Texas Business & Commerce Code

§ 2A.304 — SUBSEQUENT LEASE OF GOODS BY LESSOR

BC § 2A.304Title 1. UNIFORM COMMERCIAL CODE · Ch. 2A. LEASES · Art. C. EFFECT OF LEASE CONTRACT

Statute text

(a)Subject to Section 2A.303 of this chapter, 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 by Subsection (b) or Section 2A.527(d) 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:

(1)the lessor's transferor was deceived as to the identity of the lessor;

(2)the delivery was in exchange for a check which is later dishonored;

(3)it was agreed that the transaction was to be a "cash sale"; or

(4)the delivery was procured through fraud punishable as larcenous under the criminal law.

(b)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 that 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.

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Legislative history

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1, 1993.