Part 5 - Default - Illinois Statutes

      (810 ILCS 5/Art. 2A Pt. 5 heading)PART 5. DEFAULT

      (810 ILCS 5/Art. 2A Pt. 5 Sub. A heading)A. In General

    (810 ILCS 5/2A‑501)(from Ch. 26, par. 2A‑501)
    Sec. 2A‑501. Default; procedure.
    (1) Whether the lessor or the lessee is in default under a lease contract is determined by the lease agreement and this Article.
    (2) If the lessor or the lessee is in default under the lease contract, the party seeking enforcement has rights and remedies as provided in this Article and, except as limited by this Article, as provided in the lease agreement.
    (3) If the lessor or the lessee is in default under the lease contract, the party seeking enforcement may reduce the party's claim to judgment, or otherwise enforce the lease contract by self‑help or any available judicial procedure or nonjudicial procedure, including administrative proceeding, arbitration, or the like, in accordance with this Article.
    (4) Except as otherwise provided in Section 1‑305(a) or this Article or the lease agreement, the rights and remedies referred to in subsections (2) and (3) are cumulative.
    (5) If the lease agreement covers both real property and goods, the party seeking enforcement may proceed under this Part as to the goods, or under other applicable law as to both the real property and the goods in accordance with that party's rights and remedies in respect of the real property, in which case this Part does not apply.
(Source: P.A. 95‑895, eff. 1‑1‑09.)

(810 ILCS 5/2A‑502) (from Ch. 26, par. 2A‑502)     Sec. 2A‑502. Notice after default. Except as otherwise provided in this Article or the lease agreement, the lessor or lessee in default under the lease contract is not entitled to notice of default or notice of enforcement from the other party to the lease agreement. (Source: P.A. 87‑493.)

(810 ILCS 5/2A‑503) (from Ch. 26, par. 2A‑503)     Sec. 2A‑503. Modification or impairment of rights and remedies.     (1) Except as otherwise provided in this Article, the lease agreement may include rights and remedies for default 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.     (2) Resort to a remedy provided under this Article or in the lease agreement is optional unless the remedy is expressly agreed to be exclusive. If circumstances cause an exclusive or limited remedy to fail of its essential purpose, or provision for an exclusive remedy is unconscionable, remedy may be had as provided in this Article.     (3) Consequential damages may be liquidated under Section 2A‑504, or may otherwise be limited, altered, or excluded unless the limitation, alteration, or exclusion is unconscionable. Limitation, alteration, or exclusion of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation, alteration, or exclusion of damages where the loss is commercial is not prima facie unconscionable.     (4) Rights and remedies on default by the lessor or the lessee with respect to any obligation or promise collateral or ancillary to the lease contract are not impaired by this Article. (Source: P.A. 87‑493.)

(810 ILCS 5/2A‑504) (from Ch. 26, par. 2A‑504)     Sec. 2A‑504. Liquidation of damages.     (1) Damages payable by either party for default, or any other act or omission, including indemnity for loss or diminution of anticipated tax benefits or loss or damage to lessor's residual interest, may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the default or other act or omission.     (2) If the lease agreement provides for liquidation of damages, and such provision does not comply with subsection (1), or such provision is an exclusive or limited remedy that circumstances cause to fail of its essential purpose, remedy may be had as provided in this Article.     (3) If the lessor justifiably withholds or stops delivery of goods because of the lessee's default or insolvency (Section 2A‑525 or 2A‑526), the lessee is entitled to restitution of any amount by which the sum of his or her payments exceeds:         (a) the amount to which the lessor is entitled by

virtue of terms liquidating the lessor's damages in accordance with subsection (1); or

(b) in the absence of those terms, 20% of the then

present value of the total rent the lessee was obligated to pay for the balance of the lease term, or, in the case of a consumer lease, the lesser of such amount or $500.

(4) A lessee's right to restitution under subsection (3) is subject to offset to the extent the lessor establishes:         (a) a right to recover damages under the provisions

of this Article other than subsection (1); and

(b) the amount or value of any benefits received by

the lessee directly or indirectly by reason of the lease contract.

(Source: P.A. 87‑493.)

(810 ILCS 5/2A‑505) (from Ch. 26, par. 2A‑505)     Sec. 2A‑505. Cancellation and termination and effect of cancellation, termination, rescission, or fraud on rights and remedies.     (1) On cancellation of the lease contract, all obligations that are still executory on both sides are discharged, but any right based on prior default or performance survives, and the cancelling party also retains any remedy for default of the whole lease contract or any unperformed balance.     (2) On termination of the lease contract, all obligations that are still executory on both sides are discharged but any right based on prior default or performance survives.     (3) Unless the contrary intention clearly appears, expressions of "cancellation", "rescission", or the like of the lease contract may not be construed as a renunciation or discharge of any claim in damages for an antecedent default.     (4) Rights and remedies for material misrepresentation or fraud include all rights and remedies available under this Article for default.     (5) Neither rescission nor a claim for rescission of the lease contract nor rejection or return of the goods may bar or be deemed inconsistent with a claim for damages or other right or remedy. (Source: P.A. 87‑493.)

