Texas Business & Commerce Code

§ 2A.303 — ALIENABILITY OF PARTY'S INTEREST UNDER LEASE CONTRACT OR OF LESSOR'S RESIDUAL INTEREST IN GOODS; DELEGATION OF PERFORMANCE; TRANSFER OF RIGHTS

BC § 2A.303Title 1. UNIFORM COMMERCIAL CODE · Ch. 2A. LEASES · Art. C. EFFECT OF LEASE CONTRACT

Statute text

(a)As used in this section, "creation of a security interest" includes the sale of a lease contract that is subject to Chapter 9 of this code, Secured Transactions, by reason of Section 9.109(a)(3).

(b)Except as provided in Section 9.407(c), a provision in a lease agreement which (1) prohibits the voluntary or involuntary transfer, including a transfer by sale, sublease, creation or enforcement of a security interest, or attachment, levy, or other judicial process, of an interest of a party under the lease contract or of the lessor's residual interest in the goods, or (2) makes such a transfer an event of default, gives rise to the rights and remedies provided in Subsection (d), but a transfer that is prohibited or is an event of default under the lease agreement is otherwise effective.

(c)A provision in a lease agreement which (1) prohibits a transfer of a right to damages for default with respect to the whole lease contract or of a right to payment arising out of the transferor's due performance of the transferor's entire obligation, or (2) makes such a transfer an event of default, is not enforceable, and such a transfer is not a transfer that materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the other party to the lease contract within the purview of Subsection (d).

(d)Subject to Section 9.407(c):

(1)if a transfer is made which is made an event of default under a lease agreement, the party to the lease contract not making the transfer, unless that party waives the default or otherwise agrees, has the rights and remedies described in Section 2A.501(b); and

(2)if Subdivision (1) is not applicable and if a transfer is made that (A) is prohibited under a lease agreement or (B) materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden of risk imposed on, the other party to the lease contract, unless the party not making the transfer agrees at any time to the transfer in the lease contract or otherwise, then, except as limited by contract, (i) the transferor is liable to the party not making the transfer for damages caused by the transfer to the extent that the damages could not reasonably be prevented by the party not making the transfer and (ii) a court having jurisdiction may grant other appropriate relief, including cancellation of the lease contract or an injunction against the transfer.

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Legislative history

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1999, 76th Leg., ch. 414, Sec. 2.20, eff. July 1, 2001.