alteration or exclusion of damages where the loss is commercial is not prima facie unconscionable.

(d) This article does not impair rights and remedies on default by the lessor or the lessee with respect to any obligation or promise collateral or ancillary to the lease contract.

(P.A. 02-131, S. 64.)

Sec. 42a-2A-712. Remedies for misrepresentation or fraud. Remedies for material misrepresentation or fraud include all remedies available under this article for nonfraudulent default. Rescission or a claim for rescission of a lease contract or rejection or return of the goods does not bar and is not inconsistent with a claim for damages or other remedy.

(P.A. 02-131, S. 65.)

Sec. 42a-2A-713. Proof of market rent. (a) Damages based on market rent are determined according to the rent for the use of the goods concerned for a lease term identical to the remaining period of the original lease agreement and prevailing at the times specified in sections 42a-2A-721 and 42a-2A-735.

(b) If evidence of rent for the use of the goods concerned for a period identical to the remaining period of the original lease agreement and prevailing at the times or places described in this article is not readily available, the following rules apply:

(1) The rent prevailing within any reasonable time before or after the time described may be used.

(2) The rent prevailing at any other place or for a different lease period which in commercial judgment or usage of trade is a reasonable substitute may be used, making proper allowance for the difference, including the cost of transporting the goods to or from the other place.

(3) Evidence of a relevant rent prevailing at another time or place or for a lease period other than the period described in this section offered by one party is not admissible unless the party has given the other party notice that the court finds sufficient to prevent unfair surprise.

(c) If the prevailing rent or value of goods regularly leased in any established market is in dispute, reports in official publications or trade journals or in newspapers, periodicals or other means of communication in general circulation and published as the reports of such market, are admissible in evidence. The circumstances of the preparation of such a report may affect the weight of the evidence but not its admissibility.

(P.A. 02-131, S. 66.)

Sec. 42a-2A-714. Liability of third parties for injury to goods. (a) If a third party deals with goods identified to a lease contract and causes actionable injury to the goods, the lessor has a right of action against the third party, and the lessee has a right of action against the third party, if the lessee:

(1) Has a security interest in the goods;

(2) Has an insurable interest in the goods; or

(3) Bears the risk of loss under the lease contract or has, since the injury, assumed such risk as against the lessor and the goods have been converted or destroyed.

(b) If, at the time of the injury, the plaintiff did not bear the risk of loss as against the other party to the lease contract and there is no arrangement between them for disposition of the recovery, any recovery or settlement is subject to the plaintiff’s interest as fiduciary for the other party to the lease contract.

(c) Either party with the consent of the other may maintain an action for the benefit of a concerned party.

(P.A. 02-131, S. 67.)

Sec. 42a-2A-715. Statute of limitations. (a) An action for default under a lease contract, including breach of warranty or indemnity, must be commenced within four years after the right of action has accrued. Except in a consumer lease or an action for indemnity, the original lease agreement may reduce the period of limitations to not less than one year.

(b) Except as otherwise provided in subsection (c) of this section, a right of action accrues when the act or omission on which the default or breach of warranty is based is or should have been discovered by the aggrieved party. A right of action for indemnity accrues when the act or omission on which the claim for indemnity is based is or should have been discovered by the indemnified party.

(c) If an action commenced within the applicable period of limitation is terminated but a remedy by another action for the same default or breach of warranty or indemnity is available, the other action may be commenced after the expiration of the time limitation and within six months after the termination of the first action unless the termination resulted from voluntary discontinuance or from dismissal for failure to prosecute.

(d) This section does not alter the law on tolling of the statute of limitations and does not apply to a right of action that accrued before October 1, 2002.

(P.A. 02-131, S. 68.)

