citation: COM § 9626

text:
(a) In an action arising from a transaction, other than a consumer transaction, in which the amount of a deficiency or surplus is in issue, the following rules apply:

(1) A secured party need not prove compliance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance unless the debtor or a secondary obligor places the secured party’s compliance in issue.

(2) If the secured party’s compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition, or acceptance was conducted in accordance with this chapter.

(3) Except as otherwise provided in Section 9628, if a secured party fails to prove that the collection, enforcement, disposition, or acceptance was conducted in accordance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance, the liability of a debtor or a secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses, and attorney’s fees exceeds the greater of either of the following:

(A) The proceeds of the collection, enforcement, disposition, or acceptance.

(B) The amount of proceeds that would have been realized had the noncomplying secured party proceeded in accordance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance.

(4) For purposes of subparagraph (B) of paragraph (3), the amount of proceeds that would have been realized is equal to the sum of the secured obligation, expenses, and attorney’s fees unless the secured party proves that the amount is less than that sum.

(5) If a deficiency or surplus is calculated under subdivision (f) of Section 9615, the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.

(b) In a consumer transaction, the following rules apply:

(1) In an action in which a deficiency or a surplus is an issue:

(A) A secured party has the burden of proving compliance with the provisions of this chapter relating to collection, enforcement, disposition, and acceptance whether or not the debtor or a secondary obligor places the secured party’s compliance in issue.

(B) If a deficiency or surplus is calculated under subdivision (f) of Section 9615, the secured party has the burden of establishing that the amount of proceeds of the disposition is not significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.

(2) The debtor or any secondary obligor is liable for any deficiency only if all of the following conditions are met:

(A) It is not otherwise agreed or otherwise provided in the Retail Installment Sales Act (Chapter 1 (commencing with Section 1801), Title 2, Part 4, Division 3, Civil Code), and, in particular, Section 1812.5 of the Civil Code or any other statute.

(B) The debtor and obligor were given notice, in accordance with Sections 9611, 9612, and 9613, or Section 9614, as applicable, of the disposition of the collateral.

(C) The collection, enforcement, disposition, and acceptance by the secured party were conducted in good faith and in a commercially reasonable manner.

(3) Upon entry of a final judgment that the debtor or obligor is not liable for a deficiency by reason of paragraph (2) or subdivision (f) of Section 9615, the secured party may neither obtain a deficiency judgment nor retain a security interest in any other collateral of the debtor or obligor that secured the indebtedness for which the debtor or obligor is no longer liable.

(4) If, subsequent to a disposition that does not satisfy any one or more of the conditions set forth in paragraph (2), or subsequent to a disposition that is subject to subdivision (f) of Section 9615, the secured party disposes pursuant to this section of other collateral securing the same indebtedness, the debtor or obligor may, to the extent he or she is no longer liable for a deficiency judgment by reason of paragraph (2) or subdivision (f) of Section 9615, recover the proceeds realized from the subsequent dispositions, as well as any damages to which the debtor may be entitled if the subsequent disposition is itself noncomplying or otherwise wrongful.

(5) Nothing herein shall deprive the debtor of any right to recover damages from the secured party under subdivision (b) of Section 9625, or to offset any such damages against any claim by the secured party for a deficiency, or of any right or remedy to which the debtor may be entitled under any other law. A debtor or obligor in a consumer transaction shall not have any damages owed to it reduced by the amount of any deficiency that would have resulted had the disposition of the collateral by the secured party been conducted in conformity with this division.

(6) The secured party shall account to the debtor for any surplus, except as provided in Section 701.040 of the Code of Civil Procedure.

history: (History: Amended (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 1003, Sec. 47. Effective January 1, 2001. Addition and amendment operative July 1, 2001, by Stats. 1999, Ch. 991, Sec. 75, and Stats. 2000, Ch. 1003, Sec. 56.)


kind: section

code: COM

citation: COM § 9627

text:
(a) The fact that a greater amount could have been obtained by a collection, enforcement, disposition, or acceptance at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition, or acceptance was made in a commercially reasonable manner.

(b) A disposition of collateral is made in a commercially reasonable manner if the disposition satisfies any of the following conditions:

(1) It is made in the usual manner on any recognized market.

(2) It is made at the price current in any recognized market at the time of the disposition.

(3) It is made otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.

(c) A collection, enforcement, disposition, or acceptance is commercially reasonable if it has been approved in or by any of the following:

(1) In a judicial proceeding.

(2) By a bona fide creditors’ committee.

(3) By a representative of creditors.

(4) By an assignee for the benefit of creditors.

(d) Approval under subdivision (c) need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition, or acceptance is not commercially reasonable.

history: (History: Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)

division: 9. SECURED TRANSACTIONS

chapter: 6. Default

path: 9. SECURED TRANSACTIONS > 6. Default


citation: COM § 9628

text:
(a) Subject to subdivision (e), unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person both of the following rules apply:

(1) The secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this division.

(2) The secured party’s failure to comply with this division does not affect the liability of the person for a deficiency.

(b) Subject to subdivision (e), a secured party is not liable because of its status as secured party to either of the following persons:

(1) To a person that is a debtor or obligor, unless the secured party knows all of the following:

(A) That the person is a debtor or obligor.

(B) The identity of the person.

(C) How to communicate with the person.

(2) To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows both of the following:

(A) That the person is a debtor.

(B) The identity of the person.

(c) A secured party is not liable to any person, and a person’s liability for a deficiency is not affected, because of any act or omission arising out of the secured party’s reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party’s belief is based on its reasonable reliance on either of the following representations:

(1) A debtor’s representation concerning the purpose for which collateral was to be used, acquired, or held.

(2) An obligor’s representation concerning the purpose for which a secured obligation was incurred.

(d) A secured party is not liable under paragraph (2) of subdivision (c) of Section 9625 more than once with respect to any one secured obligation.

(e) Subdivisions (a) and (b) do not apply to limit the liability of a secured party to a person if, at the time the secured party obtains control of collateral that is a controllable account, controllable electronic record, or controllable payment intangible or at the time the security interest attaches to the collateral, whichever is later, both of the following conditions are satisfied:

(1) The person is a debtor or obligor.

(2) The secured party knows that the information in subparagraph (A), (B), or (C) of paragraph (1) of subdivision (b) relating to the person is not provided by the collateral, a record attached to or logically associated with the collateral, or the system in which the collateral is recorded.

history: (History: Amended by Stats. 2023, Ch. 210, Sec. 73. (SB 95) Effective January 1, 2024.)


citation: COM § 9629

text: No renunciation or modification by the debtor of any of his or her rights under this chapter as to consumer goods shall be valid or enforceable unless the renunciation or modification is in consideration of a waiver by the secured party of any right to a deficiency on the debt.


citation: COM § 9701

text: This division shall become operative on July 1, 2001.

history: (History: Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)

chapter: 7. Transition

path: 9. SECURED TRANSACTIONS > 7. Transition


citation: COM § 9702

text:
(a) Except as otherwise provided in this chapter, this division applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before this division takes effect.

(b) Except as otherwise provided in subdivision (c) and in Sections 9703 to 9709, inclusive, both of the following rules apply:

(1) Transactions and liens that were not governed by former Division 9, were validly entered into or created before July 1, 2001, and would be subject to this act if they had been entered into or created after July 1, 2001, and the rights, duties, and interests flowing from those transactions and liens remain valid after July 1, 2001.

(2) The transactions and liens may be terminated, completed, consummated, and enforced as required or permitted by this division or by the law that otherwise would apply if this division had not taken effect.

