N.D. Cent. Code § 41-02.1-56
(2A-508) Lessee's remedies
Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) If a lessor fails to deliver the goods in conformity to the lease contract (section 41-02.1-57) or repudiates the lease contract (section 41-02.1-43), or a lessee rightfully rejects the goods (section 41-02.1-57) or justifiably revokes acceptance of the goods (section 41-02.1-65), then with respect to any goods involved, and with respect to all of the goods if under an installment lease contract the value of the whole lease contract is substantially impaired (section 41-02.1-58), the lessor is in default under the lease contract and the lessee may: Cancel the lease contract (subsection 1 of section 41-02.1-53).
(1) If a lessor fails to deliver the goods in conformity to the lease contract (section 41-02.1-57) or repudiates the lease contract (section 41-02.1-43), or a lessee rightfully rejects the goods (section 41-02.1-57) or justifiably revokes acceptance of the goods (section 41-02.1-65), then with respect to any goods involved, and with respect to all of the goods if under an installment lease contract the value of the whole lease contract is substantially impaired (section 41-02.1-58), the lessor is in default under the lease contract and the lessee may: Cancel the lease contract (subsection 1 of section 41-02.1-53).
(2) Recover so much of the rent and security as has been paid as is just under the circumstances.
(2) Recover so much of the rent and security as has been paid as 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 (sections 41-02.1-66 and 41-02.1-68), or recover damages for nondelivery (sections 41-02.1-67 and 41-02.1-68).
(3) Cover and recover damages as to all goods affected whether or not they have been identified to the lease contract (sections 41-02.1-66 and 41-02.1-68), or recover damages for nondelivery (sections 41-02.1-67 and 41-02.1-68).
(4) Exercise any other rights or remedies provided in the lease contract.
(4) Exercise any other rights or remedies provided in the lease contract.
(5) If a lessor fails to deliver the goods in conformity to the lease contract or repudiates the lease contract, the lessee may also: If the goods have been identified, recover them (section 41-02.1-70); or
(5) If a lessor fails to deliver the goods in conformity to the lease contract or repudiates the lease contract, the lessee may also: If the goods have been identified, recover them (section 41-02.1-70); or
(6) In a proper case, obtain specific performance or replevy the goods (section 41-02.1-80).
(6) In a proper case, obtain specific performance or replevy the goods (section 41-02.1-80).
(7) If a lessor is otherwise in default under a lease contract, the lessee may exercise the rights and remedies provided in the lease contract, which may include a right to cancel the lease, and under subsection 3 of section 41-02.1-67.
(7) If a lessor is otherwise in default under a lease contract, the lessee may exercise the rights and remedies provided in the lease contract, which may include a right to cancel the lease, and under subsection 3 of section 41-02.1-67.
(8) If a lessor has breached a warranty, whether express or implied, the lessee may recover damages (subsection 4 of section 41-02.1-67).
(8) If a lessor has breached a warranty, whether express or implied, the lessee may recover damages (subsection 4 of section 41-02.1-67).
(9) 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 the provisions of subsection 5 of section 41-02.1-75.
(9) 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 the provisions of subsection 5 of section 41-02.1-75.
(10) Subject to the provisions of section 41-02.1-48, 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.
(10) Subject to the provisions of section 41-02.1-48, 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.
(11) Subsection (5), a revised version of the provisions of Section 2-711(3), recognizes, on rightful rejection or justifiable revocation, the lessee’s security interest in goods in its possession and control. Section 9-113, which recognized security interests arising under the Article on Sales (Article 2), was amended with the adoption of this Article to reflect the security interests arising under this Article. Pursuant to Section 2A-511(4), a purchaser who purchases goods from the lessee in good faith takes free of any rights of the lessor, or in the case of a finance lease, the supplier. Such goods, however, must have been rightfully rejected and disposed of pursuant to Section 2A-511 or 2A-512. However, Section 2A-517(5) provides that the lessee will have the same rights and duties with respect to goods where acceptance has been revoked as with respect to goods rejected. Thus, Section 2A-511(4) will apply to the lessee’s disposition of such goods.
(12) Pursuant to Section 2A-527(5), the lessee must account to the lessor for the excess proceeds of such disposition, after satisfaction of the claim secured by the lessee’s security interest.
(13) Subsection (6), a slightly revised version of the provisions of Section 2-717, sanctions a right of set-off by the lessee, subject to the rule of Section 2A-407 with respect to irrevocable promises in a finance lease that is not a consumer lease, and further subject to an enforceable “hell or high water” clause in the lease agreement. Section 2A-407 official comment. No attempt is made to state how the set-off should occur; this is to be determined by the facts of each case.
(14) There is no special treatment of the finance lease in this section. Absent supplemental principles of law and equity to the contrary, in the case of most finance leases, following the lessee’s acceptance of the goods, the lessee will have no rights or remedies against the lessor, because the lessor’s obligations to the lessee are minimal. Sections 2A-210 and 2A-211(1). Since the lessee will look to the supplier for performance, this is appropriate. Section 2A-209.
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.