(B)

LESSOR’S REMEDIES

Sec. 42a-2A-716. Lessor’s remedies in general. (a) If the lessee wrongfully rejects or revokes acceptance of goods or fails to make a payment when due or repudiates with respect to a part or the whole, the lessee is in default under the lease contract with respect to any goods involved, and with respect to all of the goods if under an installment lease contract the value of the whole lease contract is substantially impaired, and the lessor may do one or more of the following:

(1) Withhold delivery of the goods and take possession of goods previously delivered;

(2) Stop delivery of the goods by any carrier or bailee under subsection (b) of section 42a-2A-719;

(3) Proceed under section 42a-2A-718 with respect to goods still unidentified to the lease contract or unfinished;

(4) Obtain specific performance under section 42a-2A-708 or recover the rent under section 42a-2A-722;

(5) Dispose of the goods and recover damages under section 42a-2A-720 or retain the goods and recover damages under section 42a-2A-721;

(6) Recover incidental and consequential damages under sections 42a-2A-706 and 42a-2A-707;

(7) Cancel the lease contract under section 42a-2A-709;

(8) Recover liquidated damages under section 42a-2A-710;

(9) Enforce limited remedies under section 42a-2A-711;

(10) Recover damages under section 42a-2A-705; or

(11) Exercise any other rights or pursue any other remedies provided in the lease agreement.

(b) If the lessor does not fully exercise a right or obtain a remedy to which the lessor is entitled under subsection (a) of this section, the lessor may recover the loss resulting in the ordinary course of events from the lessee’s default as determined in any reasonable manner, together with incidental damages, less expenses avoided as a result of the lessee’s default.

(c) If the lessee is otherwise in default under a lease contract, the lessor may exercise the rights and pursue the remedies provided in the lease agreement, which may include a right to cancel the lease. In addition, except as otherwise provided in the lease agreement:

(1) If the default substantially impairs the value of the lease contract to the lessor, the lessor may exercise the rights and pursue the remedies under subsection (a) or (b) of this section; or

(2) If the default does not substantially impair the value of the lease contract to the lessor, the lessor may recover under subsection (b) of this section.

(P.A. 02-131, S. 69.)

Sec. 42a-2A-717. Lessor’s right to possession of goods. (a) Upon a default by the lessee under a lease contract of the type described in subsection (a) or subdivision (1) of subsection (c) of section 42a-2A-716 or, if agreed, upon other default by the lessee, the lessor may take possession of the goods. If the lease agreement so provides, the lessor may require the lessee to assemble the goods and make them available to the lessor at a place to be designated by the lessor which is reasonably convenient to both parties. Without removal, the lessor may render unusable any goods employed in trade or business and may dispose of goods on the lessee’s premises.

(b) A lessor may proceed under subsection (a) of this section without judicial process if it can be done without breach of the peace, or the lessor may proceed by judicial process.

(P.A. 02-131, S. 70.)

Sec. 42a-2A-718. Lessor’s right to identify goods to lease contract despite default or to salvage unfinished goods. (a) Upon default by the lessee under the lease contract of the type described in subsection (a) or subdivision (1) of subsection (c) of section 42a-2A-716 or, if agreed, after other default by the lessee, the lessor may:

(1) Identify to the lease contract conforming goods not already identified if they are in the lessor’s or supplier’s possession or control at the time the lessor learned of the default; and

(2) Dispose of goods that are shown to have been intended for the particular lease contract even if such goods are unfinished.

(b) If goods are unfinished at the time of default, an aggrieved lessor or the supplier, in the exercise of reasonable commercial judgment for the purposes of minimizing loss and of effective realization, may complete the manufacture and wholly identify the goods to the lease contract, cease manufacture and lease, sell or otherwise dispose of the goods for scrap or salvage value, or proceed in any other reasonable manner.

(P.A. 02-131, S. 71.)

Sec. 42a-2A-719. Lessor’s refusal to deliver because of lessee’s insolvency; stoppage in transit or otherwise. (a) A lessor that discovers that the lessee is insolvent may refuse to deliver the goods.

(b) Subject to subsection (d) of this section, the lessor may stop delivery of goods in the possession of a carrier or other bailee if the lessee is insolvent or repudiates or fails to make a payment due before delivery, whether for rent, security or otherwise under the lease contract or if, for any other reason, the lessor has a right to withhold or reclaim the goods.

(c) As against a lessee under subsection (b) of this section, the lessor may stop delivery until:

(1) Receipt of the goods by the lessee;

(2) Acknowledgment to the lessee by any bailee of the goods, other than a carrier, or a carrier by reshipment or as a warehouse, that the bailee holds the goods for the lessee; or

(3) Acknowledgment to the lessee by a carrier by reshipment or as a warehouse that the carrier holds the goods for the lessee.

(d) If notice to stop delivery has been given, the following rules apply:

(1) The notice must afford the carrier or bailee a reasonable opportunity to prevent delivery of the goods.