(c) This division does not affect an action, case, or proceeding commenced before July 1, 2001.

history: (History: Amended (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 1003, Sec. 48. Effective January 1, 2001. Addition and amendment operative July 1, 2001, by Stats. 1999, Ch. 991, Sec. 75, and Stats. 2000, Ch. 1003, Sec. 56.)


citation: COM § 9703

text:
(a) A security interest that is enforceable immediately before July 1, 2001, and would have priority over the rights of a person that becomes a lien creditor at that time is a perfected security interest under this division if, on July 1, 2001, the applicable requirements for enforceability and perfection under this division are satisfied without further action.

(b) Except as otherwise provided in Section 9705, if, immediately before July 1, 2001, a security interest is enforceable and would have priority over the rights of a person that becomes a lien creditor at that time, but the applicable requirements for enforceability or perfection under this division are not satisfied on July 1, 2001, when all of the following rules apply with respect to the security interest:

(1) It is a perfected security interest until July 1, 2002.

(2) It remains enforceable thereafter only if the security interest becomes enforceable under Section 9203 before July 1, 2002.

(3) It remains perfected thereafter only if the applicable requirements for perfection under this division are satisfied before July 1, 2002.


citation: COM § 9704

text:
All of the following rules apply with respect to a security interest that is enforceable immediately before July 1, 2001, but which would be subordinate to the rights of a person that becomes a lien creditor at that time:

(1) It remains an enforceable security interest until July 1, 2002.

(2) It remains enforceable thereafter if the security interest becomes enforceable under Section 9203 on July 1, 2001, or on July 1, 2002.

(3) It becomes perfected in either of the following ways:

(A) Without further action, on July 1, 2001, if the applicable requirements for perfection under this division are satisfied on or before that time.

(B) When the applicable requirements for perfection are satisfied if the requirements are satisfied after that time.


citation: COM § 9705

text:
(a) If action, other than the filing of a financing statement, is taken before July 1, 2001, and the action would have resulted in priority of a security interest over the rights of a person that becomes a lien creditor had the security interest become enforceable before July 1, 2001, the action is effective to perfect a security interest that attaches under this division on or before July 1, 2002. An attached security interest becomes unperfected on July 1, 2002, unless the security interest becomes a perfected security interest under this division before that date.

(b) The filing of a financing statement before July 1, 2001, is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this division.

(c) This division does not render ineffective an effective financing statement that, before July 1, 2001, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in former Section 9103. However, except as otherwise provided in subdivisions (d) and (e) and in Section 9706, the financing statement ceases to be effective at the earlier of either of the following:

(1) The time the financing statement would have ceased to be effective under the law of the jurisdiction in which it is filed.

(2) June 30, 2006.

(d) The filing of a continuation statement after July 1, 2001, does not continue the effectiveness of the financing statement filed before July 1, 2001. However, upon the timely filing of a continuation statement after July 1, 2001, and in accordance with the law of the jurisdiction governing perfection as provided in Chapter 3 (commencing with Section 9301), the effectiveness of a financing statement filed in the same office in that jurisdiction before July 1, 2001, continues for the period provided by the law of that jurisdiction.

(e) Paragraph (2) of subdivision (c) applies to a financing statement that, before July 1, 2001, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in former Section 9103 only to the extent that Chapter 3 (commencing with Section 9301) provides that the law of a jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.

(f) A financing statement that includes a financing statement filed before July 1, 2001, and a continuation statement filed after July 1, 2001, is effective only to the extent that it satisfies the requirements of Chapter 5 (commencing with Section 9501) for an initial financing statement.

history: (History: Amended (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 1003, Sec. 49. Effective January 1, 2001. Addition and amendment operative July 1, 2001, by Stats. 1999, Ch. 991, Sec. 75, and Stats. 2000, Ch. 1003, Sec. 56.)


citation: COM § 9706

text:
(a) The filing of an initial financing statement in the office specified in Section 9501 continues the effectiveness of a financing statement filed before July 1, 2001, if all of the following conditions are satisfied:

(1) The filing of an initial financing statement in that office would be effective to perfect a security interest under this division.

(2) The preeffective date financing statement was filed in an office in another state or another office in this state.

(3) The initial financing statement satisfies subdivision (c).

(b) The filing of an initial financing statement under subdivision (a) continues the effectiveness of the preeffective date financing statement for the following periods:

(1) If the initial financing statement is filed before July 1, 2001, for the period provided in former Section 9403 with respect to a financing statement.

(2) If the initial financing statement is filed after July 1, 2001, for the period provided in Section 9515 with respect to an initial financing statement.

(c) To be effective for purposes of subdivision (a), an initial financing statement must do all of the following:

(1) Satisfy the requirements of Chapter 5 (commencing with Section 9501) for an initial financing statement.

(2) Identify the preeffective date financing statement by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement.

(3) Indicate that the preeffective date financing statement remains effective.

history: (History: Amended (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 135, Sec. 21. Effective January 1, 2001. Addition and amendment operative July 1, 2001, pursuant to Stats. 1999, Ch. 991, Sec. 75, and Section 9701.)


citation: COM § 9707

text:
(a) In this section, “pre-effective-date financing statement” means a financing statement filed before the date that this section becomes operative.

(b) After the date this section becomes operative, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or otherwise amend the information provided in, a pre-effective-date financing statement only in accordance with the law of the jurisdiction governing perfection as provided in Chapter 3 (commencing with Section 9301). However, the effectiveness of a pre-effective-date financing statement also may be terminated in accordance with the law of the jurisdiction in which the financing statement is filed.

(c) Except as otherwise provided by subdivision (d), if the law of this state governs perfection of a security interest, the information in a pre-effective-date financing statement may be amended after the date this section becomes operative only if any of the following occur:

(1) The pre-effective-date financing statement and an amendment are filed in the office specified in Section 9501.

(2) An amendment is filed in the office specified in Section 9501 concurrently with, or after the filing in that office of, an initial financing statement that satisfies subdivision (c) of Section 9706.

(3) An initial financing statement that provides the information as amended and satisfies subdivision (c) of Section 9706 is filed in the office specified in Section 9501.

(d) If the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement may be continued only under subdivisions (d) and (f) of Section 9705 or Section 9706.

(e) Whether or not the law of this state governs the perfection of a security interest, the effectiveness of a pre-effective-date financing statement filed in this state may be terminated after the date that this section becomes operative by filing a termination statement in the office in which the pre-effective-date financing statement is filed, unless an initial filing statement that satisfies subdivision (c) of Section 9706 has been filed in the office specified by the law of the jurisdiction governing perfection as provided in Chapter 3 (commencing with Section 9301) as the office in which to file a financing statement.

history: (History: Added by Stats. 2000, Ch. 1003, Sec. 51. Effective January 1, 2001. Operative July 1, 2001, by Sec. 56 of Ch. 1003.)


citation: COM § 9708

text:
A person may file an initial financing statement or a continuation statement under this chapter if both of the following conditions are satisfied:

(1) The secured party of record authorizes the filing.

(2) The filing is necessary under this chapter to do either of the following:

(A) To continue the effectiveness of a financing statement filed before July 1, 2001.

(B) To perfect or continue the perfection of a security interest.

history: (History: Added by renumbering Section 9707 (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 1003, Sec. 50. Effective January 1, 2001. Addition (as Section 9707) and renumbering amendment operative July 1, 2001, by Stats. 1999, Ch. 991, Sec. 75, and Stats. 2000, Ch. 1003, Sec. 56.)


citation: COM § 9709

text:
(a) This division determines priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before July 1, 2001, former Division 9 (commencing with Section 9101) determines priority.

