41-02.1-68. (2A-520) Lessee's incidental and consequential damages.
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/nd/title-41/chapter-41-02-1-leases/41-02-1-68·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
1. Incidental damages resulting from a lessor's default include expenses reasonably
incurred in inspection, receipt, transportation, and care and custody of goods rightfully
rejected or goods the acceptance of which is justifiably revoked, any commercially
reasonable charges, expenses, or commissions in connection with effecting cover, and
any other reasonable expense incident to the default.
2. Consequential damages resulting from a lessor's default include:
a. Any loss resulting from general or particular requirements and needs of which the
lessor at the time of contracting had reason to know and which could not
reasonably be prevented by cover or otherwise; and
b. Injury to person or property proximately resulting from any breach of warranty.
41-02.1-69. (2A-521) Lessee's right to specific performance or replevin. 1. Specific performance may be decreed if the goods are unique or in other proper
circumstances. 2. A decree for specific performance may include any terms and conditions as to
payment of the rent, damages, or other relief that the court deems just. 3. A lessee has a right of replevin, detinue, sequestration, claim and delivery, or the like
for goods identified to the lease contract if after reasonable effort the lessee is unable
to effect cover for those goods or the circumstances reasonably indicate that the effort
will be unavailing.
41-02.1-70. (2A-522) Lessee's right to goods on lessor's insolvency. 1. Subject to subsection 2 and even though the goods have not been shipped, a lessee
who has paid a part or all of the rent and security for goods identified to a lease
contract (section 41-02.1-26) on making and keeping good a tender of any unpaid
portion of the rent and security due under the lease contract may recover the goods
identified to a lease contract only if they conform to the lease contract. 2. A lessee acquires the right to recover goods identified to a lease contract only if they
conform to the lease contract.
41-02.1-71. (2A-523) Lessor's remedies. 1. If a 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, 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 lessee is in default under the lease contract and the lessor may:
a. Cancel the lease contract (subsection 1 of section 41-02.1-53).
b. Proceed respecting goods not identified to the lease contract (section
41-02.1-72).
c. Withhold delivery of the goods and take possession of goods previously delivered
(section 41-02.1-73).
d. Stop delivery of the goods by any bailee (section 41-02.1-74).
e. Dispose of the goods and recover damages (section 41-02.1-75), or retain the
goods and recover damages (section 41-02.1-76), or in a proper case recover
rent (section 41-02.1-77).
f. Exercise any other rights or remedies provided in the lease contract. 2. If a lessor does not exercise the rights to which the lessor is entitled under
subsection 1, the lessor may recover the loss resulting in the ordinary course of events
from the lessee's default as determined in any manner which is reasonable, together
with incidental damages, less expenses saved in consequence of the lessee's default. 3. If a lessee is otherwise in default under a lease contract, the lessor may exercise the
rights and remedies provided in the lease contract, which may include a right to cancel
the lease, and unless otherwise provided in the lease contract:
a. If the default substantially impairs the value of the lease contract to the lessor, the
lessor may exercise the rights and remedies provided under subsection 1 or 2.
b. If the default does not substantially impair the value of the lease contract to the
lessor, the lessor may recover under subsection 2.
41-02.1-72. (2A-524) Lessor's right to identify goods to lease contract. 1. A lessor aggrieved under subsection 1 of section 41-02.1-70 may:
a. Identify to the lease contract conforming goods not already identified if at the time
the lessor learned of the default they were in the lessor's or the supplier's
possession or control; and
b. Dispose of goods (subsection 1 of section 41-02.1-74) that demonstrably have
been intended for the particular lease contract even though those goods are
unfinished.
2. If the goods are unfinished, in the exercise of reasonable commercial judgment for the
purposes of avoiding loss and of effective realization, an aggrieved lessor or the
supplier may either complete manufacture and wholly identify the goods to the lease
contract or cease manufacture and lease, sell, or otherwise dispose of the goods for
scrap or salvage value or proceed in any other reasonable manner.
41-02.1-73. (2A-525) Lessor's right to possession of goods. 1. If a lessor discovers the lessee to be insolvent, the lessor may refuse to deliver the
goods. 2. The lessor has on a default by the lessee under the lease contract described in
subsection 1 of section 41-02.1-71 or in subdivision a of subsection 3 of section
41-02.1-71 the right to take possession of the goods. If the lease contract 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 (section
41-02.1-75). 3. The lessor may proceed under subsection 2 without judicial process if that can be
done without breach of the peace or the lessor may proceed by action.
41-02.1-74. (2A-526) Lessor's stoppage of delivery in transit or otherwise. 1. A lessor may stop delivery of goods in the possession of a carrier or other bailee if the
lessor discovers the lessee to be insolvent and may stop delivery of carload, truckload,
planeload, or larger shipments of express or freight if the lessee repudiates or fails to
make a payment due before delivery, whether for rent, security, or otherwise under the
lease contract, or for any other reason that the lessor has a right to withhold or take
possession of the goods. 2. In pursuing its remedies under subsection 1, the lessor may stop delivery until:
a. Receipt of the goods by the lessee;
b. Acknowledgment to the lessee by any bailee of the goods, except a carrier, that
the bailee holds the goods for the lessee; or
c. Such an acknowledgment to the lessee by a carrier via reshipment or as a
warehouse. 3. a. To stop delivery, a lessor shall so notify as to enable the bailee by reasonable
diligence to prevent delivery of the goods.
b. After notification, the bailee shall hold and deliver the goods according to the
directions of the lessor, but the lessor is liable to the bailee for any ensuing
charges or damages.
c. A carrier who has issued a non-negotiable bill of lading is not obliged to obey a
notification to stop received from a person other than the consignor.
41-02.1-75. (2A-527) Lessor's rights to dispose of goods. 1. After a default by a lessee under the lease contract described in subsection 1 of
section 41-02.1-71 or in subdivision a of subsection 3 of section 41-02.1-71 or after the
lessor refuses to deliver or takes possession of goods (section 41-02.1-73 or
41-02.1-74), the lessor may dispose of the goods concerned or the undelivered
balance thereof by lease, sale, or otherwise. 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 the disposition is by lease agreement substantially similar
to the original lease agreement and the lease agreement is made in good faith and in
a commercially reasonable manner, the lessor may recover from the lessee as
damages accrued and unpaid rent as of the date of the commencement of the new
term of the new lease agreement, the present value, as of the same date, of the total
rent for the remaining lease term 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 period of the new lease term which is comparable to the then remaining term of
the original lease agreement, and any incidental damages allowed under section
41-02.1-78, less expenses saved in consequence of the lessee's default.
3. If the lessor's disposition is by lease agreement that for any reason does not qualify for
treatment under subsection 2, 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
41-02.1-76 governs.
4. A subsequent buyer or lessee who 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 though the lessor fails to
comply with one or more of the requirements of this chapter.
5. The lessor is not accountable to the lessee for any profit made on any disposition. A
lessee who has rightfully rejected or justifiably revoked acceptance shall account to
the lessor for any excess over the amount of the lessee's security interest
(subsection 5 of section 41-02.1-56).