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N.D. Cent. Code § 41-02.1-03

(2A-103) Definitions and index of definitions

Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) In this chapter unless the context otherwise requires: “Buyer in ordinary course of business” means a person who in good faith and without knowledge that the sale is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. “Buying” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
(1) In this chapter unless the context otherwise requires: “Buyer in ordinary course of business” means a person who in good faith and without knowledge that the sale is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. “Buying” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
(2) “Cancellation” occurs when either party puts an end to the lease contract for default by the other party.
(2) “Cancellation” occurs when either party puts an end to the lease contract for default by the other party.
(3) “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole.
(3) “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole.
(4) “Conforming” goods or performance under a lease contract means goods or performance that is in accordance with the obligations under the lease contract.
(4) “Conforming” goods or performance under a lease contract means goods or performance that is 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 if the total payments to be made under the lease contract, excluding payments for options to renew or buy, do not exceed twenty-five thousand dollars.
(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 if the total payments to be made under the lease contract, excluding payments for options to renew or buy, do not exceed twenty-five thousand dollars.
(6) “Fault” means wrongful act, omission, breach, or default.
(6) “Fault” means wrongful act, omission, breach, or default.
(7) “Finance lease” means a lease in which: The lessor does not select, manufacture, or supply the goods;
(7) “Finance lease” means a lease in which: The lessor does not select, manufacture, or supply the goods;
(8) The lessor acquires the goods or the right to possession and use of the goods in connection with the lease; and
(8) The lessor acquires the goods or the right to possession and use of the goods in connection with the lease; and
(9) 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;
(9) 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;
(10) 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;
(10) 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;
(11) The lessee, before signing the lease contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations, or modifications of remedies, or liquidated damages, including those of any third party such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; or
(11) The lessee, before signing the lease contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations, or modifications of remedies, or liquidated damages, including those of any third party such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; or
(12) Only 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 this chapter 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 contact 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.
(12) Only 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 this chapter 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 contact 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.
(13) “Consumer lease”. New. This Article includes a subset of rules that applies only to consumer leases. Sections 2A-106, 2A-108(2), 2A-108(4), 2A-109(2), 2A-221, 2A-309, 2A-406, 2A-407, 2A-504(3)(b), and 2A-516(3)(b).
(14) “Fault”. Section 1-201(16).
(15) For a transaction to qualify as a finance lease it must first qualify as a lease. Unless the lessor is comfortable that the transaction will qualify as a finance lease, the lease agreement should include provisions giving the lessor the benefits created by the subset of rules applicable to the transaction that qualifies as a finance lease under this Article.
(16) “Goods”. Section 9-105(1)(h). See Section 2A-103(3) for reference to the definition of “Account”, “Chattel paper”, “Document”, “General intangibles” and “Instrument”. See Section 2A-217 for determination of the time and manner of identification.
(17) “Installment lease contract”. Section 2-612(1).
(18) “Lease”. New. There are several reasons to codify the law with respect to leases of goods. An analysis of the case law as it applies to leases of goods suggests at least several significant issues to be resolved by codification. First and foremost is the definition of a lease. It is necessary to define lease to determine whether a transaction creates a lease or a security interest disguised as a lease. If the transaction creates a security interest disguised as a lease, the transaction will be governed by the Article on Secured Transactions (Article 9) and the lessor will be required to file a financing statement or take other action to perfect its interest in the goods against third parties. There is no such requirement with respect to leases under the common law and, except with respect to leases of fixtures (Section 2A-309), this Article imposes no such requirement. Yet the distinction between a lease and a security interest disguised as a lease is not clear from the case law at the time of the promulgation of this Article. DeKoven, Leases of Equipment: Puritan Leasing Company v. August, A Dangerous Decision,12 U.S.F. L.Rev. 257 (1978).
(19) “Lease agreement”. This definition is derived from the first sentence of Section 1-201(3). Because the definition of lease is broad enough to cover future transfers, lease agreement includes an agreement contemplating a current or subsequent transfer. Thus it was not necessary to make an express reference to an agreement for the future lease of goods (Section 2-106(1)). This concept is also incorporated in the definition of lease contract. Note that the definition of lease does not include transactions in ordinary building materials that are incorporated into an improvement on land. Section 2A-309(2).
(20) “Lease contract”. This definition is derived from the definition of contract in Section 1-201(11). Note that a lease contract may be for the future lease of goods, since this notion is included in the definition of lease.
(21) “Leasehold interest”. New.
(22) “Lessee”. New.
(23) The definition of “Lessee in ordinary course of business” conforms with amendments to Section 1-201(9)(buyer in ordinary course of business) that were part of the Article 9 revision process (with the omission of the reference to sales of minerals).
(24) “Lessor”. New.
(25) “Lessor’s residual interest”. New.