(b) For purposes of subdivision (a) of Section 9322, the priority of a security interest that becomes enforceable under Section 9203 dates from July 1, 2001, if the security interest is perfected under this division by the filing of a financing statement before July 1, 2001, which would not have been effective to perfect the security interest under former Division 9 (commencing with Section 9101). This subdivision does not apply to conflicting security interests each of which is perfected by the filing of such a financing statement.

history: (History: Added by renumbering Section 9708 (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 1003, Sec. 52. Effective January 1, 2001. Addition (as Section 9708) and renumbering amendment operative July 1, 2001, by Stats. 1999, Ch. 991, Sec. 75, and Stats. 2000, Ch. 1003, Sec. 56.)


citation: COM § 9801

text: The changes to this division made by the act adding this chapter shall become operative on July 1, 2014.

history: (History: Added by Stats. 2013, Ch. 531, Sec. 23. (AB 502) Effective January 1, 2014. Operative July 1, 2014, by Sec. 28 of Ch. 531.)

path: 9. SECURED TRANSACTIONS > 8. Transition Provisions for 2010 Amendments


citation: COM § 9802

text:
(a) Except as otherwise provided in this chapter, the changes to this division made by the act adding this chapter apply to a transaction or lien within its scope, even if the transaction or lien was entered into or created before July 1, 2014.

(b) The changes to this division made by the act adding this chapter do not affect an action, case, or proceeding commenced before July 1, 2014.

chapter: 8. Transition Provisions for 2010 Amendments


citation: COM § 9803

text:
(a) A security interest that is a perfected security interest immediately before July 1, 2014, is a perfected security interest under this division as amended by this act if, as of July 1, 2014, the applicable requirements for attachment and perfection under this division as of that date are satisfied without further action.

(b) Except as otherwise provided in Section 9805, if, immediately before July 1, 2014, a security interest is a perfected security interest, but the applicable requirements for perfection under this division as of July 1, 2014, are not satisfied as of that date, the security interest remains perfected thereafter only if the applicable requirements for perfection under this division as amended by this act are satisfied by July 1, 2015.


citation: COM § 9804

text:
A security interest that is an unperfected security interest immediately before July 1, 2014, becomes a perfected security interest as follows:

(a) Without further action, on July 1, 2014, if the applicable requirements for perfection under this division as amended by this act are satisfied before or at that time.

(b) When the applicable requirements for perfection are satisfied if the requirements are satisfied after that time.


citation: COM § 9805

text:
(a) The filing of a financing statement before July 1, 2014, is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this division as amended by this act.

(b) The changes to this division made by the act adding this chapter do not render ineffective an effective financing statement that, before July 1, 2014, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in this division as it existed before that date. However, except as otherwise provided in subdivisions (c) and (d) and Section 9806, the financing statement ceases to be effective under the following conditions:

(1) If the financing statement is filed in this state, at the time the financing statement would have ceased to be effective had the changes to this division made by the act adding this chapter not become operative.

(2) If the financing statement is filed in another jurisdiction, at the earlier of the following:

(A) The time the financing statement would have ceased to be effective under the law of that jurisdiction.

(B) June 30, 2018.

(c) The filing of a continuation statement after July 1, 2014, does not continue the effectiveness of a financing statement filed before that date. However, upon the timely filing of a continuation statement after July 1, 2014, and in accordance with the law of the jurisdiction governing perfection as provided in this division, the effectiveness of a financing statement filed in the same office in that jurisdiction before July 1, 2014, continues for the period provided by the law of that jurisdiction.

(d) Subparagraph (B) of paragraph (2) of subdivision (b) applies to a financing statement that, before July 1, 2014, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in this division as it existed before that date, only to the extent that this division provides that the law of a jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.

(e) A financing statement that includes a financing statement filed before July 1, 2014, and a continuation statement filed after that date is effective only to the extent that it satisfies the requirements of Chapter 5 (commencing with Section 9501) as amended by the act adding this chapter for an initial financing statement. A financing statement that indicates that the debtor is a decedent’s estate indicates that the collateral is being administered by a personal representative within the meaning of paragraph (2) of subdivision (a) of Section 9503, as amended by the act adding this chapter. A financing statement that indicates that the debtor is a trust or is a trustee acting with respect to property held in trust indicates that the collateral is held in a trust within the meaning of paragraph (3) of subdivision (a) of Section 9503 as amended by the act adding this chapter.


citation: COM § 9806

text:
(a) The filing of an initial financing statement in the office specified in Section 9501 continues the effectiveness of a financing statement filed before July 1, 2014, if the following conditions are satisfied:

(1) The filing of an initial financing statement in that office would be effective to perfect a security interest under this division as amended by the act adding this chapter.

(2) The preeffective-date financing statement was filed in an office in another state.

(3) The initial financing statement satisfies subdivision (c).

(b) The filing of an initial financing statement under subdivision (a) continues the effectiveness of the preeffective-date financing statement if the following conditions are satisfied:

(1) If the initial financing statement is filed before July 1, 2014, for the period provided in Section 9515 prior to its amendment by the act adding this chapter with respect to an initial financing statement.

(2) If the initial financing statement is filed after July 1, 2014, for the period provided in Section 9515 as amended by the act adding this chapter with respect to an initial financing statement.

(c) To be effective for purposes of subdivision (a), an initial financing statement shall satisfy the following conditions:

(1) Satisfy the requirements of Chapter 5 (commencing with Section 9501) as amended by the act adding this chapter for an initial financing statement.

(2) Identify the preeffective-date financing statement by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement.

(3) Indicate that the preeffective-date financing statement remains effective.


citation: COM § 9807

text:
(a) In this section, “preeffective-date financing statement” means a financing statement filed before July 1, 2014.

(b) After July 1, 2014, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or otherwise amend the information provided in, a preeffective-date financing statement only in accordance with the law of the jurisdiction governing perfection as provided in this division as amended by the act adding this chapter. However, the effectiveness of a preeffective-date financing statement also may be terminated in accordance with the law of the jurisdiction in which the financing statement is filed.

(c) Except as otherwise provided in subdivision (d), if the law of this state governs perfection of a security interest, the information in a preeffective-date financing statement may be amended after July 1, 2014, only if:

(1) The preeffective-date financing statement and an amendment are filed in the office specified in Section 9501.

(2) An amendment is filed in the office specified in Section 9501 concurrently with, or after the filing in that office of, an initial financing statement that satisfies subdivision (c) of Section 9806.

(3) An initial financing statement that provides the information as amended and satisfies subdivision (c) of Section 9806 is filed in the office specified in Section 9501.

(d) If the law of this state governs perfection of a security interest, the effectiveness of a preeffective-date financing statement may be continued only under subdivision (c) or (e) of Section 9805 or Section 9806.

(e) Whether or not the law of this state governs perfection of a security interest, the effectiveness of a preeffective-date financing statement filed in this state may be terminated after July 1, 2014, by filing a termination statement in the office in which the preeffective-date financing statement is filed, unless an initial financing statement that satisfies subdivision (c) of Section 9806 has been filed in the office specified by the law of the jurisdiction governing perfection as provided in this division as amended by the act adding this chapter as the office in which to file a financing statement.


citation: COM § 9808

text:
A person may file an initial financing statement or a continuation statement under this chapter if the following conditions are satisfied:

(a) The secured party of record authorizes the filing.

(b) The filing is necessary under this part to accomplish either of the following:

(1) To continue the effectiveness of a financing statement filed before July 1, 2014.