(2) After notice, the carrier or bailee shall hold and deliver the goods according to the directions of the lessor. The lessor is liable to the bailee or carrier for any resulting charges or damages. A carrier or bailee need not stop delivery if the lessor does not provide indemnity for charges or damages upon the carrier’s or bailee’s demand.

(3) A carrier or bailee that has issued a nonnegotiable document need not obey a notice to stop received from a person other than the person named in the document as the person from which the goods have been received for shipment or storage.

(P.A. 02-131, S. 72; P.A. 04-64, S. 56.)

History: P.A. 04-64 amended Subsec. (c)(2) and (3) by replacing “warehouseman” with “warehouse” to conform to revisions made to article 7 by the same act.

Sec. 42a-2A-720. Lessor’s rights to dispose of goods. (a) Upon a default by a lessee under the lease contract of the type described in subsection (a) or subdivision (1) of subsection (c) of section 42a-2A-716, or upon the lessor’s refusal to deliver or taking possession of goods under section 42a-2A-717 or 42a-2A-719, or, if agreed, upon other default by a lessee, the lessor may dispose of the goods concerned or the undelivered balance thereof by lease, sale or otherwise.

(b) Except as otherwise provided with respect to damages liquidated in the lease agreement or otherwise determined by agreement of the parties, if the disposition is by lease agreement substantially similar to the original lease agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, the lessor may recover from the lessee as damages compensation for:

(1) Accrued and unpaid rent as of the date of the commencement of the period of the new lease agreement;

(2) The present value, as of the same date, of the total rent for the then remaining lease period of the original lease agreement, minus the present value, as of the same date, of the rent under the new lease agreement applicable to that part of the new lease period which is comparable to the then remaining period of the original lease agreement; and

(3) Any incidental damages allowed under section 42a-2A-706, less expenses avoided as a result of the lessee’s default.

(c) If the lessor’s disposition is by a lease agreement that for any reason does not qualify for treatment under subsection (b) of this section, or is by sale or otherwise, the lessor may recover from the lessee as if the lessor had elected not to dispose of the goods, and section 42a-2A-721 governs.

(d) A person that subsequently buys or leases from the lessor in good faith for value as a result of a disposition under this section takes the goods free of the original lease contract and any rights of the original lessee even if the lessor fails to comply with one or more of the requirements of this article.

(e) A lessor is not accountable to the lessee for any profit made on any disposition. A lessee that has rightfully rejected or justifiably revoked acceptance shall account to the lessor for any excess over the amount of the lessee’s security interest.

(P.A. 02-131, S. 73.)

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.

Sec. 42a-2A-722. Lessor’s action for the rent. (a) Upon a default by the lessee under the lease contract of the type described in subsection (a) or subdivision (1) of subsection (c) of section 42a-2A-716 or, if agreed, upon another default by the lessee, if the lessor complies with subsection (c) of this section, the lessor may recover from the lessee the damages specified in subsection (b) of this section for:

(1) Goods accepted by the lessee and not repossessed by or tendered to the lessor;

(2) Goods identified to the lease contract if the lessor is unable after reasonable effort to dispose of them at a reasonable price or the circumstances reasonably indicate such effort will be unavailing; and

(3) Conforming goods lost or damaged after risk of loss passes to the lessee, but if the lessor has retained or regained control of the goods, the loss or damage must occur within a commercially reasonable time after the risk of loss has passed to the lessee.

(b) The damages available under the circumstances described in subsection (a) of this section are:

(1) Accrued and unpaid rent as of the date of entry of judgment in favor of the lessor;

(2) The present value as of the same date of the rent for the then remaining lease term of the lease agreement; and

(3) Any incidental or consequential damages allowed under section 42a-2A-706 or 42a-2A-707, less expenses avoided as a result of the lessee’s default.

(c) Except as otherwise provided in subsection (d) of this section, a lessor shall hold for the lessee for the remaining period of the lease agreement any goods that have been identified to the lease contract and are in the lessor’s control.

(d) A lessor may dispose of the goods at any time before collection of the judgment for damages obtained pursuant to subsection (a) of this section. If the disposition is before the end of the remaining period of the lease agreement, the lessor’s recovery against the lessee for damages is governed by section 42a-2A-720 or 42a-2A-721, and the lessor shall provide an appropriate credit against a judgment for damages to the extent that the amount of the judgment exceeds the recovery available under section 42a-2A-720 or 42a-2A-721.

