Chapter 1310: LEASES

1310.01 Definitions - UCC 2A-103.

(A) As used in sections 1310.01 to 1310.78 of the Revised Code, 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 the person 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. "Buyer in ordinary course of business" does not include a pawnbroker. "Buying" may be for cash, 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. "Buying" 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 a unit of goods that 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, including a machine; a set of articles, including a suite of furniture or a line of machinery; a quantity, including 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 all of the following apply:

(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;

(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) Before signing the lease contract, the lessee receives an accurate and complete statement designating the promises and warranties, disclaimers of warranties, limitations or modifications of remedies, or liquidated damages of the manufacturer of the goods and of any other third party that were 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) If the lease is not a consumer lease, before the lessee signs the lease contract, the lessor informs the lessee in writing 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; that the lessee is entitled under sections 1310.01 to 1310.78 of the Revised Code 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 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 that are fixtures, as defined in section 1310.37 of the Revised Code. "Goods" does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. "Goods" 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. 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, "lease" 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, usage of trade, or course of performance as provided in sections 1310.01 to 1310.78 of the Revised Code. Unless the context clearly indicates otherwise, "lease agreement" includes a sublease agreement.

(12) "Lease contract" means the total legal obligation that results from the lease agreement as affected by sections 1310.01 to 1310.78 of the Revised Code and any other applicable rules of law. Unless the context clearly indicates otherwise, "lease contract" 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, "lessee" includes a sublessee.

(15) "Lessee in ordinary course of business" means a person who in good faith and without knowledge that the lease to the person 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. "Lessee in ordinary course of business" does not include a pawnbroker. "Leasing" may be for cash, by exchange of other property, or on secured or unsecured credit and includes acquiring goods or documents of title under a preexisting lease contract. "Leasing" 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, "lessor" 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 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 parties entered into the transaction. The discount otherwise is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the parties entered into the transaction.

(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.

(B) The following definitions also apply to sections 1310.01 to 1310.78 of the Revised Code:

(1) "Accessions," as defined in section 1310.38 of the Revised Code;

(2) "Construction mortgage," "encumbrance," "fixtures," "fixture filing," and "purchase money lease" as defined in section 1310.37 of the Revised Code.

(C) As used in sections 1310.01 to 1310.78 of the Revised Code:

(1) "Account," "chattel paper," "document," "general intangible," "instrument," "mortgage," and "pursuant to commitment" have the same meanings as in section 1309.102 of the Revised Code.

(2) "Between merchants," "buyer," "merchant," "receipt," "sale," and "seller" have the same meanings as in section 1302.01 of the Revised Code.

(3) "Consumer goods" has the same meaning as in section 1309.07 of the Revised Code.

(4) "Entrusting" has the same meaning as in section 1302.44 of the Revised Code.

(5) "Good faith" has the same meaning as in section 1301.201 of the Revised Code.

(6) "Sale on approval" and "sale or return" have the same meanings as in section 1302.39 of the Revised Code.

(D) In addition, Chapter 1301. of the Revised Code contains general definitions and principles of construction and interpretation applicable throughout this chapter.

Cite as R.C. § 1310.01

Amended by 129th General AssemblyFile No.9, HB 9, §1, eff. 6/29/2011.

Effective Date: 07-01-2001

1310.02 Provisions apply to all transactions creating lease - application of other laws - UCC 2A-104.

(A) Sections 1310.01 to 1310.78 of the Revised Code apply to any transaction, regardless of form, that creates a lease.

(B)

(1) A lease, although subject to sections 1310.01 to 1310.78 of the Revised Code, is also subject to Chapter 1548., 4505., or 4585. of the Revised Code, any applicable certificate of title statute of another jurisdiction as provided in section 1310.03 of the Revised Code, and Chapter 1345., 1349., or 1351. of the Revised Code.

(2) If there is a conflict between the provisions of sections 1310.01 to 1310.78 of the Revised Code, other than section 1310.03 , division (C) of section 1310.32 , and division (C) of section 1310.33 of the Revised Code, and any statute referred to in division (B)(1) of this section, the provisions of that statute control.

(3) A failure to comply with any applicable statute has only the effect specified in that statute.

Cite as R.C. § 1310.02

Effective Date: 11-06-1992

1310.03 Territorial application of provisions to goods covered by certificate of title - UCC 2A-105.

Subject to the provisions of division (C) of section 1310.32 and division (C) of section 1310.33 of the Revised Code, with respect to goods covered by a certificate of title issued under Chapter 1548., 4505., or 4585. of the Revised Code or the certificate of title law of another jurisdiction, compliance and the effect of compliance or noncompliance with a certificate of title statute shall be governed by the law, including the conflict of laws rules, of the jurisdiction issuing the certificate until the earlier of one of the following:

(A) The surrender of the certificate;

(B) Four months after the goods are removed from that jurisdiction and thereafter until a new certificate of title is issued by another jurisdiction.

Cite as R.C. § 1310.03

Effective Date: 11-06-1992

1310.04 Limitation on power of parties to consumer lease to choose applicable law and judicial forum - UCC 2A-106.

(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 resides within thirty days after the lease agreement becomes enforceable or in which the goods are to be used, the choice of law is not enforceable.

(B) If the judicial forum chosen by the parties to a consumer lease is a forum that otherwise would not have jurisdiction over the lessee, the choice of judicial forum is not enforceable.

Cite as R.C. § 1310.04

Effective Date: 11-06-1992

1310.05 Waiver or renunciation of claim or right after default - UCC 2A-107.

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 written waiver or renunciation signed and delivered by the aggrieved party.

Cite as R.C. § 1310.05

Effective Date: 11-06-1992

1310.06 Unconscionability - UCC 2A-108.

(A) If a court as a matter of law finds a lease contract or any clause of a lease contract to have been unconscionable at the time it was made, the court may refuse to enforce the lease contract, may enforce the remainder of the lease contract without the unconscionable clause, or may so limit the application of the unconscionable clause as to avoid any unconscionable result.

(B) With respect to a consumer lease, if a court as a matter of law finds that a lease contract or any clause of a lease contract has been induced by unconscionable conduct or that unconscionable conduct has occurred in the collection of a claim arising from a lease contract, the court may grant appropriate relief.

(C) Before making a finding of unconscionability under division (A) or (B) of this section, a court, on its own motion or that of a party, shall afford the parties a reasonable opportunity to present evidence as to the setting, purpose, and effect of the lease contract, a clause of the lease contract, or the conduct of the parties.

(D) In an action in which the lessee claims unconscionability with respect to a consumer lease, all of the following apply:

(1) If the court finds unconscionability under division (A) or (B) of this section, the court shall award reasonable attorney's fees to the lessee.

(2) If the court does not find unconscionability under division (A) or (B) of this section and the lessee claiming unconscionability has brought or maintained an action he knew to be groundless, the court shall award reasonable attorney's fees to the party against whom the claim is made.

(3) In determining reasonable attorney's fees, the amount of the recovery on behalf of the claimant under division (A) or (B) of this section is not controlling.

Cite as R.C. § 1310.06

Effective Date: 11-06-1992

1310.07 Option to accelerate at will - UCC 2A-109.

(A) A term providing that one party or his successor in interest may accelerate payment or performance or require collateral or additional collateral "at will," "when he deems himself insecure," or in words of similar import shall be construed to mean that he has power to do so only if he believes in good faith that the prospect of payment or performance is impaired.

(B) With respect to a consumer lease, the burden of establishing good faith under division (A) of this section is on the party who exercised the power. Otherwise, the burden of establishing lack of good faith is on the party against whom the power has been exercised.

Cite as R.C. § 1310.07

Effective Date: 11-06-1992

1310.08 Statute of frauds - UCC 2A-201.

(A) A lease contract is not enforceable by way of action or defense unless one of the following applies:

(1) The total payments to be made under the lease contract, excluding payments for options to renew or buy, are less than one thousand dollars;

(2) There is a writing, 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 division (A)(2) of this section, whether or not it is specific, if it reasonably identifies what is described.

(C) A writing is not insufficient because it omits or incorrectly states a term agreed upon, but the lease contract is not enforceable under division (A)(2) of this section beyond the lease term and the quantity of goods shown in the writing.