(2) To perfect or continue the perfection of a security interest.


citation: COM § 9809

text: The changes to this division made by the act adding this chapter determine the priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before those changes become operative on July 1, 2014, this division as it existed before those changes become operative determines priority.


citation: COM § 9901

text:
(a) The changes to this division made by the act adding this chapter become operative on January 1, 2015.

(b) This chapter applies to a security interest only to the extent that, with respect to such security interest, both of the following apply:

(1) A debtor is an individual.

(2) A financing statement filed before January 1, 2015, provides the name of an individual as a debtor.

(c) If a security interest is within the scope of Chapter 8 (commencing with Section 9801), that chapter continues to apply. To the extent there is a conflict between Chapter 8 (commencing with Section 9801) and this chapter, this chapter governs.

history: (History: Added by Stats. 2014, Ch. 284, Sec. 2. (AB 1858) Effective January 1, 2015.)

path: 9. SECURED TRANSACTIONS > 9. Transition Provisions for 2014 Amendments


citation: COM § 9902

text:
(a) Except as otherwise provided in this chapter, the changes to this division made by the act adding this chapter apply to a transaction or lien within its scope, even if the transaction or lien was entered into or created before January 1, 2015.

(b) The changes to this division made by the act adding this chapter do not affect an action, case, or proceeding commenced before January 1, 2015.

chapter: 9. Transition Provisions for 2014 Amendments


citation: COM § 9903

text: A security interest that is a perfected security interest immediately before January 1, 2015, is a perfected security interest under this division as amended by this act if, as of January 1, 2015, the applicable requirements for attachment and perfection under this division as of that date are satisfied without further action.


citation: COM § 9904

text:
A security interest that is an unperfected security interest immediately before January 1, 2015, becomes a perfected security interest as follows:

(a) Without further action, on January 1, 2015, if the applicable requirements for perfection under this division as amended by this act are satisfied before or at that time.

(b) When the applicable requirements for perfection are satisfied if the requirements are satisfied after that time.


citation: COM § 9905

text:
(a) The filing of a financing statement before January 1, 2015, is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this division as amended by this act.

(b) The changes to this division made by the act adding this chapter do not render ineffective an effective financing statement that, before January 1, 2015, is filed and satisfies the applicable requirements for perfection under this division (including giving effect to Chapter 8 (commencing with Section 9801)) as it existed before giving effect to the changes to this division made by the act adding this chapter. However, except as otherwise provided in subdivision (c), the financing statement ceases to be effective at the time the financing statement would have ceased to be effective had the changes to this division made by the act adding this chapter not become effective and operative.

(c) The timely filing of a continuation statement on or after January 1, 2015, continues the effectiveness of a financing statement filed before January 1, 2015, if the financing statement (including any amendments) contains the name of the debtor in accordance with the requirements of Chapter 5 (commencing with Section 9501) as amended by the act adding this chapter for an initial financing statement.

(d) A financing statement (including any amendments) that includes a financing statement filed before January 1, 2015, and a continuation statement filed after January 1, 2015, is effective only to the extent that they satisfy the requirements of Chapter 5 (commencing with Section 9501) as amended by the act adding this chapter for an initial financing statement.


citation: COM § 9906

text:
A person may file an initial financing statement or a continuation statement under this chapter if the following conditions are satisfied:

(a) The secured party of record authorizes the filing.

(b) The filing is necessary under this division to accomplish either of the following:

(1) To continue the effectiveness of a financing statement filed before January 1, 2015.

(2) To perfect or continue the perfection of a security interest.


citation: COM § 9907

text: The changes to this division made by the act adding this chapter determine the priority of conflicting claims to the collateral. However, if the relative priorities of the claims were established before those changes become effective and operative on January 1, 2015, this division as it existed before those changes become effective and operative determines priority.


text: This division shall be known and may be cited as the Uniform Commercial Code—Leases.

history: (History: Repealed and added by Stats. 1988, Ch. 1359, Sec. 5. Operative January 1, 1990, by Sec. 11 of Ch. 1359.)

division: 10. PERSONAL PROPERTY LEASES

chapter: 1. General Provisions

path: 10. PERSONAL PROPERTY LEASES > 1. General Provisions


text:
(a) This division applies to any transaction, regardless of form, that creates a lease and, in the case of a hybrid lease, it applies to the extent provided in subdivision (b).

(b) In a hybrid lease, the following rules apply:

(1) If the lease-of-goods aspects do not predominate, the following rules apply:

(A) Only the provisions of this division which relate primarily to the lease-of-goods aspects of the transaction apply, and the provisions that relate primarily to the transaction as a whole do not apply.

(B) Section 10209 applies if the lease is a finance lease.

(C) Section 10407 applies to the promises of the lessee in a finance lease to the extent the promises are consideration for the right to possession and use of the leased goods.

(2) If the lease-of-goods aspects predominate, this division applies to the transaction, but does not preclude application in appropriate circumstances of other law to aspects of the lease which do not relate to the lease of goods.

history: (History: Amended by Stats. 2023, Ch. 210, Sec. 74. (SB 95) Effective January 1, 2024.)


text:
(a) In this division, unless the context otherwise requires:

(1) “Buyer in ordinary course of business” means a person who, in good faith and without knowledge that the sale to it is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, buys in ordinary course from a person in the business of selling goods of that kind, but does not include a pawnbroker. “Buying” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a preexisting contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

(2) “Cancellation” occurs when either party puts an end to the lease contract for default by the other party.

(3) “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole.

(4) “Conforming” goods or performance under a lease contract means goods or performance that are in accordance with the obligations under the lease contract.

(5) “Consumer lease” means a lease that a lessor regularly engaged in the business of leasing or selling makes to a lessee who is an individual and who takes under the lease primarily for a personal, family, or household purpose.

(6) “Fault” means wrongful act, omission, breach, or default.

(7) “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, and (C) one of the following occurs:

(i) The lessee receives a copy of the contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract.

(ii) The lessee’s approval of the contract by which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract.

(iii) The lessee, before signing the lease contract, 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.

(iv) The lessor, before the lessee signs the lease contract, informs the lessee in writing (aa) of the identity of the person supplying the goods to the lessor, unless the lessee has selected that person and directed the lessor to acquire the goods or the right to possession and use of the goods from that person, (bb) that the lessee is entitled under this division 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 (cc) that the lessee may communicate with the person supplying the goods to the lessor and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of them or of remedies.

(8) “Goods” means all things that are movable at the time of identification to the lease contract, or are fixtures (Section 10309), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals.

(9) “Installment lease contract” means a lease contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause “each delivery is a separate lease” or its equivalent.

(10) “Lease” means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. Unless the context clearly indicates otherwise, the term includes a sublease.

(11) “Lease agreement” means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this division. Unless the context clearly indicates otherwise, the term includes a sublease agreement.

(12) “Lease contract” means the total legal obligation that results from the lease agreement as affected by this division and any other applicable rules of law. Unless the context clearly indicates otherwise, the term includes a sublease contract.

(13) “Leasehold interest” means the interest of the lessor or the lessee under a lease contract.

(14) “Lessee” means a person who acquires the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.

(15) “Lessee in ordinary course of business” means a person who, in good faith and without knowledge that the lease to it is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, leases in ordinary course from a person in the business of selling or leasing goods of that kind, but does not include a pawnbroker. “Leasing” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a preexisting lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

(16) “Lessor” means a person who transfers the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.

(17) “Lessor’s residual interest” means the lessor’s interest in the goods after expiration, termination, or cancellation of the lease contract.

(18) “Lien” means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest.

(19) “Lot” means a parcel or a single article that is the subject matter of a separate lease or delivery, whether or not it is sufficient to perform the lease contract.