(e) Payment of the judgment for damages obtained under subsection (a) of this section entitles the lessee to the use and possession of the goods not then disposed of for the remaining period of, and in accordance with, the lease agreement.

(f) Upon default by the lessee under the lease contract of the type described in subsection (a) or subdivision (1) of subsection (c) of section 42a-2A-716 or, if agreed, upon other default by the lessee, a lessor that is not entitled to rent under this section is still entitled to damages for nonacceptance under section 42a-2A-720 or 42a-2A-721.

(P.A. 02-131, S. 75.)

Sec. 42a-2A-723. Lessor’s rights to residual interest. In addition to any other recovery permitted by this article or other law, a lessor may recover from a lessee an amount that will fully compensate the lessor for any loss of or damage to the lessor’s residual interest in the goods caused by the lessee’s default.

(P.A. 02-131, S. 76.)

(C)

LESSEE’S REMEDIES

Sec. 42a-2A-724. Lessee’s remedies in general; lessee’s security interest in rejected goods. (a) If the lessor fails to deliver the goods in conformity to the lease contract or repudiates the contract, or a lessee rightfully rejects the goods or justifiably revokes acceptance of the goods, with respect to any goods involved and with respect to all of the goods if under an installment lease contract the value of the whole lease contract is substantially impaired, the lessor is in default under the lease contract, and the lessee may do one or more of the following:

(1) Cancel the lease contract under section 42a-2A-709;

(2) Recover so much of the rent and security as has been paid and is just under the circumstances;

(3) Cover and obtain damages under section 42a-2A-734;

(4) Recover damages for nondelivery under section 42a-2A-735;

(5) If an acceptance of goods has not been justifiably revoked, recover damages for default with regard to accepted goods under section 42a-2A-736;

(6) Enforce a security interest under subsection (d) of this section;

(7) Recover identified goods under section 42a-2A-737;

(8) Obtain specific performance under section 42a-2A-708;

(9) Recover incidental and consequential damages under sections 42a-2A-706 and 42a-2A-707;

(10) Recover liquidated damages under section 42a-2A-710;

(11) Enforce limited remedies under section 42a-2A-711;

(12) Recover damages under section 42a-2A-705; or

(13) Exercise any other rights or pursue any other remedy provided in the lease contract.

(b) If the lessor is otherwise in default under a lease contract, the lessee may exercise the rights and pursue the remedies provided in the lease agreement, which may include a right to cancel the lease, and the rights and remedies under subsection (a) of section 42a-2A-736.

(c) If a lessor has breached a warranty, whether express or implied, the lessee may recover damages under subsection (b) of section 42a-2A-736.

(d) On rightful rejection or justifiable revocation of acceptance, a lessee has a security interest in goods in the lessee’s possession or control for any rent and security that has been paid and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody. In such case, the lessee may hold the goods and dispose of them in good faith and in a commercially reasonable manner. The disposition is subject to subsections (d) and (e) of section 42a-2A-720.

(e) Subject to section 42a-2A-607, a lessee, on so notifying the lessor, may deduct all or any part of the damages resulting from any default under the lease contract from any part of the rent still due under the same contract.

(P.A. 02-131, S. 77.)

Sec. 42a-2A-725. Lessee’s rights on nonconforming delivery; rightful rejection. (a) Subject to sections 42a-2A-710, 42a-2A-711 and 42a-2A-726, if the goods or the tender or delivery fail in any respect to conform to the lease contract, the lessee may:

(1) Reject the whole;

(2) Accept the whole; or

(3) Accept any commercial unit or units and reject the rest.

(b) Rejection of goods must be within a reasonable time after their delivery or tender and is not effective unless the lessee notifies the lessor within a reasonable time.

(P.A. 02-131, S. 78.)

Sec. 42a-2A-726. Installment lease contract: Default. (a) In this section, “installment lease contract” means a lease contract in which the terms require or the circumstances permit the delivery of goods in separate lots to be separately accepted, even if the lease agreement requires payment other than in installments or contains a term stating “Each delivery is a separate lease”, or words of similar import.

