41-02.1-64. (2A-516) Effect of acceptance of goods - Notice of default - Burden of
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establishing default after acceptance - Notice of claim or litigation to person answerable over.
1. A lessee must pay rent for any goods accepted in accordance with the lease contract,
with due allowance for goods rightfully rejected or not delivered.
2. A lessee's acceptance of goods precludes rejection of the goods accepted. In the case
of a finance lease, if made with knowledge of a nonconformity, acceptance cannot be
revoked because of it. In any other case, if made with knowledge of a nonconformity,
acceptance cannot be revoked because of it unless the acceptance was on the
reasonable assumption that the nonconformity would be seasonably cured.
Acceptance does not of itself impair any other remedy provided by this chapter or the
lease agreement for nonconformity. 3. If a tender has been accepted:
a. Within a reasonable time after the lessee discovers or should have discovered
any default, the lessee shall notify the lessor and the supplier, if any, or be barred
from any remedy against the party not notified;
b. Except in the case of a consumer lease, within a reasonable time after the lessee
receives notice of litigation for infringement or the like (section 41-02.1-20) the
lessee shall notify the lessor or be barred from any remedy over for liability
established by the litigation; and
c. The burden is on the lessee to establish any default. 4. If a lessee is sued for breach of a warranty or other obligation for which a lessor or a
supplier is answerable over:
a. The lessee may give the lessor or the supplier written notice of the litigation. If the
notice states that the lessor or the supplier may come in and defend and that if
the lessor or the supplier does not do so, the lessor or the supplier will be bound
in any action by the lessee by any determination of fact common to the two
litigations, then unless the lessor or the supplier after seasonable receipt of the
notice does come in and defend the lessor or the supplier is so bound.
b. The lessor or the supplier may demand in writing that the lessee turn over control
of the litigation including settlement if the claim is one for infringement or the like
(section 41-02.1-20) or else be barred from any remedy over. If the demand
states that the lessor or the supplier agrees to bear all expense and to satisfy any
adverse judgment, then unless the lessee after seasonable receipt of the demand
does turn over control the lessee is so barred. 5. The provisions of subsections 3 and 4 apply to any obligation of a lessee to hold the
lessor or the supplier harmless against infringement or the like (section 41-02.1-20).
41-02.1-65. (2A-517) Revocation of acceptance of goods. 1. A lessee may revoke acceptance of a lot or commercial unit whose nonconformity
substantially impairs its value to the lessee if:
a. Except in the case of a finance lease, on the reasonable assumption that its
nonconformity would be cured and it has not been seasonably cured; or
b. Without discovery of the nonconformity if the lessee's 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. 2. 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 commits a default under the
lease contract which substantially impairs the value of that lot or commercial unit to the
lessee. 3. If the lease agreement so provides, the lessee may revoke acceptance of a lot or
commercial unit for other defaults by the lessor. 4. Revocation of acceptance must occur within a reasonable time after the lessee
discovers or should have discovered the ground for it and before any substantial
change in condition of the goods which is not caused by the nonconformity.
Revocation is not effective until the lessee notifies the lessor. 5. A lessee who so revokes has the same rights and duties with regard to the goods
involved as if the lessee had rejected them.
41-02.1-66. (2A-518) Cover - Substitute goods. 1. After default by a lessor under the lease contract as described in subsection 1 of
section 41-02.1-56 or, if agreed, after other default by the lessor, the lessee may cover
by making any purchase or lease of or contract to purchase or lease goods in
substitution for those due from the lessor. 2. Except as otherwise provided with respect to damages liquidated in the lease
agreement (section 41-02.1-52) or determined by agreement of the parties (sections
41-01-16 and 41-02.1-51), if a lessee's cover 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 lessee may recover from the
lessor as damages the present value, as of the date of the commencement of the term
of the new lease agreement, of the rent under the new lease agreement applicable to
that period of the new lease term which is comparable to the then remaining term of
the original lease agreement minus the present value as of the same date of the total
rent for the then remaining lease term of the original lease agreement, and any
incidental or consequential damages, less expenses saved in consequence of the
lessor's default.
3. If a lessee's cover is by lease agreement that for any reason does not qualify for
treatment under subsection 2, or is by purchase or otherwise, the lessee may recover
from the lessor as if the lessee had elected not to cover and section 41-02.1-67
governs.