(20) “Merchant lessee” means a lessee that is a merchant with respect to goods of the kind subject to the lease.

(21) “Present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. 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.

(22) “Purchase” includes taking by sale, lease, mortgage, security interest, pledge, gift, or any other voluntary transaction creating an interest in goods.

(23) “Sublease” means a lease of goods the right to possession and use of which was acquired by the lessor as a lessee under an existing lease.

(24) “Supplier” means a person from whom a lessor buys or leases goods to be leased under a finance lease.

(25) “Supply contract” means a contract under which a lessor buys or leases goods to be leased.

(26) “Termination” occurs when either party pursuant to a power created by agreement or law puts an end to the lease contract otherwise than for default.

(27) “Hybrid lease” means a single transaction involving a lease of goods and any of the following:

(A) The provision of services.

(B) A sale of other goods.

(C) A sale, lease, or license of property other than goods.

(b) Other definitions applying to this division and the sections in which they appear are:

“Accessions.” Subdivision (a) of Section 10310.

“Construction mortgage.” Paragraph (4) of subdivision (a) of Section 10309.

“Encumbrance.” Paragraph (5) of subdivision (a) of Section 10309.

“Fixtures.” Paragraph (1) of subdivision (a) of Section 10309.

“Fixture filing.” Paragraph (2) of subdivision (a) of Section 10309.

“Purchase money lease.” Paragraph (3) of subdivision (a) of Section 10309.

(c) The following definitions in other divisions apply to this division:

“Account.” Paragraph (2) of subdivision (a) of Section 9102.

“Between merchants.” Subdivision (3) of Section 2104.

“Buyer.” Paragraph (a) of subdivision (1) of Section 2103.

“Chattel paper.” Paragraph (11) of subdivision (a) of Section 9102.

“Consumer goods.” Paragraph (23) of subdivision (a) of Section 9102.

“Document.” Paragraph (30) of subdivision (a) of Section 9102.

“Entrusting.” Subdivision (3) of Section 2403.

“General intangible.” Paragraph (42) of subdivision (a) of Section 9102.

“Instrument.” Paragraph (47) of subdivision (a) of Section 9102.

“Merchant.” Subdivision (1) of Section 2104.

“Mortgage.” Paragraph (55) of subdivision (a) of Section 9102.

“Pursuant to commitment.” Paragraph (69) of subdivision (a) of Section 9102.

“Receipt of goods.” Paragraph (c) of subdivision (1) of Section 2103.

“Sale.” Subdivision (1) of Section 2106.

“Sale on approval.” Section 2326.

“Sale or return.” Section 2326.

“Seller.” Paragraph (d) of subdivision (1) of Section 2103.

(d) In addition, Division 1 contains general definitions and principles of construction and interpretation applicable throughout this division.

history: (History: Amended by Stats. 2023, Ch. 210, Sec. 75. (SB 95) Effective January 1, 2024.)


text:
(a) A lease, although subject to this division, is also subject to any applicable:

(1) Certificate of title statute of this state, including the provisions of the Vehicle Code that require registration of a vehicle or boat and provisions of the Health and Safety Code that require registration of a mobilehome or commercial coach.

(2) Certificate of title statute of another jurisdiction (Section 10105).

(3) Consumer law of this state, both decisional and statutory, including, to the extent that they apply to a consumer lease transaction, Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code, Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code, and Part 4 (commencing with Section 1725) of Division 3 of the Civil Code.

(b) In case of conflict between this division, other than Section 10105, subdivision (c) of Section 10304, and subdivision (c) of Section 10305, and a law referred to in subdivision (a), that law controls.

(c) Failure to comply with an applicable law has only the effect specified therein.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 4. Effective July 15, 1991.)


text: Subject to the provisions of subdivision (c) of Section 10304 and subdivision (c) of Section 10305, with respect to goods covered by a certificate of title issued under a statute of this state or of another jurisdiction, compliance and the effect of compliance or noncompliance with a certificate of title statute are governed by the law (including the conflict of laws rules) of the jurisdiction issuing the certificate until the earlier of (1) surrender of the certificate, or (2) four months after the goods are removed from that jurisdiction and thereafter until a new certificate of title is issued by another jurisdiction.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 5. Effective July 15, 1991.)


text:
(a) If the law chosen by the parties to a consumer lease is that of a jurisdiction other than a jurisdiction in which the lessee resides at the time the lease agreement becomes enforceable or within 30 days thereafter, in which the goods are to be used, or in which the lease is executed by the lessee, the choice is not enforceable.

(b) If the judicial forum chosen by the parties to a consumer lease is in a county other than the county in which the lessee in fact signed the lease, the county in which the lessee resides at the commencement of the action, the county in which the lessee resided at the time the lease contract became enforceable, or the county in which the goods are permanently stored, the choice is not enforceable.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 6. Effective July 15, 1991.)


text: Any claim or right arising out of an alleged default or breach of warranty may be discharged in whole or in part without consideration by a waiver or renunciation in a signed record delivered by the aggrieved party.

history: (History: Amended by Stats. 2023, Ch. 210, Sec. 76. (SB 95) Effective January 1, 2024.)


text:
(a) A lease contract is not enforceable by way of action or defense unless:

(1) In a lease contract that is not a consumer lease, the total payments to be made under the lease contract, excluding payments for options to renew or buy, are less than one thousand dollars ($1,000); or

(2) There is a record, signed by the party against whom enforcement is sought or by that party’s authorized agent, sufficient to indicate that a lease contract has been made between the parties and to describe the goods leased and the lease term.

(b) Any description of leased goods or of the lease term is sufficient and satisfies paragraph (2) of subdivision (a), whether or not it is specific, if it reasonably identifies what is described.

(c) A record is not insufficient because it omits or incorrectly states a term agreed upon, but the lease contract is not enforceable under paragraph (2) of subdivision (a) beyond the lease term and the quantity of goods shown in the record.

(d) A lease contract that does not satisfy the requirements of subdivision (a), but which is valid in other respects, is enforceable:

(1) If the goods are to be specially manufactured or obtained for the lessee and are not suitable for lease or sale to others in the ordinary course of the lessor’s 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 whom enforcement is sought admits in that party’s pleading, testimony, or otherwise in court that a lease contract was made, but the lease contract is not enforceable under this provision beyond the quantity of goods admitted; or

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

(e) The lease term under a lease contract referred to in subdivision (d) is:

(1) If there is a record signed by the party against whom enforcement is sought or by that party’s authorized agent specifying the lease term, the term so specified;

(2) If the party against whom enforcement is sought admits in that party’s pleading, testimony, or otherwise in court a lease term, the term so admitted; or

(3) A reasonable lease term.

history: (History: Amended by Stats. 2023, Ch. 210, Sec. 77. (SB 95) Effective January 1, 2024.)

path: 10. PERSONAL PROPERTY LEASES > 2. Formation and Construction of Lease Contract


text:
Terms with respect to which the confirmatory memoranda 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 such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:

(a) By course of dealing or usage of trade or by course of performance; and

(b) By evidence of consistent additional terms unless the court finds the record to have been intended also as a complete and exclusive statement of the terms of the agreement.

history: (History: Amended by Stats. 2023, Ch. 210, Sec. 78. (SB 95) Effective January 1, 2024.)

chapter: 2. Formation and Construction of Lease Contract


text:
(a) A lease contract may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of a lease contract.

(b) An agreement sufficient to constitute a lease contract may be found although the moment of its making is undetermined.