(D) A lease contract that does not satisfy the requirements of division (A) of this section but that is valid in other respects is enforceable as follows:

(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, in testimony, or otherwise in court that a lease contract was made. The lease contract is not enforceable under division (D)(2) of this section beyond the quantity of goods admitted.

(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 division (D) of this section is one of the following:

(1) If there is a writing 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, in testimony, or otherwise in court a lease term, the term so admitted;

(3) A reasonable lease term.

Cite as R.C. § 1310.08

Effective Date: 11-06-1992

1310.09 Final written expression - parol or extrinsic evidence - UCC 2A-202.

Terms with respect to which the confirmatory memoranda of the parties agree or that otherwise are set forth in a writing intended by the parties as a final expression of their agreement with respect to the terms that are included in their agreement may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented by both of the following:

(A) Course of dealing, usage of trade, or course of performance;

(B) Evidence of consistent additional terms, unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.

Cite as R.C. § 1310.09

Effective Date: 11-06-1992

1310.10 Seals inoperative - UCC 2A-203.

The affixing of a seal to a writing evidencing a lease contract or an offer to enter into a lease contract does not render the writing a sealed instrument, and the law with respect to sealed instruments does not apply to a lease contract or offer to which a seal has been affixed.

Cite as R.C. § 1310.10

Effective Date: 11-06-1992

1310.11 Formation in general - UCC 2A-204.

(A) A lease contract may be made in any manner sufficient to show agreement, including conduct by both parties that 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 of a lease contract 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.

Cite as R.C. § 1310.11

Effective Date: 11-06-1992

1310.12 Firm offers - UCC 2A-205.

An offer by a merchant to lease goods to or from another person in a signed writing 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 shall be separately signed by the offeror.

Cite as R.C. § 1310.12

Effective Date: 11-06-1992

1310.13 Offer and acceptance in formation of lease contract - UCC 2A-206.

(A) Unless otherwise unambiguously indicated by the language or circumstances, an offer to make a lease contract shall be construed as inviting acceptance in any manner and by any medium reasonable under 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.

Cite as R.C. § 1310.13

Effective Date: 11-06-1992

1310.14 [Repealed].

Cite as R.C. § 1310.14

Repealed by 129th General AssemblyFile No.9, HB 9, §2, eff. 6/29/2011.

Effective Date: 11-06-1992

1310.15 Modification, rescission and waiver - UCC 2A-208.

(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 writing may not be otherwise modified or rescinded, but, except as between merchants, a provision that excludes modification or rescission except by a signed writing and that is on a form supplied by a merchant shall be separately signed by the other party.

(C) Although an attempt at modification or rescission does not satisfy the requirements of division (B) of this section, 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.

Cite as R.C. § 1310.15

Effective Date: 11-06-1992

1310.16 Lessee under finance lease as beneficiary of supply contract - UCC 2A-209.

(A) The benefit of a supplier's promises to the lessor under a supply contract and of all express or implied warranties, 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 from the terms.

(B) The extension of the benefit of a supplier's promises and of warranties to the lessee as provided in division (A) of this section does not do either of the following:

(1) Modify the rights and obligations of the parties to the supply contract, whether arising from the contract or otherwise;

(2) Impose any duty or liability under the supply contract on the lessee.

(C) Any modification or rescission of a 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 division (A) of this section, the lessee retains all rights that the lessee may have against the supplier and that arise from an agreement between the lessee and the supplier or under other law.

Cite as R.C. § 1310.16

Effective Date: 11-06-1992

1310.17 Express warranties - UCC 2A-210.

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

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

Cite as R.C. § 1310.17

Effective Date: 11-06-1992

1310.18 Warranties against interference and against infringement - lessee's obligation against infringement - UCC 2A-211.

(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, and that 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.

Cite as R.C. § 1310.18

Effective Date: 11-06-1992

1310.19 Implied warranty of merchantability - UCC 2A-212.

(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) To be merchantable, goods shall at least satisfy the following:

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

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

(3) Be 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) Be adequately contained, packaged, and labeled as the lease agreement may require;

(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.

Cite as R.C. § 1310.19

Effective Date: 11-06-1992

1310.20 Implied warranty of fitness for particular purpose - UCC 2A-213.

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.

Cite as R.C. § 1310.20

Effective Date: 11-06-1992

1310.21 Exclusion or modification of warranties - UCC 2A-214.

(A) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit a warranty shall be construed wherever reasonable as consistent with each other, but, subject to the provisions of section 1310.09 of the Revised Code on parol or extrinsic evidence, negation or limitation is inoperative to the extent that the construction is unreasonable.

(B) Subject to division (C) of this section, to exclude or modify the implied warranty of merchantability or any part of it, the language shall mention "merchantability," be by a writing, and be conspicuous. Subject to division (C) of this section, to exclude or modify any implied warranty of fitness, the exclusion shall 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 division (B) of this section, but subject to division (D) of this section, all of the following apply:

(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 in the circumstances should have revealed.

(3) An implied warranty also may 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 as provided in section 1310.18 of the Revised Code, or any part of it, the language shall 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.

Cite as R.C. § 1310.21

Effective Date: 11-06-1992

1310.22 Cumulation and conflict of warranties express or implied - UCC 2A-215.

Express or implied warranties shall 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:

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

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

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

Cite as R.C. § 1310.22

Effective Date: 11-06-1992

1310.23 Third-party beneficiaries of express and implied warranties - UCC 2A-216 Alternative C.

An express or implied warranty to or for the benefit of a lessee under sections 1310.01 to 1310.78 of the Revised Code extends to any person who reasonably may be expected to use, consume, or be affected by the goods and who is injured by breach of the warranty. The operation of this section may not be excluded, modified, or limited with respect to injury to the person of an individual to whom the warranty extends, but an exclusion, modification, or limitation of the warranty, including any with respect to rights and remedies, effective against the lessee also is effective against the beneficiary designated under this section.

Cite as R.C. § 1310.23

Effective Date: 11-06-1992

1310.24 Identification - UCC 2A-217.

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 in one of the following manners:

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

(B) 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;

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

Cite as R.C. § 1310.24

Effective Date: 11-06-1992

1310.25 Insurance and proceeds - UCC 2A-218.

(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 divisions (A) and (B) of this section, 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 section of the Revised Code, statute, or rule of law.

(E) The parties may determine by agreement that one or more parties have an obligation to obtain and pay for insurance covering the goods and may determine by agreement the beneficiary of the proceeds of the insurance.

Cite as R.C. § 1310.25

Effective Date: 11-06-1992

1310.26 Risk of loss - UCC 2A-219.

(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 section 1310.27 of the Revised Code on the effect of default on risk of loss, 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 and 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. If it does require delivery at a particular destination and the goods are duly tendered at that particular destination while in the possession of the carrier, the risk of loss passes to the lessee when the goods are duly so tendered at that particular destination 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 division (B)(1) or (2) of this section, 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 of loss passes to the lessee on tender of delivery.

Cite as R.C. § 1310.26

Effective Date: 11-06-1992

1310.27 Effect of default on risk of loss - UCC 2A-220.

(A) If risk of loss is to pass to the lessee and the time of passage is not stated, one of the following applies:

(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, to the extent of any deficiency in his 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 otherwise is 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 effective insurance coverage, may treat the risk of loss as resting on the lessee for a commercially reasonable time.

Cite as R.C. § 1310.27

Effective Date: 11-06-1992

1310.28 Casualty to identified goods - UCC 2A-221.

If a lease contract requires goods to be 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 1310.26 of the Revised Code, both of the following apply:

(A) If the loss is total, the lease contract is avoided.

(B) If the loss is partial or the goods have so deteriorated as to no longer conform to the lease contract, the lessee may demand inspection and at his option either treat the lease contract as avoided or, except in a finance lease that is not a consumer 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.

Cite as R.C. § 1310.28

Effective Date: 11-06-1992

1310.29 Enforceability of lease contract - UCC 2A-301.

Except as otherwise provided in sections 1310.01 to 1310.78 of the Revised Code, 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.

Cite as R.C. § 1310.29

Effective Date: 11-06-1992

1310.30 Title to and possession of goods - UCC 2A-302.

Except as otherwise provided in sections 1310.01 to 1310.78 of the Revised Code, those sections apply 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 section of the Revised Code, statute of another jurisdiction, or rule of law that possession or the absence of possession is fraudulent.

