41-02.1-54. (2A-506) Statute of limitations.
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1. An action for default under a lease contract, including breach of warranty or indemnity,
must be commenced within four years after the cause of action accrued. By the
original lease contract the parties may reduce the period of limitation to not less than
one year.
2. A cause of action for default 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,
or when the default occurs, whichever is later. A cause 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, whichever is later.
3. If an action commenced within the time limited by subsection 1 is so terminated as to
leave available a remedy by another action for the same default or breach of warranty
or indemnity, the other action may be commenced after the expiration of the time
limited and within six months after the termination of the first action unless the
termination resulted from voluntary discontinuance or from dismissal for failure or
neglect to prosecute. 4. This section does not alter the law on tolling of the statute of limitations nor does it
apply to causes of action that have accrued before this chapter becomes effective.
41-02.1-55. (2A-507) Proof of market rent - Time and place. 1. Damages based on market rent (section 41-02.1-67 or 41-02.1-76) are determined
according to the rent for the use of the goods concerned for a lease term identical to
the remaining lease term of the original lease agreement and prevailing at the time of
the default. 2. If evidence of rent for the use of the goods concerned for a lease term identical to the
remaining lease term of the original lease agreement and prevailing at the times or
places described in this chapter is not readily available, the rent prevailing within any
reasonable time before or after the time described or at any other place or for a
different lease term which in commercial judgment or under usage of trade would
serve as a reasonable substitute for the one described may be used, making any
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 a time or place or for a lease term other than
the one described in this chapter offered by one party is not admissible unless and
until the party has given the other party notice that the court finds sufficient to prevent
unfair surprise. 4. If the prevailing rent or value of any goods regularly leased in any established market
is in issue, reports in official publications or trade journals or in newspapers or
periodicals of general circulation published as the reports of that market are admissible
in evidence. The circumstances of the preparation of the report may be shown to affect
its weight but not its admissibility.
41-02.1-56. (2A-508) Lessee's remedies. 1. If a lessor fails to deliver the goods in conformity to the lease contract (section
41-02.1-57) or repudiates the lease contract (section 41-02.1-43), or a lessee rightfully
rejects the goods (section 41-02.1-57) or justifiably revokes acceptance of the goods
(section 41-02.1-65), then 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 (section 41-02.1-58), the lessor is in default under the lease
contract and the lessee may:
a. Cancel the lease contract (subsection 1 of section 41-02.1-53).
b. Recover so much of the rent and security as has been paid as is just under the
circumstances.
c. Cover and recover damages as to all goods affected whether or not they have
been identified to the lease contract (sections 41-02.1-66 and 41-02.1-68), or
recover damages for nondelivery (sections 41-02.1-67 and 41-02.1-68).
d. Exercise any other rights or remedies provided in the lease contract. 2. If a lessor fails to deliver the goods in conformity to the lease contract or repudiates
the lease contract, the lessee may also:
a. If the goods have been identified, recover them (section 41-02.1-70); or
b. In a proper case, obtain specific performance or replevy the goods (section
41-02.1-80). 3. If a lessor is otherwise in default under a lease contract, the lessee may exercise the
rights and remedies provided in the lease contract, which may include a right to cancel
the lease, and under subsection 3 of section 41-02.1-67. 4. If a lessor has breached a warranty, whether express or implied, the lessee may
recover damages (subsection 4 of section 41-02.1-67). 5. 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, and care and custody and may hold those goods and dispose of them
in good faith and in a commercially reasonable manner, subject to the provisions of
subsection 5 of section 41-02.1-75. 6. Subject to the provisions of section 41-02.1-48, a lessee, on notifying the lessor of the
lessee's intention to do so, 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
lease contract.
41-02.1-57. (2A-509) Lessee's rights on improper delivery - Rightful rejection. 1. Subject to the provisions of section 41-02.1-58 on default in installment lease
contracts, if the goods or the tender or delivery fail in any respect to conform to the
lease contract, the lessee may reject or accept the goods or accept any commercial
unit or units and reject the rest of the goods. 2. Rejection of goods is ineffective unless it is within a reasonable time after tender or
delivery of the goods and the lessee seasonably notifies the lessor.
41-02.1-58. (2A-510) Installment lease contracts - Rejection and default. 1. Under an installment lease contract, a lessee may reject any delivery that is
nonconforming if the nonconformity substantially impairs the value of that delivery and
cannot be cured or the nonconformity is a defect in the required documents. If,
however, the nonconformity does not fall within subsection 2 and the lessor or the
supplier gives adequate assurance of its cure, the lessee must accept that delivery. 2. Whenever nonconformity or default with respect to one or more deliveries substantially
impairs the value of the installment lease contract as a whole, there is a default with
respect to the whole. But, the aggrieved party reinstates the installment lease contract
as a whole if the aggrieved party accepts a nonconforming delivery without seasonably
notifying of cancellation or brings an action with respect only to past deliveries or
demands performance as to future deliveries.
41-02.1-59. (2A-511) Merchant lessee's duties as to rightfully rejected goods. 1. Subject to any security interest of a lessee (subsection 5 of section 41-02.1-56), if a
lessor or a supplier has no agent or place of business at the market of rejection, a
merchant lessee, after rejection of goods in the merchant lessee's possession or
control, shall follow any reasonable instructions received from the lessor or the
supplier with respect to the goods. In the absence of those instructions, a merchant
lessee shall make reasonable efforts to sell, lease, or otherwise dispose of the goods
for the lessor's account if they threaten to decline in value speedily. Instructions are not
reasonable if on demand indemnity for expenses is not forthcoming. 2. If a merchant lessee or any other lessee (section 41-02.1-60) disposes of goods, the
lessee is entitled to reimbursement either from the lessor or the supplier or out of the
proceeds for reasonable expenses of caring for and disposing of the goods and, if the
expenses include no disposition commission, to such commission as is usual in the
trade, or if there is none, to a reasonable sum not exceeding ten percent of the gross
proceeds. 3. In complying with this section or section 41-02.1-60, the lessee is held only to good
faith. Good-faith conduct hereunder is neither acceptance or conversion nor the basis
of an action for damages. 4. A purchaser who purchases in good faith from a lessee under this section or section
41-02.1-60 takes the goods free of any rights of the lessor and the supplier even
though the lessee fails to comply with one or more of the requirements of this chapter.
41-02.1-60. (2A-512) Lessee's duties as to rightfully rejected goods. 1. Except as otherwise provided with respect to goods that threaten to decline in value
speedily (section 41-02.1-59) and subject to any security interest of a lessee
(subsection 5 of section 41-02.1-56):
a. The lessee, after rejection of goods in the lessee's possession, shall hold them
with reasonable care at the lessor's or the supplier's disposition for a reasonable
time after the lessee's seasonable notification of rejection;
b. If the lessor or the supplier gives no instructions within a reasonable time after
notification of rejection, the lessee may store the rejected goods for the lessor's
or the supplier's account or ship them to the lessor or the supplier or dispose of
them for the lessor's or the supplier's account with reimbursement in the manner
provided in section 41-02.1-59; but
c. The lessee has no further obligations with regard to goods rightfully rejected.
2. Action by the lessee pursuant to subsection 1 is not acceptance or conversion.