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

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 8. Effective July 15, 1991.)


text: An offer by a merchant to lease goods to or from another person in a signed record that by its terms gives assurance it will be held open is not revocable, for lack of consideration, during the time stated or, if no time is stated, for a reasonable time, but in no event may the period of irrevocability exceed three months. Any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

history: (History: Amended by Stats. 2023, Ch. 210, Sec. 79. (SB 95) Effective January 1, 2024.)


text:
(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 in the circumstances.

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

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 10. Effective July 15, 1991.)


text:
(a) An agreement modifying a lease contract needs no consideration to be binding.

(b) A signed lease agreement that excludes modification or rescission except by a signed record may not be otherwise modified or rescinded, but, except as between merchants, such a requirement on a form supplied by a merchant must be separately signed by the other party.

(c) Although an attempt at modification or rescission does not satisfy the requirements of subdivision (b), it may operate as a waiver.

(d) A party who has made a waiver affecting an executory portion of a lease contract may retract the waiver by reasonable notification 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.

history: (History: Amended by Stats. 2023, Ch. 210, Sec. 80. (SB 95) Effective January 1, 2024.)


text:
(a) The benefit of a supplier’s promises to the lessor under the 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 of the 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 (subdivision (a) of Section 10209) does not: (1) modify the rights and obligations of the parties to the supply contract, whether arising therefrom or otherwise, or (2) impose any duty or liability under the supply contract on the lessee.

(c) Any modification or rescission of the 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 is deemed to have assumed, in addition to the obligations of the lessor to the lessee under the lease contract, 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 subdivision (a), the lessee retains all rights that the lessee may have against the supplier which arise from an agreement between the lessee and the supplier or under other law.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 13. Effective July 15, 1991.)


text:
(a) Express warranties by the lessor are created as follows:

(1) Any affirmation of fact or promise made by the lessor to the lessee 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 affirmation or promise.

(2) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods will conform to the description.

(3) Any sample or model that is made part of the basis of the bargain creates an express warranty that the whole of the goods will conform to the sample or model.

(b) It is not necessary to the creation of an express warranty that the lessor use formal words, such as “warrant” or “guarantee,” or that the lessor have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the lessor’s opinion or commendation of the goods does not create a warranty.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 14. Effective July 15, 1991.)


text:
(a) There is in a lease contract a warranty that for the lease term no person holds a claim to or interest in the goods that arose from an act or omission of the lessor, other than a claim by way of infringement or the like, which will interfere with the lessee’s enjoyment of its leasehold interest.

(b) Except in a finance lease there is in a lease contract by a lessor who is a merchant regularly dealing in goods of the kind a warranty that the goods are delivered free of the rightful claim of any person by way of infringement or the like.

(c) A lessee who furnishes specifications to a lessor or a supplier shall hold the lessor and the supplier harmless against any claim by way of infringement or the like that arises out of compliance with the specifications.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 15. Effective July 15, 1991.)


text:
(a) Except in a finance lease, a warranty that the goods will be merchantable is implied in a lease contract if the lessor is a merchant with respect to goods of that kind.

(b) Goods to be merchantable must be at least such as:

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

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

(3) Are fit for the ordinary purposes for which goods of that type 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) Are adequately contained, packaged, and labeled as the lease agreement may require; and

(6) Conform to any promises or affirmations of fact made on the container or label.

(c) Other implied warranties may arise from course of dealing or usage of trade.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 16. Effective July 15, 1991.)


text: Except in a finance lease, if the lessor at the time the lease contract is made has reason to know of 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 in the lease contract an implied warranty that the goods will be fit for that purpose.

history: (History: Added by Stats. 1988, Ch. 1359, Sec. 5. Operative January 1, 1990, by Sec. 11 of Ch. 1359.)


text:
(a) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit a warranty must be construed wherever reasonable as consistent with each other; but, subject to the provisions of Section 10202 on parol or extrinsic evidence, negation or limitation is inoperative to the extent that the construction is unreasonable.

(b) Subject to subdivision (c), to exclude or modify the implied warranty of merchantability or any part of it the language must mention “merchantability,” be by a writing, and be conspicuous. Subject to subdivision (c), to exclude or modify any implied warranty of fitness the exclusion must be by a writing and be conspicuous. Language to exclude all implied warranties of fitness is sufficient if it is in writing, is conspicuous and states, for example, “There is no warranty that the goods will be fit for a particular purpose.”

(c) Notwithstanding subdivision (b), but subject to subdivision (d),

(1) Unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like “as is,” or “with all faults,” or by other language that in common understanding calls the lessee’s attention to the exclusion of warranties and makes plain that there is no implied warranty, if in writing and conspicuous;

(2) If the lessee before entering into the lease contract has examined the goods or the sample or model as fully as desired or has refused to examine the goods, there is no implied warranty with regard to defects that an examination ought in the circumstances to have revealed; and

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

(d) To exclude or modify a warranty against interference or against infringement (Section 10211) or any part of it, the language must be specific, be by a writing, and be conspicuous, unless the circumstances, including course of performance, course of dealing, or usage of trade, give the lessee reason to know that the goods are being leased subject to a claim or interest of any person.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 17. Effective July 15, 1991.)


text:
Warranties, whether express or implied, must be construed as consistent with each other and as cumulative, but if that construction is unreasonable, the intention of the parties determines which warranty is dominant. In ascertaining that intention the following rules apply:

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

(2) A sample from an existing bulk displaces inconsistent general language of description.

(3) Express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 18. Effective July 15, 1991.)


text:
Identification of goods as goods to which a lease contract refers may be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement, identification occurs:

(1) When the lease contract is made, if the lease contract is for a lease of goods that are existing and identified;

(2) 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) When the young are conceived, if the lease contract is for a lease of unborn young of animals.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 19. Effective July 15, 1991.)


text:
(a) A lessee obtains an insurable interest when existing goods are identified to the lease contract even though the goods identified are nonconforming and the lessee has an option to reject them.

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

(c) Notwithstanding a lessee’s insurable interest under subdivisions (a) and (b), 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) Nothing in this section impairs any insurable interest recognized under any other statute or rule of 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 by agreement may determine the beneficiary of the proceeds of the insurance.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 20. Effective July 15, 1991.)


text:
(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) Subject to the provisions of this division on the effect of default on risk of loss (Section 10220), if risk of loss is to pass to the lessee and the time of passage is not stated, the following rules apply:

(1) If the lease contract requires or authorizes the goods to be shipped by carrier

(A) And it 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; but

(B) If it does require delivery at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the lessee when the goods are there duly so tendered as to enable the lessee to take delivery.

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

(3) In any case not within paragraph (1) or (2), the risk of loss passes to the lessee on the lessee’s receipt of the goods if the lessor, or, in the case of a finance lease, the supplier, is a merchant; otherwise the risk passes to the lessee on tender of delivery.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 21. Effective July 15, 1991.)


text:
(a) Where risk of loss is to pass to the lessee and the time of passage is not stated:

(1) If a tender or delivery of goods so fails to conform to the lease contract as to give a right of rejection, the risk of their loss remains with the lessor, or, in the case of a finance lease, the supplier, until cure or acceptance.

(2) If the lessee rightfully revokes acceptance, he or she, to the extent of any deficiency in his or her effective insurance coverage, may treat the risk of loss as having remained with the lessor from the beginning.