Cite as R.C. § 1310.30

Effective Date: 11-06-1992

1310.31 Alienability of party's interest under lease contract or of lessor's residual interest in goods - delegation of performance - transfer of rights - UCC 2A-303.

(A) As used in this section, "creation of a security interest" includes the sale of a lease contract that is subject to Chapter 1309. of the Revised Code, by reason of division (A)(3) of section 1309.109 of the Revised Code.

(B) Except as provided in division (C) of this section and section 1309.407 of the Revised Code, a provision in a lease agreement that prohibits the voluntary or involuntary transfer, including a transfer by sale, sublease, creation or enforcement of a security interest, or attachment, levy, or other judicial process, of an interest of a party under the lease contract or of the lessor's residual interest in the goods or that makes such a transfer an event of default gives rise to the rights and remedies provided in division (D) of this section, but a transfer that is prohibited or is an event of default under the lease agreement otherwise is effective.

(C) A provision in a lease agreement that 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 that 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 under division (D) of this section.

(D) Subject to division (C) of this section and section 1309.407 of the Revised Code, both of the following apply:

(1) If a transfer is made that 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 division (B) of section 1310.47 of the Revised Code.

(2) If division (D)(1) of this section is not applicable and if a transfer is made that is prohibited under a lease agreement or that materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the other party to the lease contract, unless the party not making the transfer agrees at any time to the transfer in the lease contract or otherwise, then, except as limited by contract, 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 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 prohibiting the transfer or making the transfer a default shall be specific, by a writing, and conspicuous.

Cite as R.C. § 1310.31

Effective Date: 07-01-2001

1310.32 Subsequent lease of goods by lessor - UCC 2A-304.

(A) Subject to section 1310.31 of the Revised Code, 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 division (B) of this section and division (D) of section 1310.73 of the Revised Code, 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 any of the following applies:

(1) The lessor's transferor was deceived as to the identity of the lessor.

(2) The delivery was in exchange for a check that is later dishonored.

(3) It was agreed that the transaction was to be a "cash sale."

(4) The delivery was procured through fraud punishable as a theft offense under Chapter 2913. of the Revised Code or another 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 Chapter 1548., 4505., or 4585. of the Revised Code or a similar law of another jurisdiction takes no greater rights than those provided both by this section and by the certificate of title law.

Cite as R.C. § 1310.32

Effective Date: 11-06-1992

1310.33 Sale or sublease of goods by lessee - UCC 2A-305.

(A) Subject to section 1310.31 of the Revised Code, 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 division (B) of this section and division (D) of section 1310.57 of the Revised Code, 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 any of the following applies:

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

(2) The delivery was in exchange for a check that is later dishonored.

(3) The delivery was procured through fraud punishable as a theft offense under Chapter 2913. of the Revised Code or another 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 Chapter 1548., 4505., or 4585. of the Revised Code or a similar law of another jurisdiction takes no greater rights than those provided both by this section and by the certificate of title law.

Cite as R.C. § 1310.33

Effective Date: 11-06-1992

1310.34 Priority of certain liens arising by operation of law - UCC 2A-306.

If a person in the ordinary course of his 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 a section of the Revised Code, statute of another jurisdiction, or rule of law for those materials or services takes priority over any interest of the lessor or lessee under the lease contract or sections 1310.01 to 1310.78 of the Revised Code, unless the lien is created by a section of the Revised Code or statute of another jurisdiction and the section or statute provides otherwise or unless the lien is created by rule of law and the rule of law provides otherwise.

Cite as R.C. § 1310.34

Effective Date: 11-06-1992

1310.35 Priority of liens arising by attachment or levy on, security interests in, and other claims to goods - UCC 2A-307.

(A) Except as otherwise provided in section 1310.34 of the Revised Code, a creditor of a lessee takes subject to the lease contract.

(B) Except as otherwise provided in division (C) of this section and in sections 1310.34 and 1310.36 of the Revised Code, 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 1309.317 , 1309.321 , and 1309.323 of the Revised Code, a lessee takes a leasehold interest subject to a security interest held by a creditor of the lessor.

Cite as R.C. § 1310.35

Effective Date: 07-01-2001

1310.36 Special rights of creditors - UCC 2A-308.

(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 under any section of the Revised Code, any statute of another jurisdiction, or any 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.

(B) Nothing in sections 1310.01 to 1310.78 of the Revised Code impairs the rights of creditors of a lessor if the lease contract becomes enforceable, not in current course of trade but in satisfaction of or as security for a preexisting claim for money, security, or the like, and is made under circumstances that under any section of the Revised Code, statute of another jurisdiction, or rule of law apart from sections 1310.01 to 1310.78 of the Revised Code 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 section of the Revised Code, statute of another jurisdiction, 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.

Cite as R.C. § 1310.36

Effective Date: 11-06-1992

1310.37 Lessor's and lessee's rights when goods become fixtures - UCC 2A-309.

(A) As used 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 in which a record of a mortgage on the real estate would be filed or recorded, of a financing statement covering goods that are or are to become fixtures and conforming to the requirements of divisions (A) and (B) of section 1309.502 of the Revised Code.

(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.

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

(B) Under sections 1310.01 to 1310.78 of the Revised Code, a lease may be of goods that are fixtures or may continue in goods that become fixtures, but, under those sections, no lease exists of ordinary building materials incorporated into an improvement on land.

(C) Sections 1310.01 to 1310.78 of the Revised Code do not prevent the creation of a lease of fixtures pursuant to real estate law.

(D) The perfected interest of a lessor of fixtures has priority over a conflicting interest of an encumbrancer or owner of the real estate if either of the following applies:

(1) The lease is a purchase money lease, the conflicting interest of the encumbrancer or owner arises before the goods become fixtures, the interest of the lessor is perfected by a fixture filing before the goods become fixtures or within ten days after they become fixtures, and the lessee has an interest of record in the real estate or is in possession of the real estate.

(2) The interest of the lessor is perfected by a fixture filing 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.

(E) The interest of a lessor of fixtures, whether or not perfected, has priority over the conflicting interest of an encumbrancer or owner of the real estate if any of the following applies:

(1) 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 and, before the goods become fixtures, the lease contract is enforceable.

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

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

(4) 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.

(F) Notwithstanding division (D)(1) of this section but otherwise subject to divisions (D) and (E) of this section, 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.

(G) In cases not within divisions (A) to (F) of this section, 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.

(H) 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, on default, expiration, termination, or cancellation of the lease agreement but subject to the lease agreement and sections 1310.01 to 1310.78 of the Revised Code, or if necessary to enforce other rights and remedies of the lessor or lessee under those sections, may 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 shall 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.

(I) Even though the lease agreement does not create a security interest, the interest of a lessor of fixtures, including the lessor's residual interest, is perfected by filing a financing statement as a fixture filing for leased goods that are or are to become fixtures in accordance with the relevant provisions of Chapter 1309. of the Revised Code.

Cite as R.C. § 1310.37

Effective Date: 07-01-2001

131038 Lessor's and lessee's rights when goods become accessions - UCC 2A-310.

(A) For purposes of this section, 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 division (D) of this section.

(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 division (D) of this section but is subordinate to interests in the whole existing at the time the lease contract was made unless the holders of those 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 division (B) or (C) of this section is subordinate to the interest of either of the following:

(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;

(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 division (B) or (C) and division (D) of this section a lessor or a lessee of accessions holds an interest that is superior to all interests in the whole, the lessor or the lessee, on default, expiration, termination, or cancellation of the lease contract by the other party but subject to the lease contract and sections 1310.01 to 1310.78 of the Revised Code, or if necessary to enforce other rights and remedies of the lessor or lessee under those sections, may remove the goods from the whole, free and clear of all interests in the whole, but the lessor or lessee shall 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.

Cite as R.C. § 1310.38

Effective Date: 11-06-1992

1310.39 Subordination by agreement.

Nothing in sections 1310.01 to 1310.78 of the Revised Code prevents subordination by agreement by any person entitled to priority.