(26) “Lien”. New. This term is used in Section 2A-307 (Priority of Liens Arising by Attachment or Levy on, Security Interests in, and Other Claims to Goods).
(27) “Lot”. Section 2-105(5).
(28) “Merchant lessee”. New. This term is used in Section 2A-511 (Merchant Lessee’s Duties as to Rightfully Rejected Goods). A person may satisfy the requirement of dealing in goods of the kind subject to the lease as lessor, lessee, seller, or buyer.
(29) “Present value”. New. Authorities agree that present value should be used to determine fairly the damages payable by the lessor or the lessee on default. E.g., Taylor v. Commercial Credit Equip. Corp., 170 Ga.App. 322, 316 S.E.2d 788 (1984). Present value is defined to mean an amount that represents the discounted value as of a date certain of one or more sums payable in the future. This is a function of the economic principle that a dollar today is more valuable to the holder than a dollar payable in two years. While there is no question as to the principle, reasonable people would differ as to the rate of discount to apply in determining the value of that future dollar today. To minimize litigation, this Article allows the parties to specify the discount or interest rate, if the rate was not manifestly unreasonable at the time the transaction was entered into. In all other cases, the interest rate will be a commercially reasonable rate that takes into account the facts and circumstances of each case, as of the time the transaction was entered into.
(30) “Purchase”. Section 1-201(32). This definition omits the reference to lien contained in the definition of purchase in Article 1 (Section 1-201(32)). This should not be construed to exclude consensual liens from the definition of purchase in this Article; the exclusion was mandated by the scope of the definition of lien in Section 2A-103(1)(r). Further, the definition of purchaser in this Article adds a reference to lease; as purchase is defined in Section 1-201(32) to include any other voluntary transaction creating an interest in property, this addition is not substantive.
(31) “Sublease”. New.
(32) “Supplier”. New.
(33) “Supply contract”. New.
(34) “Termination”. Section 2-106(3). The effect of a termination is provided in Section 2A-505(2).
(13) “Goods” means all things that are movable at the time of identification to the lease contract, or are fixtures (section 41-02.1-39), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals.
(35) “Goods” means all things that are movable at the time of identification to the lease contract, or are fixtures (section 41-02.1-39), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals.
(14) “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.
(36) “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.
(15) “Lease” means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. Unless the context clearly indicates otherwise, the term includes a sublease.
(37) “Lease” means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. Unless the context clearly indicates otherwise, the term includes a sublease.
(16) “Lease agreement” means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances, including course of dealing or usage of trade or course of performance (as provided in this chapter). Unless the context clearly indicates otherwise, the term includes a sublease agreement.
(38) “Lease agreement” means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances, including course of dealing or usage of trade or course of performance (as provided in this chapter). Unless the context clearly indicates otherwise, the term includes a sublease agreement.
(17) “Lease contract” means the total legal obligation that results from the lease agreement as affected by this chapter and any other applicable rules of law. Unless the context clearly indicates otherwise, the term includes a sublease contract.
(39) “Lease contract” means the total legal obligation that results from the lease agreement as affected by this chapter and any other applicable rules of law. Unless the context clearly indicates otherwise, the term includes a sublease contract.
(18) “Leasehold interest” means the interest of the lessor or the lessee under a lease contract.
(40) “Leasehold interest” means the interest of the lessor or the lessee under a lease contract.
(19) “Lessee” means a person who acquires the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.
(41) “Lessee” means a person who acquires the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.
(20) “Lessee in ordinary course of business” means a person who, in good faith and without knowledge that the lease is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, leases in ordinary course from a person in the business of selling or leasing goods of that kind, but does not include a pawnbroker. “Leasing” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
(42) “Lessee in ordinary course of business” means a person who, in good faith and without knowledge that the lease is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, leases in ordinary course from a person in the business of selling or leasing goods of that kind, but does not include a pawnbroker. “Leasing” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
(21) “Lessor” means a person who transfers the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.
(43) “Lessor” means a person who transfers the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.
(22) “Lessor’s residual interest” means the lessor’s interest in the goods after expiration, termination, or cancellation of the lease contract.
(44) “Lessor’s residual interest” means the lessor’s interest in the goods after expiration, termination, or cancellation of the lease contract.
(23) “Lien” means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest.
(45) “Lien” means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest.
(24) “Lot” means a parcel or a single article that is the subject matter of a separate lease or delivery, regardless of whether it is sufficient to perform the lease contract.
(46) “Lot” means a parcel or a single article that is the subject matter of a separate lease or delivery, regardless of whether it is sufficient to perform the lease contract.
(25) “Merchant lessee” means a lessee that is a merchant with respect to goods of the kind subject to the lease.
(47) “Merchant lessee” means a lessee that is a merchant with respect to goods of the kind subject to the lease.
(26) “Present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.
