34.1-2-713. Buyer's damages for nondelivery or repudiation.
(a) Subject to the provisions of this article with respect to proof of market price (section 34.1-2-723), the measure of damages for nondelivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this article (section 34.1-2-715), but less expenses saved in consequence of the seller's breach.
(b) Market price 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.
34.1-2-714. Buyer's damages for breach in regard to accepted goods.
(a) Where the buyer has accepted goods and given notification (section 34.1-2-607) he may recover as damages for any nonconformity of tender the loss resulting in the ordinary course of events from the seller's breach as determined in any manner which is reasonable.
(b) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.
(c) In a proper case any incidental and consequential damages under the next section may also be recovered.
34.1-2-715. Buyer's incidental and consequential damages.
(a) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.
(b) Consequential damages resulting from the seller's breach include:
(i) Any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
(ii) Injury to person or property proximately resulting from any breach of warranty.
34.1-2-716. Buyer's right to specific performance or replevin.
(a) Specific performance may be decreed where the goods are unique or in other proper circumstances.
(b) The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just.
(c) The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. In the case of goods bought for personal, family or household purposes, the buyer's right of replevin vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.
The buyer on notifying the seller of his intention to do so may deduct all or any part of the damages resulting from any breach of the contract from any part of the price still due under the same contract.
34.1-2-718. Liquidation or limitation of damages; deposits.
(a) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.
(b) Where the seller justifiably withholds delivery of goods because of the buyer's breach, the buyer is entitled to restitution of any amount by which the sum of his payment exceeds:
(i) The amount to which the seller is entitled by virtue of terms liquidating the seller's damages in accordance with subsection (a); or
(ii) In the absence of such terms, twenty percent (20%) of the value of the total performance for which the buyer is obligated under the contract or five hundred dollars ($500.00), whichever is smaller.
(c) The buyer's right to restitution under subsection (b) is subject to offset to the extent that the seller establishes:
(i) A right to recover damages under the provisions of this article other than subsection (a); and
(ii) The amount or value of any benefits received by the buyer directly or indirectly by reason of the contract.
(d) Where a seller has received payment in goods their reasonable value or the proceeds of their resale shall be treated as payments for the purposes of subsection (b); but if the seller has notice of the buyer's breach before reselling goods received in part performance, his resale is subject to the conditions laid down in this article on resale by an aggrieved seller (section 34.1-2-706).
34.1-2-719. Contractual modification or limitations of remedy.
(a) Subject to the provisions of subsections (b) and (c) of this section and of the preceding section on liquidation and limitation of damages:
(i) The agreement may provide for remedies in addition to or in substitution for those provided in this article and may limit or alter the measure of damages recoverable under this article, as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts; and
(ii) Resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.
(b) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this act.
(c) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.
34.1-2-720. Effect of "cancellation" or "rescission" on claims for antecedent breach.
Unless the contrary intention clearly appears, expressions of "cancellation" or "rescission" of the contract or the like shall not be construed as a renunciation or discharge of any claim in damages for an antecedent breach.
Remedies for material misrepresentation or fraud include all remedies available under this article for nonfraudulent breach. Neither rescission or a claim for rescission of the contract for sale nor rejection or return of the goods shall bar or be deemed inconsistent with a claim for damages or other remedy.
34.1-2-722. Who can sue third parties for injury to goods.
(a) Where a third party so deals with goods which have been identified to a contract for sale as to cause actionable injury to a party to that contract:
(i) A right of action against the third party is in either party to the contract for sale who has title to or a security interest or a special property or an insurable interest in the goods; and if the goods have been destroyed or converted a right of action is also in the party who either bore the risk of loss under the contract for sale or has since the injury assumed that risk as against the other;
(ii) If at the time of the injury the party plaintiff did not bear the risk of loss as against the other party to the contract for sale and there is no arrangement between them for disposition of the recovery, his suit or settlement is, subject to his own interest, as a fiduciary for the other party to the contract;
(iii) Either party may with the consent of the other sue for the benefit of whom it may concern.
34.1-2-723. Proof of market price: Time and place.