Cite as R.C. § 1310.39

Effective Date: 11-06-1992

1310.40 Insecurity - adequate assurance of performance - UCC 2A-401.

(A) A lease contract imposes an obligation on each party that the other party'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 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 thirty 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 shall 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.

Cite as R.C. § 1310.40

Effective Date: 11-06-1992

1310.41 Anticipatory repudiation - UCC 2A-402.

If either party repudiates a lease contract 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 party, the aggrieved party may do any of the following:

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

(B) Make demand pursuant to section 1310.40 of the Revised Code and await assurance of future performance adequate under the circumstances of the particular case;

(C) Resort to any right or remedy upon default under the lease contract or sections 1310.01 to 1310.78 of the Revised Code, 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 any of those remedies, the aggrieved party may suspend performance or, if the aggrieved party is the lessor, proceed in accordance with the provisions of section 1310.70 of the Revised Code pertaining to the lessor's right to identify goods to the lease contract notwithstanding default or to salvage unfinished goods.

Cite as R.C. § 1310.41

Effective Date: 11-06-1992

1310.42 Retraction of anticipatory repudiation - UCC 2A-403.

(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, 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 1310.40 of the Revised Code.

(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.

Cite as R.C. § 1310.42

Effective Date: 11-06-1992

1310.43 Substituted performance - UCC 2A-404.

(A) If, without fault of the lessee, the lessor, and the supplier, the agreed berthing, loading, or unloading facilities fail, 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 shall be tendered and accepted.

(B) If the agreed means or manner of payment fails because of domestic or foreign governmental regulation, both of the following apply:

(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.

(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.

Cite as R.C. § 1310.43

Effective Date: 11-06-1992

1310.44 Excused performance - UCC 2A-405.

Subject to the provisions of section 1310.43 of the Revised Code pertaining to substituted performance, the following rules apply:

(A) A delay in delivery or nondelivery in whole or in part by a lessor or a supplier who complies with divisions (B) and (C) of this section 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.

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

(C) 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 division (B) of this section, of the estimated quota thus made available for the lessee.

Cite as R.C. § 1310.44

Effective Date: 11-06-1992

1310.45 Procedure on excused performance - UCC 2A-406.

(A) If the lessee receives notification of a material or indefinite delay or of an allocation justified under section 1310.44 of the Revised Code, the lessee, 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 as provided in section 1310.56 of the Revised Code, may do either of the following:

(1) Terminate the lease contract, subject to division (B) of section 1310.51 of the Revised Code;

(2) Except in a finance lease that is not a consumer 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 division (C) of section 1310.44 of the Revised Code, the lessee fails to modify the lease agreement in accordance with division (A)(2) of this section within a reasonable time not exceeding thirty days, the lease contract lapses with respect to any deliveries affected.

Cite as R.C. § 1310.45

Effective Date: 11-06-1992

1310.46 Irrevocable promises, finance leases - UCC 2A-407.

(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) Both of the following apply to a promise that has become irrevocable and independent under division (A) of this section:

(1) It is effective and enforceable between the parties and by or against third parties, including assignees of the parties.

(2) It is not subject to cancellation, termination, modification, repudiation, excuse, or substitution without the consent of the party to whom it 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.

Cite as R.C. § 1310.46

Effective Date: 11-06-1992

1310.47 Default, procedure - UCC 2A-501.

(A) Whether the lessor or the lessee is in default under a lease contract is determined by the lease agreement and sections 1310.01 to 1310.78 of the Revised Code.

(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 sections 1310.01 to 1310.78 of the Revised Code and, except as limited by those sections, 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 an administrative proceeding, arbitration, or the like, in accordance with sections 1310.01 to 1310.78 of the Revised Code.

(D) Except as otherwise provided in division (A) of section 1301.305 or sections 1310.01 to 1310.78 of the Revised Code or the lease agreement, the rights and remedies referred to in divisions (B) and (C) of this section are cumulative.

(E) If the lease agreement covers both real property and goods, the party seeking enforcement may proceed under sections 1310.47 to 1310.78 of the Revised Code 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 sections 1310.47 to 1310.78 of the Revised Code does not apply.

Cite as R.C. § 1310.47

Amended by 129th General AssemblyFile No.9, HB 9, §1, eff. 6/29/2011.

Effective Date: 11-06-1992

1310.48 Notice after default - UCC 2A-502.

Except as otherwise provided in sections 1310.01 to 1310.78 of the Revised Code 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.

Cite as R.C. § 1310.48

Effective Date: 11-06-1992

1310.49 Modification or impairment of rights and remedies - UCC 2A-503.

(A) Except as otherwise provided in sections 1310.01 to 1310.78 of the Revised Code, the lease agreement may include rights and remedies for default in addition to or in substitution for those provided in sections 1310.01 to 1310.78 of the Revised Code and may limit or alter the measure of damages recoverable under those sections.

(B) Resort to a remedy provided under sections 1310.01 to 1310.78 of the Revised Code or in the lease agreement is optional unless the remedy is expressly agreed to be exclusive. If circumstances cause an exclusive or limited remedy to fail of its essential purpose or if a provision for an exclusive remedy is unconscionable, remedy may be had as provided in sections 1310.01 to 1310.78 of the Revised Code.

(C) Consequential damages may be liquidated under section 1310.50 of the Revised Code, or may otherwise be limited, altered, or excluded unless the limitation, alteration, or exclusion is unconscionable, limitation, alteration, or exclusion of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable, but limitation, alteration, or exclusion of damages, if the loss is commercial, is not prima facie unconscionable.

(D) Rights and remedies on default by the lessor or the lessee with respect to any obligation or promise collateral or ancillary to the lease contract are not impaired by sections 1310.01 to 1310.78 of the Revised Code.

Cite as R.C. § 1310.49

Effective Date: 11-06-1992

1310.50 Liquidation of damages - UCC 2A-504.

(A) Damages payable by either party for default or any other act or omission, including indemnity for loss or diminution of anticipated tax benefits or loss or damage to lessor's residual interest, may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the default or other act or omission.

(B) If the lease agreement provides for liquidation of damages, and if either that provision does not comply with division (A) of this section, or that provision is an exclusive or limited remedy that circumstances cause to fail of its essential purpose, remedy may be had as provided in sections 1310.01 to 1310.78 of the Revised Code.

(C) If the lessor justifiably withholds or stops delivery of goods because of the lessee's default or insolvency as provided in section 1310.71 or 1310.72 of the Revised Code, the lessee is entitled to restitution of any amount by which the sum of his payments exceeds either of the following:

(1) The amount to which the lessor is entitled by virtue of terms liquidating the lessor's damages in accordance with division (A) of this section;

(2) In the absence of those terms, twenty per cent of the then present value of the total rent the lessee was obligated to pay for the balance of the lease term or, in the case of a consumer lease, the lesser of that amount or five hundred dollars.

(D) A lessee's right to restitution under division (C) of this section is subject to offset to the extent the lessor establishes both of the following:

(1) A right to recover damages under sections 1310.01 to 1310.78 of the Revised Code other than under division (A) of this section;

(2) The amount or value of any benefits received by the lessee directly or indirectly by reason of the lease contract.

Cite as R.C. § 1310.50

Effective Date: 11-06-1992

1310.51 Cancellation and termination and effect of cancellation, termination, rescission or fraud on rights and remedies - UCC 2A-505.

(A) On cancellation of the lease contract, all obligations that are still executory on all parties are discharged, but any right based on prior default or performance survives, and the cancelling party also retains any remedy for default of the whole lease contract or any unperformed balance.

(B) On termination of the lease contract, all obligations that are still executory on all parties are discharged, but any right based on prior default or performance survives.

(C) Unless the contrary intention clearly appears, expressions of "cancellation," "rescission," or the like of the lease contract may not be construed as a renunciation or discharge of any claim in damages for an antecedent default.

(D) Rights and remedies for material misrepresentation or fraud include all rights and remedies available under sections 1310.01 to 1310.78 of the Revised Code for default.

(E) A rescission of the lease contract, a claim for rescission of the lease contract, or a rejection or return of the goods does not bar, and shall not be considered inconsistent with, a claim for damages or other right or remedy.

Cite as R.C. § 1310.51

Effective Date: 11-06-1992

1310.52 Statute of limitations - UCC 2A-506.

(A) An action for default under a lease contract, including an action for a breach of warranty or indemnity, shall be commenced within four years after the cause of action accrued. By the original lease contract, the parties may reduce the period of limitation to not less than one year.