(48) “Present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.
(27) “Purchase” includes taking by sale, lease, mortgage, security interest, pledge, gift, or any other voluntary transaction creating an interest in goods.
(49) “Purchase” includes taking by sale, lease, mortgage, security interest, pledge, gift, or any other voluntary transaction creating an interest in goods.
(28) “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.
(50) “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.
(29) “Supplier” means a person from whom a lessor buys or leases goods to be leased under a finance lease.
(51) “Supplier” means a person from whom a lessor buys or leases goods to be leased under a finance lease.
(30) “Supply contract” means a contract under which a lessor buys or leases goods to be leased.
(52) “Supply contract” means a contract under which a lessor buys or leases goods to be leased.
(31) “Termination” occurs when either party under a power created by agreement or law puts an end to the lease contract otherwise than for default.
(53) “Termination” occurs when either party under a power created by agreement or law puts an end to the lease contract otherwise than for default.
(32) Other definitions applying to this chapter and the sections in which they appear are: “Accessions”. Subsection 1 of section 41-02.1-40.
(54) Other definitions applying to this chapter and the sections in which they appear are: “Accessions”. Subsection 1 of section 41-02.1-40.
(33) “Construction mortgage”. Subdivision d of subsection 1 of section 41-02.1-39.
(55) “Construction mortgage”. Subdivision d of subsection 1 of section 41-02.1-39.
(34) “Encumbrance”. Subdivision e of subsection 1 of section 41-02.1-39.
(56) “Encumbrance”. Subdivision e of subsection 1 of section 41-02.1-39.
(35) “Fixture filing”. Subdivision b of subsection 1 of section 41-02.1-39.
(57) “Fixture filing”. Subdivision b of subsection 1 of section 41-02.1-39.
(36) “Fixtures”. Subdivision a of subsection 1 of section 41-02.1-39.
(58) “Fixtures”. Subdivision a of subsection 1 of section 41-02.1-39.
(37) “Purchase money lease”. Subdivision c of subsection 1 of section 41-02.1-39.
(59) “Purchase money lease”. Subdivision c of subsection 1 of section 41-02.1-39.
(38) The following definitions also apply to this chapter: “Account”. Section 41-09-02.
(60) The following definitions also apply to this chapter: “Account”. Section 41-09-02.
(39) “Between merchants”. Subsection 1 of section 41-02-04.
(61) “Between merchants”. Subsection 1 of section 41-02-04.
(40) “Buyer”. Subdivision a of subsection 1 of section 41-02-03.
(62) “Buyer”. Subdivision a of subsection 1 of section 41-02-03.
(41) “Chattel paper”. Section 41-09-02.
(63) “Chattel paper”. Section 41-09-02.
(42) “Consumer goods”. Section 41-09-02.
(64) “Consumer goods”. Section 41-09-02.
(43) “Document”. Section 41-09-02.
(65) “Document”. Section 41-09-02.
(44) “Entrusting”. Subsection 3 of section 41-02-48.
(66) “Entrusting”. Subsection 3 of section 41-02-48.
(45) “General intangible”. Section 41-09-02.
(67) “General intangible”. Section 41-09-02.
(46) “Instrument”. Section 41-09-02.
(68) “Instrument”. Section 41-09-02.
(47) “Merchant”. Subsection 3 of section 41-02-04.
(69) “Merchant”. Subsection 3 of section 41-02-04.
(48) “Mortgage”. Section 41-09-02.
(70) “Mortgage”. Section 41-09-02.
(49) “Pursuant to commitment”. Section 41-09-02.
(71) “Pursuant to commitment”. Section 41-09-02.
(50) “Receipt”. Subdivision c of subsection 1 of section 41-02-03.
(72) “Receipt”. Subdivision c of subsection 1 of section 41-02-03.
(51) “Sale”. Subdivision d of subsection 1 of section 41-02-06.
(73) “Sale”. Subdivision d of subsection 1 of section 41-02-06.
(52) “Sale on approval”. Subdivision a of subsection 1 of section 41-02-43.
(74) “Sale on approval”. Subdivision a of subsection 1 of section 41-02-43.
(53) “Sale or return”. Subdivision b of subsection 1 of section 41-02-43.
(75) “Sale or return”. Subdivision b of subsection 1 of section 41-02-43.
(54) “Seller”. Subdivision d of subsection 1 of section 41-02-03.
(76) “Seller”. Subdivision d of subsection 1 of section 41-02-03.
(55) In addition, chapter 41-01 contains general definitions and principles of construction and interpretation applicable throughout this chapter.
(77) In addition, chapter 41-01 contains general definitions and principles of construction and interpretation applicable throughout this chapter.

Official source: North Dakota Legislative Branch. Reproduced from public-domain North Dakota statutes; confirm against the official source for the current text. Not legal advice.