(a) If an action based on anticipatory repudiation comes to trial before the time for performance with respect to some or all of the goods, any damages based on market price (section 34.1-2-708 or section 34.1-2-713) shall be determined according to the price of such goods prevailing at the time when the aggrieved party learned of the repudiation.
(b) If evidence of a price prevailing at the times or places described in this article is not readily available the price prevailing within any reasonable time before or after the time described or at any other place which 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 cost of transporting the goods to or from such other place.
(c) Evidence of a relevant price prevailing at a time or place other than the one described in this article offered by one (1) party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise.
Whenever the prevailing price or value of any goods regularly bought and sold in any established commodity market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of such market shall be admissible in evidence. The circumstances of the preparation of such a report may be shown to affect its weight but not its admissibility.
34.1-2-725. Statute of limitations in contracts for sale.
(a) An action for breach of any contract for sale must be commenced within four (4) years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one (1) year but may not extend it.
(b) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.
(c) Where an action commenced within the time limited by subsection (a) is so terminated as to leave available a remedy by another action for the same breach such other action may be commenced after the expiration of the time limited and within six (6) 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 nor does it apply to causes of action which have accrued before this act becomes effective.
34.1-2.A-103. Definitions and index of definitions.
(a) In this article unless the context otherwise requires:
(i) "Buyer in ordinary course of business" means a person who in good faith and without knowledge that the sale to him 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;
(ii) "Cancellation" occurs when either party puts an end to the lease contract for default by the other party;
(iii) "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;
(iv) "Conforming" goods or performance under a lease contract means goods or performance that are in accordance with the obligations under the lease contract;
(v) "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 ($25,000.00);
(vi) "Fault" means wrongful act, omission, breach, or default;
(vii) "Finance lease" means a lease with respect to which:
(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; and
(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) 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 a 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
(IV) If the lease is not a consumer lease, the lessor, before the lessee signs the lease contract, informs the lessee in writing (1) 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, (2) that the lessee is entitled under this article 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 (3) 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.
(viii) "Goods" means all things that are movable at the time of identification to the lease contract, or are fixtures (section 34.1-2.A-309), 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;
(ix) "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;
(x) "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;
(xi) "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 article. Unless the context clearly indicates otherwise, the term includes a sublease agreement;
(xii) "Lease contract" means the total legal obligation that results from the lease agreement as affected by this article and any other applicable rules of law. Unless the context clearly indicates otherwise, the term includes a sublease contract;
(xiii) "Leasehold interest" means the interest of the lessor or the lessee under a lease contract;
(xiv) "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;
(xv) "Lessee in ordinary course of business" means a person who in good faith and without knowledge that the lease to him 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;
(xvi) "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;
(xvii) "Lessor's residual interest" means the lessor's interest in the goods after expiration, termination, or cancellation of the lease contract;
(xviii) "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;
(xix) "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;
(xx) "Merchant lessee" means a lessee that is a merchant with respect to goods of the kind subject to the lease;
(xxi) "Present value" means the amount as of a date certain of one (1) 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;
(xxii) "Purchase" includes taking by sale, lease, mortgage, security interest, pledge, gift, or any other voluntary transaction creating an interest in goods;
(xxiii) "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;
(xxiv) "Supplier" means a person from whom a lessor buys or leases goods to be leased under a finance lease;
(xxv) "Supply contract" means a contract under which a lessor buys or leases goods to be leased;
(xxvi) "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) Other definitions applying to this article and the sections in which they appear are: "Accessions". Section 34.1-2.A-310(a). "Construction mortgage". Section 34.1-2.A-309(a)(iv). "Encumbrance". Section 34.1-2.A-309(a)(v). "Fixtures" Section 34.1-2.A-309(a)(i). "Fixture filing". Section 34.1-2.A-309(a)(ii). "Purchase money lease". Section 34.1-2.A-309(a)(iii).