(B) A cause of action for default accrues when the act or omission on which the default or breach of warranty is based is or should have been discovered by the aggrieved party or when the default occurs, whichever is later. A cause of action for indemnity accrues when the act or omission on which the claim for indemnity is based is or should have been discovered by the indemnified party, whichever is later.

(C) If an action commenced within the time limited by division (A) of this section is so terminated as to leave available a remedy by another action for the same default, breach of warranty, or indemnity, the other action may be commenced after the expiration of the time limited and within six months after the termination of the first action unless the termination resulted from voluntary discontinuance or from dismissal for failure or neglect to prosecute.

(D) This section does not alter the law on tolling of the statute of limitations and does not apply to causes of action that accrued before the effective date of this section.

Cite as R.C. § 1310.52

Effective Date: 11-06-1992

1310.53 Proof of market rent - time and place - UCC 2A-507.

(A) Damages based on market rent as provided in section 1310.65 or 1310.74 of the Revised Code are determined according to the rent for the use of the goods concerned for a lease term identical to the remaining lease term of the original lease agreement and prevailing at the times specified in those sections.

(B) If evidence of rent for the use of the goods concerned for a lease term identical to the remaining lease term of the original lease agreement and prevailing at the times or places described in sections 1310.01 to 1310.78 of the Revised Code is not readily available, the rent prevailing within any reasonable time before or after the time described or at any other place or for a different lease term that, in commercial judgment or under usage of trade, would serve as a reasonable substitute for the one described may be used, making any proper allowance for the difference, including the cost of transporting the goods to or from the other place.

(C) Evidence of a relevant rent prevailing at a time or place or for a lease term other than the one described in sections 1310.01 to 1310.78 of the Revised Code offered by one party is not admissible unless and until he has given the other party notice that the court finds sufficient to prevent unfair surprise.

(D) If the prevailing rent or value of any goods regularly leased in any established market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of that market are admissible in evidence. The circumstances of the preparation of the report may be shown to affect its weight but not its admissibility.

Cite as R.C. § 1310.53

Effective Date: 11-06-1992

1310.54 Lessee's remedies - UCC 2A-508.

(A) If a lessor fails to deliver the goods in conformity to the lease contract as provided in section 1310.55 of the Revised Code or repudiates the lease contract as provided in section 1310.41 of the Revised Code, or if a lessee rightfully rejects the goods as provided in section 1310.55 of the Revised Code or justifiably revokes acceptance of the goods as provided in section 1310.63 of the Revised Code, then, with respect to any goods involved and with respect to all of the goods if under an installment lease contract the value of the whole lease contract is substantially impaired as provided in section 1310.56 of the Revised Code, the lessor is in default under the lease contract, and the lessee may do one or more of the following:

(1) Cancel the lease contract as provided in division (A) of section 1310.51 of the Revised Code;

(2) Recover so much of the rent and security as has been paid and is just under the circumstances;

(3) Cover and recover damages as to all goods affected, whether or not they have been identified to the lease contract, as provided in sections 1310.64 and 1310.66 of the Revised Code, or recover damages for nondelivery as provided in sections 1310.65 and 1310.66 of the Revised Code;

(4) Exercise any other rights or pursue any other remedies provided in the lease contract.

(B) If a lessor fails to deliver the goods in conformity to the lease contract or repudiates the lease contract, the lessee also may do one of the following:

(1) If the goods have been identified, recover them as provided in section 1310.68 of the Revised Code;

(2) In a proper case, obtain specific performance or replevy the goods as provided in section 1310.67 of the Revised Code.

(C) If a lessor is otherwise in default under a lease contract, the lessee may exercise the rights and pursue the remedies provided in the lease contract, which may include a right to cancel the lease, and in division (C) of section 1310.65 of the Revised Code.

(D) If a lessor has breached an express or implied warranty, the lessee may recover damages as provided in division (D) of section 1310.65 of the Revised Code.

(E) On rightful rejection or justifiable revocation of acceptance, a lessee has a security interest in goods in the lessee's possession or control for any rent and security that has been paid and any expenses reasonably incurred in their inspection, receipt, transportation, and care and custody and may hold those goods and dispose of them in good faith and in a commercially reasonable manner, subject to section 1310.73 of the Revised Code.

(F) Subject to section 1310.46 of the Revised Code, a lessee, on notifying the lessor of the lessee's intention to do so, may deduct all or any part of the damages resulting from any default under the lease contract from any part of the rent still due under the same lease contract.

Cite as R.C. § 1310.54

Effective Date: 11-06-1992

1310.55 Lessee's rights on improper delivery - rightful rejection - UCC 2A-509.

(A) Subject to the provisions of section 1310.56 of the Revised Code on default in installment lease contracts, if the goods or the tender or delivery of the goods fail in any respect to conform to the lease contract, the lessee may reject or accept the goods or accept any commercial unit or units and reject the rest of the goods.

(B) A rejection of goods is ineffective unless it is within a reasonable time after the tender or delivery of the goods, and the lessee seasonably notifies the lessor.

Cite as R.C. § 1310.55

Effective Date: 11-06-1992

1310.56 Installment lease contracts - rejection and default - UCC 2A-510.

(A) Under an installment lease contract, a lessee may reject any delivery that is nonconforming if the nonconformity substantially impairs the value of that delivery and cannot be cured or the nonconformity is a defect in the required documents. If the nonconformity does not fall within division (B) of this section, and if the lessor or the supplier gives adequate assurance of its cure, the lessee must accept that delivery.

(B) Whenever nonconformity or default with respect to one or more deliveries substantially impairs the value of the installment lease contract as a whole, there is a default with respect to the whole. The aggrieved party reinstates the installment lease contract as a whole if the aggrieved party accepts a nonconforming delivery without seasonably notifying of cancellation, brings an action with respect only to past deliveries, or demands performance as to future deliveries.

Cite as R.C. § 1310.56

Effective Date: 11-06-1992

1310.57 Merchant lessee's duties as to rightfully rejected goods - UCC 2A-511.

(A) Subject to any security interest of a lessee as provided in division (E) of section 1310.54 of the Revised Code, if a lessor or a supplier has no agent or place of business at the market of rejection, a merchant lessee, after rejection of goods in his possession or control, shall follow any reasonable instructions received from the lessor or the supplier with respect to the goods. In the absence of those instructions, a merchant lessee shall make reasonable efforts to sell, lease, or otherwise dispose of the goods for the lessor's account if they threaten to decline in value speedily. Instructions are not reasonable if on demand indemnity for expenses is not forthcoming.

(B) If a merchant lessee, as provided in division (A) of this section, or any other lessee, as provided in section 1310.58 of the Revised Code, disposes of goods, he is entitled to reimbursement either from the lessor or the supplier or out of the proceeds for the reasonable expenses of caring for and disposing of the goods and, if the expenses include no disposition commission, to the commission that is usual in the trade or, if there is none, to a reasonable sum not exceeding ten per cent of the gross proceeds.

(C) In complying with this section or section 1310.58 of the Revised Code, the lessee is held only to good faith. Good faith conduct is neither acceptance or conversion nor the basis of an action for damages.

(D) A purchaser who purchases in good faith from a lessee pursuant to this section or section 1310.58 of the Revised Code takes the goods free of any rights of the lessor and the supplier even though the lessee fails to comply with one or more of the requirements of sections 1310.01 to 1310.78 of the Revised Code.

Cite as R.C. § 1310.57

Effective Date: 11-06-1992

1310.58 Lessee's duties as to rightfully rejected goods - UCC 2A-512.

(A) Except as otherwise provided in section 1310.57 of the Revised Code with respect to goods that threaten to decline in value speedily and subject to any security interest of a lessee as provided in division (E) of section 1310.54 of the Revised Code, the following apply:

(1) The lessee, after rejection of goods in the lessee's possession, shall hold them with reasonable care at the lessor's or supplier's disposition for a reasonable time after the lessee's seasonable notification of rejection.