(b) Whether or not risk of loss is to pass to the lessee, if the lessee as to conforming goods already identified to a lease contract repudiates or is otherwise in default under the lease contract, the lessor, or, in the case of a finance lease, the supplier, to the extent of any deficiency in his or her effective insurance coverage may treat the risk of loss as resting on the lessee for a commercially reasonable time.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 22. Effective July 15, 1991.)


text:
If a lease contract requires goods identified when the lease contract is made, and the goods suffer casualty without fault of the lessee, the lessor, or the supplier before delivery, or the goods suffer casualty before risk of loss passes to the lessee pursuant to the lease agreement or Section 10219, then:

(1) If the loss is total, the lease contract is avoided; and

(2) If the loss is partial or the goods have so deteriorated as to no longer conform to the lease contract, the lessee may nevertheless demand inspection and at his or her option either treat the lease contract as avoided or, except in a finance lease, accept the goods with due allowance from the rent payable for the balance of the lease term for the deterioration or the deficiency in quantity but without further right against the lessor.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 23. Effective July 15, 1991.)


text: Except as otherwise provided in this division, a lease contract is effective and enforceable according to its terms between the parties, against purchasers of the goods, and against creditors of the parties.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 24. Effective July 15, 1991.)

chapter: 3. Effect of Lease Contract

path: 10. PERSONAL PROPERTY LEASES > 3. Effect of Lease Contract


text: Except as otherwise provided in this division, each provision of this division applies whether the lessor or a third party has title to the goods, and whether the lessor, the lessee, or a third party has possession of the goods, notwithstanding any statute or rule of law that possession or the absence of possession is fraudulent.


text:
(a) As used in the section, “creation of a security interest” includes the sale of a lease contract that is subject to Division 9 (commencing with Section 9101), Secured Transactions, by reason of paragraph (3) of subdivision (a) of Section 9109.

(b) Except as provided in subdivision (c) and Section 9407, 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 subdivision (d), but a transfer that is prohibited or is an event of default under the lease agreement is otherwise effective.

(c) A provision 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, and 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 purview of subdivision (d).

(d) Subject to subdivision (c) and Section 9407:

(1) If a transfer is made which is made an event of default under a lease agreement, the party to the lease contract not making the transfer, unless that party waives the default or otherwise agrees, has the rights and remedies described in subdivision (b) of Section 10501.

(2) If paragraph (1) is not applicable and if 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, then, except as limited by contract, (C) 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 (D) a court having jurisdiction may grant other appropriate relief, including cancellation of the lease contract or an injunction against the transfer.

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

(f) 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 of any liability for default.

(g) In a consumer lease, to prohibit the transfer of an interest of a party under the lease contract or to make a transfer an event of default, the language must be specific, by a writing, and conspicuous.

history: (History: Amended by Stats. 1999, Ch. 991, Sec. 37. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)


text:
(a) Subject to Section 10303, 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 subdivision (b) of this section and subdivision (d) of Section 10527, 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. If goods have been delivered under a transaction of purchase, the lessor has that power even though:

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

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

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

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

(b) 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 that lessor’s and the existing lessee’s rights to the goods, and takes free of the existing lease contract.

(c) 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.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 26. Effective July 15, 1991.)


text:
(a) Subject to the provisions of Section 10303, 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 provided in subdivision (b) of this section and subdivision (d) of Section 10511, takes subject to the existing lease contract. A lessee with a voidable leasehold interest has power to transfer a good leasehold interest to a good faith buyer for value or a good faith sublessee for value, but only to the extent set forth in the preceding sentence. When goods have been delivered under a transaction of lease the lessee has that power even though:

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

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

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

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

(c) 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.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 27. Effective July 15, 1991.)


text: If a person in the ordinary course of his or her business furnishes services or materials with respect to goods subject to a lease contract, a lien upon those goods in the possession of that person given by statute or rule of law for those materials or services takes priority over any interest of the lessor or lessee under the lease contract or this division unless the lien is created by statute and the statute provides otherwise or unless the lien is created by rule of law and the rule of law provides otherwise.


text:
(a) Except as otherwise provided in Section 10306, a creditor of a lessee takes subject to the lease contract.

(b) Except as otherwise provided in subdivision (c) and in Sections 10306 and 10308, 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 9317, 9321, and 9323, a lessee takes a leasehold interest subject to a security interest held by a creditor of the lessor.

history: (History: Amended by Stats. 1999, Ch. 991, Sec. 38. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)


text:
(a) A creditor of a lessor in possession of goods subject to a lease contract may treat the lease contract as void if as against the creditor retention of possession by the lessor is fraudulent or void under any statute or rule of law, but retention of possession in good faith and current course of trade by the lessor for a commercially reasonable time after the lease contract becomes enforceable is not fraudulent or void.

(b) Nothing in this division impairs the rights of creditors of a lessor if the lease contract is made under circumstances which under any statute or rule of law apart from this division would constitute the transaction a fraudulent transfer or voidable preference.

(c) 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 retention of possession by the seller is fraudulent under any statute or rule of law, but retention of 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 is not fraudulent if the buyer bought for value and in good faith.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 29. Effective July 15, 1991.)


text:
(a) In this section:

(1) Goods are “fixtures” when they become so related to particular real estate that an interest in them arises under real estate law;

(2) A “fixture filing” is the filing, in the office where a record of a mortgage on the real estate would be recorded, of a financing statement covering goods that are or are to become fixtures and conforming to the requirements of subdivisions (a) and (b) of Section 9502;

(3) A lease is a “purchase money lease” unless the lessee has possession or use of the goods or the right to possession or use of the goods before the lease agreement is enforceable;

(4) A mortgage is a “construction mortgage” to the extent it secures an obligation incurred for the construction of an improvement on land including the acquisition cost of the land, if the recorded writing so indicates; and

(5) “Encumbrance” includes real estate mortgages and other liens on real estate and all other rights in real estate that are not ownership interests.

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

(c) This division does not prevent creation of a lease of fixtures pursuant to real estate law.

(d) The interest of a lessor of fixtures has priority over a conflicting interest of an encumbrancer or owner of the real estate if:

(1) The lease is a purchase money lease, the conflicting interest of the encumbrancer or owner arises before the goods become fixtures, a fixture filing covering the fixtures is filed before the goods become fixtures or within 20 days thereafter, and the lessee has an interest of record in the real estate or is in possession of the real estate;

(2) A fixture filing covering the fixtures is filed before the interest of the encumbrancer or owner is of record, the lessor’s interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner, and the lessee has an interest of record in the real estate or is in possession of the real estate;

(3) 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 estate, or readily removable replacements of domestic appliances that are goods subject to a consumer lease;

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

(5) The encumbrancer or owner has consented in writing to the lease or has disclaimed an interest in the goods as fixtures; or

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

(e) Notwithstanding paragraph (1) of subdivision (d) but otherwise subject to subdivision (d), 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 estate under a construction mortgage recorded before the goods become fixtures if the goods become fixtures before the completion of the construction. To the extent given to refinance a construction mortgage, the conflicting interest of an encumbrancer of the real estate under a mortgage has this priority to the same extent as the encumbrancer of the real estate under the construction mortgage.

(f) In cases not within the preceding subdivisions, 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 estate who is not the lessee is determined by the priority rules governing conflicting interests in real estate.

(g) If the interest of a lessor of fixtures, including the lessor’s residual interest, has priority over all conflicting interests of all owners and encumbrancers of the real estate, the lessor or the lessee may (1) on default, expiration, termination, or cancellation of the lease agreement but subject to the lease agreement and this division, or (2) if necessary to enforce other rights and remedies of the lessor or lessee under this division, remove the goods from the real estate, free and clear of all conflicting interests of all owners and encumbrancers of the real estate, but the lessor or lessee must reimburse any encumbrancer or owner of the real estate who is not the lessee and who has not otherwise agreed for the cost of repair of any physical injury, but not for any diminution in value of the real estate 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.

history: (History: Amended by Stats. 1999, Ch. 991, Sec. 39. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)


text:
(a) Goods are “accessions” when they are installed in or affixed to other goods.