(810 ILCS 5/2A‑506) (from Ch. 26, par. 2A‑506)     Sec. 2A‑506. Statute of limitations.     (1) An action for default under a lease contract, including breach of warranty or indemnity, must be commenced within 4 years after the cause of action accrued. By the original lease contract the parties may reduce the period of limitation to not less than one year.     (2) A cause of action for default accrues when the act or omission on which the default or breach of warranty is based is or should have been discovered by the aggrieved party, or when the default occurs, whichever is later. A cause of action for indemnity accrues when the act or omission on which the claim for indemnity is based is or should have been discovered by the indemnified party, whichever is later.     (3) If an action commenced within the time limited by subsection (1) is so terminated as to leave available a remedy by another action for the same default or breach of warranty or indemnity, the other action may be commenced after the expiration of the time limited and within 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.     (4) This Section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action that have accrued before this Article becomes effective. (Source: P.A. 87‑493.)

(810 ILCS 5/2A‑507) (from Ch. 26, par. 2A‑507)     Sec. 2A‑507. Proof of market rent; time and place.     (1) Damages based on market rent (Section 2A‑519 or 2A‑528) are determined according to the rent for the use of the goods concerned for a lease term identical to the remaining lease term of the original lease agreement and prevailing at the times specified in Sections 2A‑519 and 2A‑528.     (2) If evidence of rent for the use of the goods concerned for a lease term identical to the remaining lease term of the original lease agreement and prevailing at the times or places described in this Article is not readily available, the rent prevailing within any reasonable time before or after the time described or at any other place or for a different lease term 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 difference, including the cost of transporting the goods to or from the other place.     (3) Evidence of a relevant rent prevailing at a time or place or for a lease term other than the one described in this Article offered by one party is not admissible unless and until he or she has given the other party notice the court finds sufficient to prevent unfair surprise.     (4) If the prevailing rent or value of any goods regularly leased in any established market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of that market are admissible in evidence. The circumstances of the preparation of the report may be shown to affect its weight but not its admissibility. (Source: P.A. 87‑493.)

      (810 ILCS 5/Art. 2A Pt. 5 Sub. B heading)B. Default by Lessor

(810 ILCS 5/2A‑508) (from Ch. 26, par. 2A‑508)     Sec. 2A‑508. Lessee's remedies.     (1) If a lessor fails to deliver the goods in conformity to the lease contract (Section 2A‑509) or repudiates the lease contract (Section 2A‑402), or a lessee rightfully rejects the goods (Section 2A‑509) or justifiably revokes acceptance of the goods (Section 2A‑517), 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 2A‑510), the lessor is in default under the lease contract and the lessee may:         (a) cancel the lease contract (Section 2A‑505(1));         (b) recover so much of the rent and security as has

been paid and is just under the circumstances;

(c) cover and recover damages as to all goods

affected whether or not they have been identified to the lease contract (Sections 2A‑518 and 2A‑520), or recover damages for nondelivery (Sections 2A‑519 and 2A‑520);

(d) exercise any other rights or pursue any other

remedies provided in the lease contract.

(2) If a lessor fails to deliver the goods in conformity to the lease contract or repudiates the lease contract, the lessee may also:         (a) if the goods have been identified, recover them

(Section 2A‑522); or

(b) in a proper case, obtain specific performance or

replevy the goods (Section 2A‑521).

(3) If a lessor is otherwise in default under a lease contract, the lessee may exercise the rights and pursue the remedies provided in the lease contract, which may include a right to cancel the lease, and in Section 2A‑519(3).     (4) If a lessor has breached a warranty, whether express or implied, the lessee may recover damages (Section 2A‑519(4)).     (5) 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 Section 2A‑527(5).     (6) Subject to the provisions of Section 2A‑407, 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. (Source: P.A. 87‑493.)

(810 ILCS 5/2A‑509) (from Ch. 26, par. 2A‑509)     Sec. 2A‑509. Lessee's rights on improper delivery; rightful rejection.     (1) Subject to the provisions of Section 2A‑510 on default in installment lease contracts, if the goods or the tender or delivery fail in any respect to conform to the lease contract, the lessee may reject or accept the goods or accept any commercial unit or units and reject the rest of the goods.     (2) Rejection of goods is ineffective unless it is within a reasonable time after tender or delivery of the goods and the lessee seasonably notifies the lessor. (Source: P.A. 87‑493.)

(810 ILCS 5/2A‑510) (from Ch. 26, par. 2A‑510)     Sec. 2A‑510. Installment lease contracts; rejection and default.     (1) Under an installment lease contract, a lessee may reject any delivery that is nonconforming if the nonconformity substantially impairs the value of that delivery and cannot be cured or the nonconformity is a defect in the required documents; but if the nonconformity does not fall within subsection (2) and the lessor or the supplier gives adequate assurance of its cure, the lessee must accept that delivery.     (2) Whenever nonconformity or default with respect to one or more deliveries substantially impairs the value of the installment lease contract as a whole there is a default with respect to the whole. But, the aggrieved party reinstates the installment lease contract as a whole if the aggrieved party accepts a nonconforming delivery without seasonably notifying of cancellation or brings an action with respect only to past deliveries or demands performance as to future deliveries. (Source: P.A. 87‑493.)