(2) If the lessor or the supplier gives no instructions within a reasonable time after notification of rejection, the lessee may store the rejected goods for the lessor's or supplier's account, ship them to the lessor or supplier, or dispose of them for the lessor's or supplier's account with reimbursement in the manner provided in section 1310.57 of the Revised Code.

(3) The lessee has no obligations other than those described in divisions (A)(1) and (2) of this section with regard to goods rightfully rejected.

(B) Action by the lessee pursuant to division (A) of this section is not acceptance or conversion.

Cite as R.C. § 1310.58

Effective Date: 11-06-1992

1310.59 Cure by lessor of improper tender or delivery - replacement - UCC 2A-513.

(A) If any tender or delivery by the lessor or supplier is rejected because it is nonconforming and if the time for performance has not yet expired, the lessor or supplier seasonably may notify the lessee of the lessor's or supplier's intention to cure and then may make a conforming delivery within the time provided in the lease contract.

(B) If the lessee rejects a nonconforming tender that the lessor or supplier had reasonable grounds to believe would be acceptable with or without money allowance, the lessor or supplier may have a further reasonable time to substitute a conforming tender if he seasonably notifies the lessee.

Cite as R.C. § 1310.59

Effective Date: 11-06-1992

1310.60 Waiver of lessee's objections - UCC 2A-514.

(A) In rejecting goods, a lessee's failure to state a particular defect that is ascertainable by reasonable inspection precludes the lessee from relying on the defect to justify rejection or to establish default if either of the following applies:

(1) The lessor or supplier could have cured the defect as provided in section 1310.59 of the Revised Code if the defect had been stated seasonably;

(2) Between merchants, the lessor or supplier, after the rejection of the goods, made a request in writing for a full and final written statement of all defects on which the lessee proposes to rely.

(B) A lessee's failure to reserve rights when paying rent or other consideration against documents precludes recovery of the payment for defects apparent in the documents.

Cite as R.C. § 1310.60

Amended by 129th General AssemblyFile No.9, HB 9, §1, eff. 6/29/2011.

Effective Date: 11-06-1992

1310.61 Acceptance of goods - UCC 2A-515.

(A) Acceptance of goods occurs after the lessee has had a reasonable opportunity to inspect the goods and one of the following applies:

(1) The lessee signifies or acts with respect to the goods in a manner that signifies to the lessor or supplier that the goods are conforming or that the lessee will take or retain them in spite of their nonconformity.

(2) The lessee fails to make an effective rejection of the goods as provided in division (B) of section 1310.55 of the Revised Code.

(B) Acceptance of a part of any commercial unit is acceptance of that entire unit.

Cite as R.C. § 1310.61

Effective Date: 11-06-1992

1310.62 Effect of acceptance of goods - notice of default - burden of establishing default after acceptance - notice of claim or litigation to person answerable over - UCC 2A-516.

(A) A lessee shall pay rent for any goods accepted in accordance with the lease contract, with due allowance for goods rightfully rejected or not delivered.

(B) A lessee's acceptance of goods precludes rejection of the goods accepted. In the case of a finance lease, if acceptance is made with knowledge of a nonconformity, the acceptance cannot be revoked because of the nonconformity. In any other case, if acceptance is made with knowledge of a nonconformity, the acceptance cannot be revoked because of the nonconformity, unless the acceptance was on the reasonable assumption that the nonconformity would be seasonably cured, acceptance does not of itself impair any other remedy for nonconformity provided by sections 1310.01 to 1310.78 of the Revised Code or the lease agreement.

(C) If a tender has been accepted, all of the following apply:

(1) Within a reasonable time after the lessee discovers or should have discovered any default, the lessee shall notify the lessor and supplier, if any, or be barred from any remedy against the party not notified.

(2) Except in the case of a consumer lease, within a reasonable time after the lessee receives notice of litigation for infringement or the like, as provided in section 1310.18 of the Revised Code, the lessee shall notify the lessor or be barred from any remedy over for liability established by the litigation.

(3) The burden is on the lessee to establish any default.

(D) If a lessee is sued for breach of a warranty or other obligation for which a lessor or a supplier is answerable over, both of the following apply:

(1) The lessee may give the lessor or supplier, or both, written notice of the litigation. If the notice states that the person notified may come in and defend and that, if the person notified does not do so, that person will be bound in any action against that person by the lessee by any determination of fact common to the two litigations, then, unless the person notified after seasonable receipt of the notice does come in and defend, that person is so bound.

(2) The lessor or supplier may demand in writing that the lessee turn over control of the litigation, including settlement, if the claim is one for infringement or the like, as provided in section 1310.18 of the Revised Code, or else be barred from any remedy over. If the demand states that the lessor or supplier agrees to bear all expense and to satisfy any adverse judgment, then, unless the lessee after seasonable receipt of the demand does turn over control, the lessee is so barred.

(E) Divisions (C) and (D) of this section apply to any obligation of a lessee to hold the lessor or supplier harmless against infringement or the like as provided in section 1310.18 of the Revised Code.

Cite as R.C. § 1310.62

Effective Date: 11-06-1992

1310.63 Revocation of acceptance of goods - UCC 2A-517.

(A) A lessee may revoke acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the lessee if either of the following applies:

(1) Except in the case of a finance lease, the lessee has accepted it on the reasonable assumption that its nonconformity would be cured, and it has not been seasonably cured.

(2) The lessee has accepted it without discovery of the nonconformity, if the lessee's acceptance was reasonably induced either by the lessor's assurances or, except in the case of a finance lease, by the difficulty of discovery before acceptance.

(B) Except in the case of a finance lease that is not a consumer lease, a lessee may revoke acceptance of a lot or commercial unit if the lessor defaults under the lease contract and the default substantially impairs the value of that lot or commercial unit to the lessee.

(C) If the lease agreement so provides, the lessee may revoke acceptance of a lot or commercial unit because of other defaults by the lessor.

(D) Revocation of acceptance shall occur within a reasonable time after the lessee discovers or should have discovered the ground for it and before any substantial change in the condition of the goods that is not caused by the nonconformity. Revocation is not effective until the lessee notifies the lessor.

(E) A lessee who so revokes has the same rights and duties with regard to the goods involved as if the lessee had rejected them.

Cite as R.C. § 1310.63

Effective Date: 11-06-1992

1310.64 Cover - substitute goods - UCC 2A-518.

(A) After a default of the type described in division (A) of section 1310.54 of the Revised Code by a lessor under a lease contract, the lessee may cover by making any purchase or lease of or contract to purchase or lease goods in substitution for those due from the lessor.

(B) Except as otherwise provided in section 1310.50 of the Revised Code with respect to damages liquidated in the lease agreement or otherwise determined pursuant to agreement of the parties as provided in section 1301.302 and in section 1310.49 of the Revised Code, if a lessee's cover is by a lease agreement substantially similar to the original lease agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, the lessee may recover from the lessor as damages both of the following:

(1) The present value, as of the date of the commencement of the term of the new lease agreement, of the rent under the new lease agreement applicable to that period of the new lease term that is comparable to the then remaining term of the original lease agreement minus the present value, as of the same date, of the total rent for the then remaining lease term of the original lease agreement;

(2) Any incidental or consequential damages, less expenses saved in consequence of the lessor's default.

(C) If a lessee's cover is by a lease agreement that for any reason does not qualify for treatment under division (B) of this section or is by purchase or otherwise, the lessee may recover from the lessor as if the lessee had elected not to cover and section 1310.65 of the Revised Code governs.

Cite as R.C. § 1310.64

Amended by 129th General AssemblyFile No.9, HB 9, §1, eff. 6/29/2011.

Effective Date: 11-06-1992

1310.65 Lessee's damages for non-delivery, repudiation, default and breach of warranty in regard to accepted goods - UCC 2A-519.

(A) Except as otherwise provided in section 1310.50 of the Revised Code with respect to damages liquidated in the lease agreement or as otherwise determined pursuant to the agreement of the parties as provided in section 1301.302 and section 1310.49 of the Revised Code, if a lessee elects not to cover or a lessee elects to cover and the cover is by lease agreement that for any reason does not qualify for treatment under division (B) of section 1310.64 of the Revised Code or is by purchase or otherwise, the measure of damages for nondelivery or repudiation by the lessor or for rejection or revocation of acceptance by the lessee is the present value, as of the date of the default, of the then market rent minus the present value, as of the same date, of the original rent, computed for the remaining lease term of the original lease agreement, together with incidental and consequential damages, less expenses saved in consequence of the lessor's default.

