N.D. Cent. Code § 41-02.1-18
(2A-209) Lessee under finance lease as beneficiary of supply contract
Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) The benefit of the supplier’s promises to the lessor under the supply contract and of all warranties, whether express or implied, including those of any third party provided in connection with or as part of the supply contract, extends to the lessee to the extent of the lessee’s leasehold interest under a finance lease related to the supply contract, but subject to the terms of the warranty and of the supply contract and all of the supplier’s defenses or claims arising therefrom.
(1) The benefit of the supplier’s promises to the lessor under the supply contract and of all warranties, whether express or implied, including those of any third party provided in connection with or as part of the supply contract, extends to the lessee to the extent of the lessee’s leasehold interest under a finance lease related to the supply contract, but subject to the terms of the warranty and of the supply contract and all of the supplier’s defenses or claims arising therefrom.
(2) The extension of the benefit of the supplier’s promises and warranties to the lessee (subsection 1 of section 41-02.1-09) does not modify the rights and obligations of the parties to the supply contract or impose any duty or liability under the supply contract on the lessee.
(2) The extension of the benefit of the supplier’s promises and warranties to the lessee (subsection 1 of section 41-02.1-09) does not modify the rights and obligations of the parties to the supply contract or impose any duty or liability under the supply contract on the lessee.
(3) Any modification or rescission of the supply contract by the supplier and the lessor is effective between the supplier and the lessee unless, before the modification or rescission, the supplier has received notice that the lessee has entered into a finance lease related to the supply contract. Whenever a modification or rescission of the supply contract is effective between the supplier and the lessee, the lessor, in addition to the obligations of the lessor under the lease contract, is treated as having assumed all obligations of the supplier and warranties which were so modified or rescinded as they existed or were available to the lessee prior to modification or rescission.
(3) Any modification or rescission of the supply contract by the supplier and the lessor is effective between the supplier and the lessee unless, before the modification or rescission, the supplier has received notice that the lessee has entered into a finance lease related to the supply contract. Whenever a modification or rescission of the supply contract is effective between the supplier and the lessee, the lessor, in addition to the obligations of the lessor under the lease contract, is treated as having assumed all obligations of the supplier and warranties which were so modified or rescinded as they existed or were available to the lessee prior to modification or rescission.
(4) In addition to the extension of the benefit of the supplier’s promises and of warranties to the lessee under subsection 1, the lessee retains all rights that the lessee may have against the supplier which arise from any agreement between the lessee and the supplier or from any other law.
(4) In addition to the extension of the benefit of the supplier’s promises and of warranties to the lessee under subsection 1, the lessee retains all rights that the lessee may have against the supplier which arise from any agreement between the lessee and the supplier or from any other law.
(5) Subsections (2) and (3) also deal with difficult issues related to modification or rescission of the supply contract. Subsection (2) states a rule that determines the impact of the statutory extension of benefit contained in subsection (1) upon the relationship of the parties to the supply contract and, in a limited respect, upon the lessee. This statutory extension of benefit, like that contained in Sections 2A-216 and 2-318, is not a modification of the supply contract by the parties. Thus, subsection (3) states the rules that apply to a modification or rescission of the supply contract by the parties. Subsection (3) provides that a modification or rescission is not effective between the supplier and the lessee if, before the modification or rescission occurs, the supplier received notice that the lessee has entered into the finance lease. On the other hand, if the modification or rescission is effective, then to the extent of the modification or rescission of the benefit or warranty, the lessor by statutory dictate assumes an obligation to provide to the lessee that which the lessee would otherwise lose. For example, assume a reduction in an express warranty from four years to one year. No prejudice to the lessee may occur if the goods perform as agreed. If, however, there is a breach of the express warranty after one year and before four years pass, the lessor is liable. A remedy for any prejudice to the lessee because of the bifurcation of the lessee’s recourse resulting from the action of the supplier and the lessor is left to resolution by the courts based on the facts of each case.
(6) Subsection (4) makes it clear that the rights granted to the lessee by this section do not displace any rights the lessee otherwise may have against the supplier.
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.