(b) The interest of a lessor or a lessee under a lease contract entered into before the goods became accessions is superior to all interests in the whole except as stated in subdivision (d).

(c) The interest of a lessor or a lessee under a lease contract entered into at the time or after the goods became accessions is superior to all subsequently acquired interests in the whole except as stated in subdivision (d) but is subordinate to interests in the whole existing at the time the lease contract was made unless the holders of such interests in the whole have in writing consented to the lease or disclaimed an interest in the goods as part of the whole.

(d) The interest of a lessor or a lessee under a lease contract described in subdivision (b) or (c) 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.

(e) When under subdivision (b) or subdivisions (c) and (d) a lessor or a lessee of accessions holds an interest that is superior to all interests in the whole, the lessor or the lessee may (1) 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 division, or (2) if necessary to enforce his or her other rights and remedies under this division, remove the goods from the whole, free and clear of all interests in the whole, but he or she must reimburse any holder of an interest in the whole who is not the lessee and who 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 until the party seeking removal gives adequate security for the performance of this obligation.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 31. Effective July 15, 1991.)


text: Nothing in this division prevents subordination by agreement by any person entitled to priority.

history: (History: Added by Stats. 1991, Ch. 111, Sec. 32. Effective July 15, 1991.)


text:
(a) A lease contract imposes an obligation on each party that the other’s expectation of receiving due performance will not be impaired.

(b) If reasonable grounds for insecurity arise with respect to the performance of either party, the insecure party may demand in writing adequate assurance of due performance. Until the insecure party receives that assurance, if commercially reasonable the insecure party may suspend any performance for which he or she has not already received the agreed return.

(c) A repudiation of the lease contract occurs if assurance of due performance adequate under the circumstances of the particular case is not provided to the insecure party within a reasonable time, not to exceed 30 days after receipt of a demand by the other party.

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

(e) Acceptance of any nonconforming delivery or payment does not prejudice the aggrieved party’s right to demand adequate assurance of future performance.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 33. Effective July 15, 1991.)

path: 10. PERSONAL PROPERTY LEASES > 4. Performance of Leased Contract: Repudiated, Substituted, and Excused


text:
(a) If either party repudiates a lease contract, other than a consumer lease, with respect to a performance not yet due under the lease contract, the loss of which performance will substantially impair the value of the lease contract to the other, the aggrieved party may:

(1) For a commercially reasonable time, await retraction of repudiation and performance by the repudiating party;

(2) Make demand pursuant to Section 10401 and await assurance of future performance adequate under the circumstances of the particular case; or

(3) Resort to any right or remedy upon default under the lease contract or this division, even though the aggrieved party has notified the repudiating party that the aggrieved party would await the repudiating party’s performance and assurance and has urged retraction. In addition, whether or not the aggrieved party is pursuing one of the foregoing remedies, the aggrieved party may suspend performance or, if the aggrieved party is the lessor, proceed in accordance with the provisions of this division on the lessor’s right to identify goods to the lease contract notwithstanding default or to salvage unfinished goods (Section 10524).

(b) The rights and remedies of the parties to a consumer lease in connection with a repudiation of that lease shall be determined under other laws, and this section shall not affect the applicability or interpretation of those laws.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 34. Effective July 15, 1991.)

chapter: 4. Performance of Leased Contract: Repudiated, Substituted, and Excused


text:
(a) Until the repudiating party’s next performance is due, the repudiating party can retract the repudiation unless, since the repudiation, the aggrieved party has canceled the lease contract or materially changed the aggrieved party’s position or otherwise indicated that the aggrieved party considers the repudiation final.

(b) Retraction may be by any method that clearly indicates to the aggrieved party that the repudiating party intends to perform under the lease contract and includes any assurance demanded under Section 10401.

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

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 35. Effective July 15, 1991.)


text:
(a) If without fault of the lessee, the lessor, and the supplier, the agreed berthing, loading, or unloading facilities fail or the agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable, but a commercially reasonable substitute is available, the substitute performance must be tendered and accepted.

(b) If the agreed means or manner of payment fails because of domestic or foreign governmental regulation:

(1) The lessor may withhold or stop delivery or cause the supplier to withhold or stop delivery unless the lessee provides a means or manner of payment that is commercially a substantial equivalent; and

(2) If delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the lessee’s obligation unless the regulation is discriminatory, oppressive, or predatory.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 36. Effective July 15, 1991.)


text:
Subject to Section 10404 on substituted performance, the following rules apply:

(1) Delay in delivery or nondelivery in whole or in part by a lessor or a supplier who complies with paragraphs (2) and (3) is not a default under the lease contract if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the lease contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order, whether or not the regulation or order later proves to be invalid.

(2) If the causes mentioned in paragraph (1) affect only part of the lessor’s or the supplier’s capacity to perform, he or she shall allocate production and deliveries among his or her customers but at his or her option may include regular customers not then under contract for sale or lease as well as his or her own requirements for further manufacture. He or she may so allocate in any manner that is fair and reasonable.

(3) The lessor seasonably shall notify the lessee and in the case of a finance lease the supplier seasonably shall notify the lessor and the lessee, if known, that there will be delay or nondelivery and, if allocation is required under paragraph (2), of the estimated quota thus made available for the lessee.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 37. Effective July 15, 1991.)


text:
(a) If the lessee receives notification of a material or indefinite delay or an allocation justified under Section 10405, the lessee may by written notification to the lessor as 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 10510):

(1) Terminate the lease contract (subdivision (b) of Section 10505); or

(2) Except in a finance lease, modify the lease contract by accepting the available quota in substitution, with due allowance from the rent payable for the balance of the lease term for the deficiency but without further right against the lessor.

(b) If, after receipt of a notification from the lessor under Section 10405, the lessee fails so to modify the lease agreement within a reasonable time not exceeding 30 days, the lease contract lapses with respect to any deliveries affected.

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 38. Effective July 15, 1991.)


text:
(a) In the case of 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 subdivision (a):

(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 whom the promise runs.

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

history: (History: Amended by Stats. 1991, Ch. 111, Sec. 39. Effective July 15, 1991.)


text:
(a) Whether the lessor or the lessee is in default under a lease contract is determined by the lease agreement and this division.

(b) If the lessor or the lessee is in default under the lease contract, the party seeking enforcement has rights and remedies as provided in this division and, except as limited by this division, as provided in the lease agreement.

(c) If the lessor or the lessee is in default under the lease contract, the party seeking enforcement may reduce the party’s claim to judgment, or otherwise enforce the lease contract by self-help or any available judicial procedure or nonjudicial procedure, including administrative proceeding, arbitration, or the like, in accordance with this division.

(d) Except as otherwise provided in subdivision (a) of Section 1305 or this division or the lease agreement, the rights and remedies referred to in subdivisions (b) and (c) are cumulative.

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

history: (History: Amended by Stats. 2006, Ch. 254, Sec. 66. Effective January 1, 2007.)

chapter: 5. Default

article: 1. In General

path: 10. PERSONAL PROPERTY LEASES > 5. Default > 1. In General


text: Except as otherwise provided in this division or the lease agreement, the lessor or lessee in default under the lease contract is not entitled to notice of default or notice of enforcement from the other party to the lease agreement.

history: (History: Added by Stats. 1988, Ch. 1359, Sec. 5. Operative January 1, 1990, by Sec. 11 of Ch. 1359.)

article: 1. In General