(B) Market rent is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.

(C) Except as otherwise agreed, if the lessee has accepted goods and given notification as provided in division (C) of section 1310.62 of the Revised Code, the measure of damages for nonconforming tender or delivery or other default by a lessor is the loss resulting in the ordinary course of events from the lessor's default as determined in any manner that is reasonable, together with incidental and consequential damages, less expenses saved in consequence of the lessor's default.

(D) Except as otherwise agreed, the measure of damages for breach of warranty is the present value, at the time and place of acceptance, of the difference between the value of the use of the goods accepted and that value if they had been as warranted for the lease term, unless special circumstances show proximate damages of a different amount, together with incidental and consequential damages, less expenses saved in consequence of the lessor's default or breach of warranty.

Cite as R.C. § 1310.65

Amended by 129th General AssemblyFile No.9, HB 9, §1, eff. 6/29/2011.

Effective Date: 11-06-1992

1310.66 Lessee's incidental and consequential damages - UCC 2A-520.

(A) Incidental damages resulting from a lessor's default include expenses reasonably incurred in inspection, receipt, transportation, and care and custody of goods rightfully rejected or goods the acceptance of which is justifiably revoked, any commercially reasonable charges, expenses, or commissions in connection with effecting cover, and any other reasonable expense incident to the default.

(B) Consequential damages resulting from a lessor's default include both of the following:

(1) Any loss resulting from general or particular requirements and needs of which the lessor at the time of contracting had reason to know and that could not reasonably be prevented by cover or otherwise;

(2) Injury to person or property proximately resulting from any breach of warranty.

Cite as R.C. § 1310.66

Effective Date: 11-06-1992

1310.67 Lessee's right to specific performance or replevin - UCC 2A-521.

(A) Specific performance may be decreed if the goods are unique or in other proper circumstances.

(B) A decree for specific performance may include any terms and conditions as to payment of the rent, damages, or other relief that the court deems just.

(C) A lessee has a right of replevin, detinue, sequestration, claim and delivery, or the like for goods identified to the lease contract if, after reasonable effort, the lessee is unable to effect cover for those goods or the circumstances reasonably indicate that the effort will be unavailing.

Cite as R.C. § 1310.67

Effective Date: 11-06-1992

1310.68 Lessee's right to goods on lessor's insolvency - UCC 2A-522.

(A) Subject to division (B) of this section and even though the goods have not been shipped, a lessee who has paid a part or all of the rent and security for goods identified to a lease contract as provided in section 1310.24 of the Revised Code, on making and keeping good a tender of any unpaid portion of the rent and security due under the lease contract, may recover the goods identified from the lessor if the lessor becomes insolvent within ten days after receipt of the first installment of rent and security.

(B) A lessee acquires the right to recover goods identified to a lease contract only if they conform to the lease contract.

Cite as R.C. § 1310.68

Effective Date: 11-06-1992

1310.69 Lessor's remedies - (UCC 2A-523).

(A) If a lessee wrongfully rejects or revokes acceptance of goods, fails to make a payment when due, or repudiates with respect to a part or the whole, then, with respect to any goods involved and with respect to all of the goods if under an installment lease contract the value of the whole lease contract is substantially impaired as provided in section 1310.56 of the Revised Code, the lessee is in default under the lease contract, and the lessor may do one or more of the following:

(1) Cancel the lease contract as provided in division (A) of section 1310.51 of the Revised Code;

(2) Proceed respecting goods not identified to the lease contract as provided in section 1310.70 of the Revised Code;

(3) Withhold delivery of the goods and take possession of goods previously delivered as provided in section 1310.71 of the Revised Code;

(4) Stop delivery of the goods by any bailee as provided in section 1310.72 of the Revised Code;

(5) Dispose of the goods and recover damages as provided in section 1310.73 of the Revised Code, retain the goods and recover damages as provided in section 1310.74 of the Revised Code, or in a proper case recover rent as provided in section 1310.75 of the Revised Code;

(6) Exercise any other rights or pursue any other remedies provided in the lease contract.

(B) If a lessor does not fully exercise a right or obtain a remedy to which the lessor is entitled under division (A) of this section, the lessor may recover the loss resulting in the ordinary course of events from the lessee's default as determined in any reasonable manner, together with incidental damages, less expenses saved in consequence of the lessee's default.

(C) If a lessee is otherwise in default under a lease contract, the lessor may exercise the rights and pursue the remedies provided in the lease contract, which may include a right to cancel the lease. In addition, unless otherwise provided in the lease contract, either of the following applies:

(1) If the default substantially impairs the value of the lease contract to the lessor, the lessor may exercise the rights and pursue the remedies provided in division (A) or (B) of this section.

(2) If the default does not substantially impair the value of the lease contract to the lessor, the lessor may recover as provided in division (B) of this section.

Cite as R.C. § 1310.69

Effective Date: 11-06-1992

1310.70 Lessor's right to identify goods to lease contract - UCC 2A-524.

(A) After default by the lessee under a lease contract of the type described in division (A) or (C)(1) of section 1310.69 of the Revised Code or, if agreed, after other default by the lessee, the lessor may do both of the following:

(1) Identify to the lease contract conforming goods not already identified if, at the time the lessor learned of the default, they were in the lessor's or the supplier's possession or control.

(2) Dispose of goods, as provided in division (A) of section 1310.73 of the Revised Code, that demonstrably have been intended for the particular lease contract even though those goods are unfinished.

(B) If the goods are unfinished, in the exercise of reasonable commercial judgment for the purposes of avoiding loss and of effective realization, an aggrieved lessor or the supplier may complete manufacture and wholly identify the goods to the lease contract, cease manufacture and lease, sell, or otherwise dispose of the goods for scrap or salvage value, or proceed in any other reasonable manner.

Cite as R.C. § 1310.70

Effective Date: 11-06-1992

1310.71 Lessor's right to possession of goods - UCC 2A-525.

(A) If a lessor discovers the lessee to be insolvent, the lessor may refuse to deliver the goods.

(B) After a default of the type described in division (A) or (C)(1) of section 1310.69 of the Revised Code by the lessee under the lease contract or, if agreed, after other default by the lessee, the lessor has the right to take possession of the goods. If the lease contract so provides, the lessor may require the lessee to assemble the goods and make them available to the lessor at a place to be designated by the lessor that is reasonably convenient to both parties. Without removal, the lessor may render unusable any goods employed in trade or business and may dispose of goods on the lessee's premises as provided in section 1310.73 of the Revised Code.

(C) The lessor may proceed under division (B) of this section without judicial process if it can be done without breach of the peace, or the lessor may proceed by action.

Cite as R.C. § 1310.71

Effective Date: 11-06-1992

1310.72 Lessor's stoppage of delivery in transit or otherwise - UCC 2A-526.

(A) A lessor may stop delivery of goods in the possession of a carrier or other bailee if the lessor discovers the lessee to be insolvent and may stop delivery of carload, truckload, planeload, or larger shipments of express or freight if the lessee repudiates or fails to make a payment due before delivery, whether for rent, security, or otherwise under the lease contract, or for any other reason the lessor has a right to withhold or take possession of the goods.

(B) In pursuing its remedies under division (A) of this section, the lessor may stop delivery until one of the following occurs:

(1) Receipt of the goods by the lessee;

(2) Acknowledgment to the lessee by any bailee of the goods, except a carrier, that the bailee holds the goods for the lessee;

(3) Such an acknowledgment to the lessee by a carrier via reshipment or as warehouse.

(C)

(1) To stop delivery, a lessor shall so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods.

(2) After notification, the bailee shall hold and deliver the goods according to the directions of the lessor, but the lessor is liable to the bailee for any ensuing charges or damages.

(3) A carrier who has issued a nonnegotiable bill of lading is not obliged to obey a notification to stop that is received from a person other than the consignor.

Cite as R.C. § 1310.72

Amended by 129th General AssemblyFile No.9, HB 9, §1, eff. 6/29/2011.