(b) In an installment lease contract, the lessee may reject any nonconforming installment of delivery of goods if the nonconformity of the goods substantially impairs the value of such installment to the buyer.

(c) If a nonconformity or default with respect to one or more installments in an installment lease contract is a substantial impairment of the value to the aggrieved party of the whole lease contract, there is a breach of the whole lease contract and the aggrieved party may reject any nonconforming unaccepted installment and cancel the installment lease contract. If the aggrieved party accepts a nonconforming installment without seasonably giving notice of cancellation, brings an action with respect only to past installments or demands performance as to future installments, the installment lease contract has not been canceled.

(P.A. 02-131, S. 79.)

Sec. 42a-2A-727. Merchant lessee’s duties; lessee’s options as to salvage. (a) Subject to a lessee’s security interest under subsection (d) of section 42a-2A-724, if the lessor or supplier does not have an agent or place of business at the market where the goods were rejected or acceptance was revoked, a merchant lessee, after an effective rejection or justifiable revocation of acceptance of goods in the lessee’s possession or control, shall follow any reasonable instructions received from the lessor or supplier with respect to the goods. In the absence of such instructions, a merchant lessee shall make a reasonable effort to sell, lease or otherwise dispose of the goods for the lessor’s account if the goods threaten to decline speedily in value. In the case of a rightful rejection or justifiable revocation of acceptance, instructions are not reasonable if, on demand, indemnity for expenses is not forthcoming.

(b) In the case of a rightful rejection or justifiable revocation of acceptance:

(1) A merchant lessee that sells or leases goods under subsection (a) of this section is entitled to reimbursement from the lessor or supplier, or out of the proceeds, for the reasonable expenses of caring for and disposing of the goods.

(2) If the expenses under subdivision (1) of this subsection do not include a disposition commission, the lessee is entitled to a commission usual in the trade or, if there is none, to a reasonable sum not exceeding ten per cent of the gross proceeds.

(c) Except as otherwise provided in subsection (a) of this section, after an effective rejection or a justifiable revocation of acceptance, a lessee may store the rejected goods for the account of the lessor or supplier, reship them to the lessor or supplier, or resell them for the account of the lessor or supplier, with reimbursement in the case of a rightful rejection or a justifiable revocation of acceptance as provided in subsection (b) of this section.

(d) In complying with this section or section 42a-2A-728, the lessee shall act in good faith. Conduct in good faith under this section does not constitute acceptance or conversion and may not be the basis of a claim for damages.

(e) A person that purchases in good faith from a lessee under this section or section 42a-2A-728 takes the goods free of any rights of the lessor and the supplier, even if the lessee fails to comply with the requirements of this article.

(P.A. 02-131, S. 80.)

Sec. 42a-2A-728. Lessee’s duties as to rightfully rejected goods. (a) Subject to subsection (d) of section 42a-2A-724 and section 42a-2A-727, after an effective rejection or justifiable revocation of acceptance, a lessee in physical possession of the goods shall hold the goods with reasonable care at the lessor’s or supplier’s disposition for a sufficient time to permit the lessor or supplier to remove them. However, the lessee has no further obligation with regard to goods rightfully rejected or to which an acceptance has been justifiably revoked.

(b) An action by the lessee under subsection (a) of this section is not acceptance or conversion.

(P.A. 02-131, S. 81.)

Sec. 42a-2A-729. Cure. (a) If a lessee rightfully rejects goods or a tender of delivery under section 42a-2A-725 or justifiably revokes an acceptance under section 42a-2A-733 and the agreed time for performance has not expired, the lessor or supplier, upon seasonable notice to the buyer and at the lessor’s or supplier’s own expense, may cure any default by making a conforming tender of delivery within the agreed time. The lessor is obligated to compensate the lessee for all of the lessee’s reasonable and necessary expenses caused by the nonconforming tender and subsequent cure.

(b) If a lessee rightfully rejects goods or a tender of delivery under section 42a-2A-725 or justifiably revokes acceptance under section 42a-2A-733 and the agreed time for performance has expired, the lessor or supplier, upon seasonable notice to the lessee and at the lessor’s or supplier’s own expense, may cure a default, if the cure is appropriate and timely under the circumstances, by making a tender of conforming goods. The lessor or supplier is obligated to compensate the lessee for all of the lessee’s reasonable and necessary expenses caused by the nonconforming tender and subsequent cure.

