70A-2a-304. Subsequent lease of goods by lessor.
(1) Subject to Section 70A-2a-303, 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
Subsection (2) and Subsection 70A-2a-527 (4), 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:
(a) the lessor's transferor was deceived as to the identity of the lessor;
(b) the delivery was in exchange for a check which is later dishonored;
(c) it was agreed that the transaction was to be a "cash sale;" or
(d) the delivery was procured through fraud punishable as larcenous under the criminal
law.
(2) 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 the 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.
(3) A subsequent lessee from the lessor of goods that are subject to an existing lease
contract and are covered by a certificate of title issued under a statute of this state or of another
jurisdiction takes no greater rights than those provided both by this section and by the certificate
of title statute.
Amended by Chapter 237, 1993 General Session
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Last revised: Thursday, May 28, 2009