41-02.1-33. (2A-303) Alienability of party's interest under lease contract or of lessor's
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/nd/title-41/chapter-41-02-1-leases/41-02-1-33·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
residual interest in goods - Delegation of performance - Transfer of rights.
1. Except as provided in subsection 3 and section 41-09-69, a provision in a lease
agreement that 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 that makes such a transfer an event of
default, is enforceable as provided in subsection 3, but a transfer that is prohibited or
is an event of default under the lease agreement is otherwise effective. "Creation of a
security interest" as used in this section includes the sale of a lease contract that is
subject to chapter 41-09. 2. A transfer of a right to damages for default with respect to the whole lease contract or
a transfer of a right to payment arising out of the transferor's due performance of the
transferor's entire obligation, which includes the creation of a security interest in the
right to future payment under a lease contract that is granted by a lessor who has no
remaining performance under the lease contract, may not be prohibited or made an
event of default and 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 subsection 3. 3. Subject to subsection 2 and section 41-09-69, if a transfer is made that is prohibited or
is an event of default under a lease agreement, or if a transfer is made 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, unless the party prejudiced by the transfer agrees at any time to the transfer
in the lease contract or otherwise, then that party has, if the transfer is made an event
of default, the rights and remedies provided under subsection 2 of section 41-02.1-48.
In all other cases, except as limited by contract, the transferor is liable to the
prejudiced party for damages caused by the transfer to the extent the damages could
not reasonably be prevented by the prejudiced party. A court having jurisdiction may
grant other appropriate relief, including cancellation of the lease contract or an
injunction against the transfer. 4. 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 and acceptance by the transferee constitutes a promise
by the transferee to perform those duties. This promise is enforceable by either the
transferor or the other party to the lease contract. 5. Unless otherwise agreed by the lessor and the lessee, no delegation of performance
relieves the transferor as against the other party of any duty to perform or any liability
for default. 6. To prohibit the transfer of an interest of a party under a consumer lease contract or to
make a transfer an event of default, the language must be specific, by a writing, and
conspicuous.
41-02.1-34. (2A-304) Subsequent lease of goods by lessor. 1. Subject to section 41-02.1-33, 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 in the goods that the lessor had or had power to transfer, and except
as provided in subsections 2 and 4 of section 41-02.1-75, takes subject to the existing
lease contract. A lessor with voidable title has power to transfer a good leasehold
interest to a good-faith subsequent lessee for value, but only to the extent set forth in
the preceding sentence. When goods have been delivered under a transaction of
purchase, the lessor has that power even though any of the following are met:
a. The lessor's transferor was deceived as to the identity of the lessor.
b. The delivery was in exchange for a check which is later dishonored.
c. It was agreed that the transaction was to be a "cash sale".
d. The delivery was procured through fraud punishable as larcenous under the
criminal law. 2. A subsequent lessee in the ordinary course of business from a lessor who is a
merchant dealing in goods of that kind to whom the goods were entrusted by the
existing lessee of that lessor before the interest of the subsequent lessee became
enforceable against that lessor obtains, to the extent of the leasehold interest
transferred, all of the lessor's and the existing lessee's rights to the goods, and takes
free of the existing lease contract.
3. 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.