(P.A. 02-131, S. 82.)

Sec. 42a-2A-730. What constitutes acceptance of goods. (a) Goods are accepted when the lessee:

(1) After a reasonable opportunity to inspect the goods, signifies to the lessor or the supplier that the goods conform or will be taken or retained in spite of their nonconformity;

(2) After a reasonable opportunity to inspect the goods, fails to make an effective rejection; or

(3) Does any act inconsistent with the interest of the lessor or supplier in the goods or inconsistent with the lessor’s claim of rejection or revocation of acceptance and the act is ratified by the lessor or supplier as an acceptance.

(b) Acceptance of a part of a commercial unit is acceptance of the entire unit.

(P.A. 02-131, S. 83.)

Sec. 42a-2A-731. Waiver of default; particularization of nonconformity. A lessee is precluded from relying on a nonconforming performance as follows:

(1) The lessee’s failure to state, in connection with a rejection under section 42a-2A-725, a particular nonconformity that is ascertainable by reasonable inspection precludes reliance on the unstated nonconformity to justify rejection or to establish default if:

(A) The lessor, upon a seasonable particularization, had a right to cure under section 42a-2A-729 and would have cured the nonconformity; or

(B) Between merchants, the lessor or the supplier after rejection has made a request in a record for a full and final statement in a record of all nonconformities on which the lessee proposes to rely.

(2) The lessee’s failure to state, in connection with a revocation of acceptance under section 42a-2A-733, the nonconformity that justifies the revocation precludes the lessee from relying on the nonconformity to justify the revocation or to establish default if the lessor had a right to cure the default under section 42a-2A-729 and could have cured the breach.

(P.A. 02-131, S. 84.)

Sec. 42a-2A-732. Effect of acceptance; notice of default; burden of establishing default after acceptance; notice of claim or litigation to person answerable over. (a) A lessee shall pay rent in accordance with the lease contract for any goods accepted.

(b) Acceptance of goods by a lessee precludes rejection of the goods accepted but does not by itself impair any other remedy provided by this article or the lease agreement for nonconformity.

(c) If a tender of delivery has been accepted, the following rules apply:

(1) The lessee, or a person entitled to enforce a warranty or warranty obligation, shall notify the party claimed against within a reasonable time after the default or breach of warranty was discovered or should have been discovered. However, a failure to give timely notice bars the lessee from a remedy only to the extent that the party entitled to notice establishes that the party was prejudiced by the failure.

(2) Except in the case of a consumer lease, if a claim for infringement or the like is made against a lessee for which a lessor or supplier is answerable over and the lessee is sued as a result of such claim, the lessee shall notify the lessor or supplier within a reasonable time after receiving notice of the litigation or be barred from any remedy over for liability established by the litigation.

(d) A lessee has the burden of establishing a default with respect to goods accepted. A person entitled to enforce a warranty obligation under section 42a-2A-508 has the burden of establishing that the warranty was breached.

(e) In a claim for breach of a warranty, indemnity or other obligation against the lessee for which another party is answerable over, the following rules apply:

(1) The lessee may give notice of the litigation to the other party in a record, and the person notified may then give similar notice of the litigation to any other person that is answerable over. If the notice invites the person notified to intervene in the litigation and defend and states that failure to do so will bind the person notified in any action later brought by the lessor as to any determination of fact common to the two actions, the person notified is so bound, unless, after seasonable receipt of the notice, the person notified intervenes in the litigation and defends.

(2) If the claim is one for infringement or the like, the original lessor or supplier may demand in a record that its lessee turn over control of the litigation, including settlement, or otherwise be barred from any remedy over. If the lessor or supplier also agrees to bear all expense and to satisfy any adverse judgment, the lessee is so barred unless, after seasonable receipt of the demand, control is turned over to the lessor or supplier.

(f) Subsections (c), (d) and (e) of this section apply to an obligation of a lessee to hold the lessor or the supplier harmless against infringement or the like.

(P.A. 02-131, S. 85.)

Sec. 42a-2A-733. Revocation of acceptance of goods. (a) A lessee may revoke acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the lessee if the lot or unit was accepted:

(1) Except in the case of a finance lease, on the reasonable assumption that its nonconformity would be cured and the nonconformity has not been seasonably cured; or

(2) Without discovery of its nonconformity if acceptance was reasonably induced either by the lessor’s assurances or, except in the case of a finance lease, by the difficulty of discovery before acceptance.