(c) The following definitions in other articles apply to this article: "Account". Section 34.1-9-102(a)(ii). "Between merchants". Section 34.1-2-104(c). "Buyer". Section 34.1-2-103(a)(i). "Chattel paper". Section 34.1-9-102(a)(xi). "Consumer goods". Section 34.1-9-102(a)(xxiii). "Document". Section 34.1-9-102(a)(xxx). "Entrusting". Section 34.1-2-403(c). "General intangible". Section 34.1-9-102(a)(xlii). "Instrument". Section 34.1-9-102(a)(xlvii). "Merchant". Section 34.1-2-104(a). "Mortgage". Section 34.1-9-102(a)(lv). "Pursuant to commitment". Section 34.1-9-102(a)(lxxi). "Receipt". Section 34.1-2-103(a)(iii). "Sale". Section 34.1-2-106(a). "Sale on approval". Section 34.1-2-326. "Sale or return". Section 34.1-2-326. "Seller". Section 34.1-2-103(a)(iv).
(d) In addition, article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.
(a) A lease, although subject to this article, is also subject to any applicable:
(i) Certificate of title statute of this state;
(ii) Certificate of title statute of another jurisdiction (section 34.1-2.A-105); or
(iii) Consumer protection statute of this state, or final consumer protection decision of a court of this state existing on the effective date of this article.
(b) In case of conflict between this article, other than sections 34.1-2.A-105, 34.1-2.A-304(c), and 34.1-2.A-305(c), and a statute or decision referred to in subsection (a), the statute or decision controls.
(c) Failure to comply with an applicable law has only the effect specified therein.
34.1-2.A-105. Territorial application of article to goods covered by certificate of title.
Subject to the provisions of sections 34.1-2.A-304(c) and 34.1-2.A-305(c), with respect to goods covered by a certificate of title issued under a statute of this state or of another jurisdiction, compliance and the effect of compliance or noncompliance with a certificate of title statute are governed by the law (including the conflict of laws rules) of the jurisdiction issuing the certificate until the earlier of (1) surrender of the certificate, or (2) four months after the goods are removed from that jurisdiction and thereafter until a new certificate of title is issued by another jurisdiction.
34.1-2.A-106. Limitation on power of parties to consumer lease to choose applicable law and judicial forum.
(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 within thirty (30) days thereafter or in which the goods are to be used, the choice is not enforceable.
(b) If the judicial forum chosen by the parties to a consumer lease is a forum that would not otherwise have jurisdiction over the lessee, the choice is not enforceable.
34.1-2.A-107. Waiver or renunciation of claim or right after default.
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.
(a) If the 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, or it may enforce the remainder of the lease contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
(b) With respect to a consumer lease, if the 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 subsection (a) or (b), the 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 or clause thereof, or of the conduct.
(d) In an action in which the lessee claims unconscionability with respect to a consumer lease:
(i) If the court finds unconscionability under subsection (a) or (b), the court shall award reasonable attorney's fees to the lessee;
(ii) If the court does not find unconscionability 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;
(iii) In determining attorney's fees, the amount of the recovery on behalf of the claimant under subsections (a) and
(b) is not controlling.
(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" or "when he deems himself insecure" or in words of similar import must be construed to mean that he has power to do so only if he in good faith believes that the prospect of payment or performance is impaired.
(b) With respect to a consumer lease, the burden of establishing good faith under subsection (a) 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.
(a) A lease contract is not enforceable by way of action or defense unless:
(i) The total payments to be made under the lease contract, excluding payments for options to renew or buy, are less than one thousand dollars ($1,000.00); or
(ii) 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 subsection (a)(ii), 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 subsection (a)(ii) beyond the lease term and the quantity of goods shown in the writing.
(d) A lease contract that does not satisfy the requirements of subsection (a), but which is valid in other respects, is enforceable:
(i) 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;
(ii) If the party against whom enforcement is sought admits in that party's pleading, testimony or otherwise in court that a lease contract was made, but the lease contract is not enforceable under this provision beyond the quantity of goods admitted; or
(iii) With respect to goods that have been received and accepted by the lessee.
(e) The lease term under a lease contract referred to in subsection (d) is:
(i) 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;
(ii) If the party against whom enforcement is sought admits in that party's pleading, testimony, or otherwise in court a lease term, the term so admitted; or
(iii) A reasonable lease term.