Effective Date: 11-06-1992

1310.73 Lessor's rights to dispose of goods - UCC 2A-527.

(A) After a default of the type described in division (A) or (C)(1) of section 1310.69 of the Revised Code by a lessee under the lease contract, after the lessor refuses to deliver or takes possession of goods as provided in section 1310.71 or 1310.72 of the Revised Code, or, if agreed, after other default by a lessee, the lessor may dispose of the goods concerned or the undelivered balance of the goods concerned by lease, sale, or otherwise.

(B) Except as otherwise provided with respect to damages liquidated in the lease agreement pursuant to section 1310.50 of the Revised Code or otherwise determined pursuant to agreement of the parties as provided in section 1301.302 and section 1310.49 of the Revised Code, if the disposition is by lease agreement substantially similar to the original lease agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, the lessor may recover from the lessee as damages all of the following:

(1) Accrued and unpaid rent as of the date of the commencement of the term of the new lease agreement;

(2) The present value, as of the same date, of the total rent for the then remaining lease term of the original lease agreement minus the present value, as of the same date, of the rent under the new lease agreement applicable to that period of the new lease term that is comparable to the then remaining term of the original lease agreement;

(3) Any incidental damages allowed under section 1310.76 of the Revised Code, less expenses saved in consequence of the lessee's default.

(C) If the lessor's disposition of the goods is by a lease agreement that for any reason does not qualify for treatment under division (B) of this section, or is by sale or otherwise, the lessor may recover from the lessee as if the lessor had elected not to dispose of the goods, and section 1310.74 of the Revised Code governs.

(D) A subsequent buyer or lessee who buys or leases from the lessor in good faith for value as a result of a disposition of goods under this section takes the goods free of the original lease contract and any rights of the original lessee even though the lessor fails to comply with one or more of the requirements of sections 1310.01 to 1310.78 of the Revised Code.

(E) The lessor is not accountable to the lessee for any profit made on any disposition. A lessee who has rightfully rejected or justifiably revoked acceptance and has proceeded in accordance with division (E) of section 1310.54 of the Revised Code shall account to the lessor for any excess over the amount of the lessee's security interest.

Cite as R.C. § 1310.73

Amended by 129th General AssemblyFile No.9, HB 9, §1, eff. 6/29/2011.

Effective Date: 11-06-1992

1310.74 Lessor's damages for non-acceptance, failure to pay, repudiation or other default - UCC 2A-528.

(A) Except as otherwise provided with respect to damages liquidated in the lease agreement pursuant to section 1310.50 of the Revised Code or otherwise determined pursuant to the agreement of the parties as provided in section 1301.302 and section 1310.49 of the Revised Code, if a lessor elects to retain the goods or a lessor elects to dispose of the goods and the disposition is by lease agreement that for any reason does not qualify for treatment under division (B) of section 1310.73 of the Revised Code or is by sale or otherwise, the lessor may recover from the lessee as damages for a default of the type described in division (A) or (C)(1) of section 1310.69 of the Revised Code or, if agreed, for other default of the lessee all of the following:

(1) Accrued and unpaid rent as of the date of default, if the lessee has never taken possession of the goods or, if the lessee has taken possession of the goods, as of the date the lessor repossesses the goods or an earlier date on which the lessee makes a tender of the goods to the lessor;

(2) The present value as of the date determined under division (A)(1) of this section of the total rent for the then remaining lease term of the original lease agreement minus the present value as of the same date of the market rent at the place where the goods are located computed for the same lease term;

(3) Any incidental damages allowed under section 1310.76 of the Revised Code, less expenses saved in consequence of the lessee's default.

(B) If the measure of damages provided in division (A) of this section is inadequate to put a lessor in as good a position as performance would have, the measure of damages is the present value of the profit, including reasonable overhead, the lessor would have made from full performance by the lessee, together with any incidental damages allowed under section 1310.76 of the Revised Code, due allowance for costs reasonably incurred, and due credit for payments or proceeds of disposition.

Cite as R.C. § 1310.74

Amended by 129th General AssemblyFile No.9, HB 9, §1, eff. 6/29/2011.

Effective Date: 11-06-1992

1310.75 Lessor's action for rent - UCC 2A-529.

(A) After default of the type described in division (A) or (C)(1) of section 1310.69 of the Revised Code by the lessee under the lease contract or, if agreed, after other default by the lessee, if the lessor complies with division (B) of this section, the lessor may recover from the lessee as damages the following:

(1) For goods accepted by the lessee and not repossessed by or tendered to the lessor, and for conforming goods lost or damaged within a commercially reasonable time after risk of loss passes to the lessee as provided in section 1310.26 of the Revised Code, all of the following:

(a) Accrued and unpaid rent as of the date of entry of judgment in favor of the lessor;

(b) The present value as of the same date of the rent for the then remaining lease term of the lease agreement;

(c) Any incidental damages allowed under section 1310.76 of the Revised Code, less expenses saved in consequence of the lessee's default.

(2) For goods identified to the lease contract if the lessor is unable after reasonable effort to dispose of them at a reasonable price or the circumstances reasonably indicate that effort will be unavailing, all of the following:

(a) Accrued and unpaid rent as of the date of entry of judgment in favor of the lessor;

(b) The present value, as of the same date, of the rent for the then remaining lease term of the lease agreement;

(c) Any incidental damages allowed under section 1310.76 of the Revised Code, less expenses saved in consequence of the lessee's default.

(B) Except as provided in division (C) of this section, the lessor shall hold for the lessee for the remaining lease term of the lease agreement any goods that have been identified to the lease contract and that are in the lessor's control.

(C) The lessor may dispose of the goods at any time before collection of the judgment for damages obtained pursuant to division (A) of this section. If the disposition of the goods is before the end of the remaining lease term of the lease agreement, the lessor's recovery against the lessee for damages is governed by section 1310.73 or 1310.74 of the Revised Code, and the lessor shall cause an appropriate credit to be provided against a judgment for damages to the extent that the amount of the judgment exceeds the recovery available pursuant to section 1310.73 or 1310.74 of the Revised Code.

(D) Payment of a judgment for damages obtained pursuant to division (A) of this section entitles the lessee to the use and possession of the goods not then disposed of for the remaining lease term of and in accordance with the lease agreement.

(E) After default of the type described in division (A) or (C)(1) of section 1310.69 of the Revised Code by the lessee under the lease contract or, if agreed, after other default by the lessee, a lessor who is held not entitled to rent under this section nevertheless shall be awarded damages for nonacceptance under section 1310.73 or 1310.74 of the Revised Code.

Cite as R.C. § 1310.75

Effective Date: 11-06-1992

1310.76 Lessor's incidental damages - UCC 2A-530.

Incidental damages to an aggrieved lessor include any commercially reasonable charges, expenses, or commissions incurred in stopping delivery, in the transportation, care, and custody of goods after the lessee's default, in connection with the return or disposition of the goods, or otherwise in connection with the default.

Cite as R.C. § 1310.76

Effective Date: 11-06-1992

1310.77 Standing to sue third parties for injury to goods - UCC 2A-531.

(A) If a third party so deals with goods that have been identified to a lease contract as to cause actionable injury to a party to the lease contract, the lessor has a right of action against the third party, and the lessee also has a right of action against the third party if the lessee has a security interest in the goods, has an insurable interest in the goods, or bears the risk of loss under the lease contract or has since the injury assumed that risk as against the lessor and the goods have been converted or destroyed.

(B) If, at the time of the injury, the plaintiff did not bear the risk of loss as against the other party to the lease contract and there is no arrangement between them for disposition of the recovery, his suit or settlement, subject to his own interest, is as a fiduciary for the other party to the lease contract.

(C) Either party with the consent of the other may sue for the benefit of whom it may concern.

Cite as R.C. § 1310.77

Effective Date: 11-06-1992

1310.78 Lessor's rights to residual interest - UCC 2A-532.

In addition to any other recovery permitted by sections 1310.01 to 1310.78 of the Revised Code or other law, the lessor may recover from the lessee an amount that will fully compensate the lessor for any loss of or damage to the lessor's residual interest in the goods caused by the default of the lessee.

Cite as R.C. § 1310.78

Effective Date: 11-06-1992

1310.99 Amended and Renumbered RC 1315.99.

Cite as R.C. § 1310.99

Effective Date: 11-06-1992