(b) Except in the case of a finance lease that is not a consumer lease, a lessee may revoke acceptance of a lot or commercial unit if the lessor defaults under the lease contract and the default substantially impairs the value of such lot or commercial unit to the lessee.

(c) If the lease agreement so provides, the lessee may revoke acceptance of a lot or commercial unit because of other defaults by the lessor.

(d) A lessee’s acceptance must be revoked under subsections (a) and (b) of this section within a reasonable time after the lessee discovers or should have discovered the grounds for it and before any substantial change in condition of the goods which is not caused by their own defects. The revocation is not effective until the lessee notifies the lessor of the revocation.

(e) A lessee that justifiably revokes acceptance has the same rights and duties under sections 42a-2A-727 and 42a-2A-728 with regard to the goods involved as if the goods had been rejected.

(P.A. 02-131, S. 86.)

Sec. 42a-2A-734. Cover; lessee’s acquisition of substitute goods. (a) Upon a default by a lessor under the lease contract of the type described in subsection (a) of section 42a-2A-724 or, if agreed, upon other default by the lessor, the lessee may cover by making in good faith and without unreasonable delay any purchase or lease of, or contract to purchase or lease, comparable goods to substitute for those due from the lessor.

(b) Except as otherwise provided with respect to damages liquidated in the lease agreement or determined by agreement of the parties, if a lessee’s cover is by a lease contract substantially similar to the original lease contract and the new lease contract is made in good faith and in a commercially reasonable manner, a lessee that covers in the manner required by subsection (a) of this section may recover damages measured by the present value, as of the date of the commencement of the period of the new lease contract, of the rent under the new lease contract applicable to that part of the new lease period which is comparable to the then remaining period of the original lease contract minus the present value as of the same date of the total rent for the then remaining lease period of the original lease contract together with any incidental or consequential damages, less expenses avoided as a result of the lessor’s default.

(c) If a lessee’s cover is by a lease agreement that for any reason does not qualify for treatment under subsection (b) of this section, or is by purchase or otherwise, the lessee may recover from the lessor as if the lessee had elected not to cover, and section 42a-2A-735 governs.

(P.A. 02-131, S. 87.)

Sec. 42a-2A-735. Lessee’s damages for nondelivery, repudiation, default and breach of warranty in regard to accepted goods. (a) Except as otherwise provided with respect to damages liquidated in the lease agreement or otherwise determined by agreement of the parties, 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 section 42a-2A-734, 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 period 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 determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.

(P.A. 02-131, S. 88.)

Sec. 42a-2A-736. Lessee’s damages for default regarding accepted goods. (a) Except as otherwise agreed, a lessee that has accepted goods and not justifiably revoked acceptance and has given notice pursuant to subsection (c) of section 42a-2A-732 may recover as damages for any nonconforming tender or other default by a lessor the loss resulting in the ordinary course of events from the lessor’s default as determined in any reasonable manner.

(b) Except as otherwise agreed, a measure of damages for breach of a warranty of quality 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 the value if the goods had been as warranted for the lease period, unless special circumstances show proximate damages of a different amount.

(c) A lessee may also recover incidental and consequential damages.

(P.A. 02-131, S. 89.)

Sec. 42a-2A-737. Prepaying lessee’s right to goods. (a) A lessee that pays all or a part of the rent or security for goods identified to the lease contract, whether or not the goods have been shipped, on making and keeping good a tender of any unpaid portion of the rent and security due under the lease contract, has a right to recover the goods from the lessor if the lessor repudiates or fails to deliver as required by the lease contract.

(b) A lessee may recover from the lessor by replevin, detinue, sequestration, claim and delivery, or the like, goods identified to the lease contract if, after reasonable efforts, the lessee is unable to effect cover for the goods or the circumstances reasonably indicate that an effort to obtain cover would be unavailing.

(c) If the requirements of subsection (a) or (b) of this section are satisfied, the lessor’s right vests upon identification of the goods to the lease contract even if the lessor has not then repudiated the lease contract or failed to deliver as required by the lease contract.

(P.A. 02-131, S. 90.)