34.1-2.A-202. Final written expression: parol or extrinsic evidence.
(a) Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:
(i) By course of dealing or usage of trade or by course of performance; and
(ii) By 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.
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 the lease contract or offer.
(a) A lease contract may be made in any manner sufficient to show agreement, including conduct by both parties which 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 (1) or more terms 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.
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 (3) months. Any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.
34.1-2.A-206. Offer and acceptance in formation of lease contract.
(a) Unless otherwise unambiguously indicated by the language or circumstances, an offer to make a lease contract must be construed as inviting acceptance in any manner and by any medium reasonable in 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.
34.1-2.A-208. Modification, rescission and waiver.
(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, such a requirement on a form supplied by a merchant must be separately signed by the other party.
(c) Although an attempt at modification or rescission does not satisfy the requirements of subsection (b), 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.
34.1-2.A-209. Lessee under finance lease as beneficiary of supply contract.
(a) The benefit of a 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 is subject to the terms of the warranty and of the supply contract and all defenses or claims arising therefrom.
(b) The extension of the benefit of a supplier's promises and of warranties to the lessee (section 34.1-2.A-209(a)) does not: (1) modify the rights and obligations of the parties to the supply contract, whether arising therefrom or otherwise; or (2) impose any duty or liability under the supply contract on the lessee.
(c) 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. 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 subsection (a), the lessee retains all rights that the lessee may have against the supplier which arise from an agreement between the lessee and the supplier or under other law.
(a) Express warranties by the lessor are created as follows:
(i) Any affirmation of fact or promise made by the lessor to the lessee which 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;
(ii) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods will conform to the description;
(iii) 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, such as "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.
34.1-2.A-211. Warranties against interference and against infringement; lessee's obligation against infringement.
(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, which 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.
34.1-2.A-212. Implied warranty of merchantability.
(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) Goods to be merchantable must be at least such as:
(i) Pass without objection in the trade under the description in the lease agreement;
(ii) In the case of fungible goods, are of fair average quality within the description;
(iii) Are fit for the ordinary purposes for which goods of that type are used;
(iv) Run, within the variation permitted by the lease agreement, of even kind, quality and quantity within each unit and among all units involved;
(v) Are adequately contained, packaged and labeled as the lease agreement may require; and
(vi) 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.
34.1-2.A-213. Implied warranty of fitness for particular purpose.
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.
34.1-2.A-214. Exclusion or modification of warranties.
(a) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit a warranty must be construed wherever reasonable as consistent with each other; but, subject to the provisions of section 34.1-2.A-202 on parol or extrinsic evidence, negation or limitation is inoperative to the extent that the construction is unreasonable.
(b) Subject to subsection (c), to exclude or modify the implied warranty of merchantability or any part of it the language must mention "merchantability," be by a writing, and be conspicuous. Subject to subsection (c), to exclude or modify any implied warranty of fitness the exclusion must 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 subsection (b), but subject to subsection (d):
(i) 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;
(ii) 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 ought in the circumstances to have revealed; and
(iii) An implied warranty may also 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 (section 34.1-2.A-211) or any part of it, the language must 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.
34.1-2.A-215. Cumulation and conflict of warranties express or implied.
(a) Warranties, whether express or implied, must 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:
(i) Exact or technical specifications displace an inconsistent sample or model or general language of description;
(ii) A sample from an existing bulk displaces inconsistent general language of description;
(iii) Express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose.
34.1-2.A-216. Third-party beneficiaries of express and implied warranties.
A warranty to or for the benefit of a lessee under this article, whether express or implied, extends to any person who may reasonably 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 is also effective against the beneficiary designated under this section.
(a) 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:
(i) When the lease contract is made if the lease contract is for a lease of goods that are existing and identified;
(ii) 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; or
(iii) When the young are conceived, if the lease contract is for a lease of unborn young of animals.
(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 subsections (a) and (b), 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 statute or rule of law.
(e) The parties by agreement may determine that one (1) or more parties have an obligation to obtain and pay for insurance covering the goods and by agreement may determine the beneficiary of the proceeds of the insurance.