(810 ILCS 5/2A‑511) (from Ch. 26, par. 2A‑511)     Sec. 2A‑511. Merchant lessee's duties as to rightfully rejected goods.     (1) Subject to any security interest of a lessee (Section 2A‑508(5)), if a lessor or a supplier has no agent or place of business at the market of rejection, a merchant lessee, after rejection of goods in his or her possession or control, shall follow any reasonable instructions received from the lessor or the supplier with respect to the goods. In the absence of those instructions, a merchant lessee shall make reasonable efforts to sell, lease, or otherwise dispose of the goods for the lessor's account if they threaten to decline in value speedily. Instructions are not reasonable if on demand indemnity for expenses is not forthcoming.     (2) If a merchant lessee (subsection (1)) or any other lessee (Section 2A‑512) disposes of goods, he or she is entitled to reimbursement either from the lessor or the supplier or out of the proceeds for reasonable expenses of caring for and disposing of the goods and, if the expenses include no disposition commission, to such commission as is usual in the trade or, if there is none, to a reasonable sum not exceeding 10% of the gross proceeds.     (3) In complying with this Section or Section 2A‑512, the lessee is held only to good faith. Good faith conduct hereunder is neither acceptance or conversion nor the basis of an action for damages.     (4) A purchaser who purchases in good faith from a lessee pursuant to this Section or Section 2A‑512 takes the goods free of any rights of the lessor and the supplier even though the lessee fails to comply with one or more of the requirements of this Article. (Source: P.A. 87‑493.)

(810 ILCS 5/2A‑512) (from Ch. 26, par. 2A‑512)     Sec. 2A‑512. Lessee's duties as to rightfully rejected goods.     (1) Except as otherwise provided with respect to goods that threaten to decline in value speedily (Section 2A‑511) and subject to any security interest of a lessee (Section 2A‑508(5)):         (a) the lessee, after rejection of goods in the

lessee's possession, shall hold them with reasonable care at the lessor's or the supplier's disposition for a reasonable time after the lessee's seasonable notification of rejection;

(b) if the lessor or the supplier gives no

instructions within a reasonable time after notification of rejection, the lessee may store the rejected goods for the lessor's or the supplier's account or ship them to the lessor or the supplier or dispose of them for the lessor's or the supplier's account with reimbursement in the manner provided in Section 2A‑511; but

(c) the lessee has no further obligations with

regard to goods rightfully rejected.

(2) Action by the lessee pursuant to subsection (1) is not acceptance or conversion. (Source: P.A. 87‑493.)

(810 ILCS 5/2A‑513) (from Ch. 26, par. 2A‑513)     Sec. 2A‑513. Cure by lessor of improper tender or delivery; replacement.     (1) If any tender or delivery by the lessor or the supplier is rejected because nonconforming and the time for performance has not yet expired, the lessor or the supplier may seasonably notify the lessee of the lessor's or the supplier's intention to cure and may then make a conforming delivery within the time provided in the lease contract.     (2) If the lessee rejects a nonconforming tender that the lessor or the supplier had reasonable grounds to believe would be acceptable with or without money allowance, the lessor or the supplier may have a further reasonable time to substitute a conforming tender if he or she seasonably notifies the lessee. (Source: P.A. 87‑493.)

    (810 ILCS 5/2A‑514)(from Ch. 26, par. 2A‑514)
    Sec. 2A‑514. Waiver of lessee's objections.
    (1) In rejecting goods, a lessee's failure to state a particular defect that is ascertainable by reasonable inspection precludes the lessee from relying on the defect to justify rejection or to establish default:
        (a) if, stated seasonably, the lessor or the

supplier could have cured it (Section 2A‑513); or

(b) between merchants if the lessor or the supplier

after rejection has made a request in writing for a full and final written statement of all defects on which the lessee proposes to rely.

(2) A lessee's failure to reserve rights when paying rent or other consideration against documents precludes recovery of the payment for defects apparent in the documents. (Source: P.A. 95‑895, eff. 1‑1‑09.)

(810 ILCS 5/2A‑515) (from Ch. 26, par. 2A‑515)     Sec. 2A‑515. Acceptance of goods.     (1) Acceptance of goods occurs after the lessee has had a reasonable opportunity to inspect the goods and         (a) the lessee signifies or acts with respect to the

goods in a manner that signifies to the lessor or the supplier that the goods are conforming or that the lessee will take or retain them in spite of their nonconformity; or

(b) the lessee fails to make an effective rejection

of the goods (Section 2A‑509(2)).

(2) Acceptance of a part of any commercial unit is acceptance of that entire unit. (Source: P.A. 87‑493.)

(810 ILCS 5/2A‑516) (from Ch. 26, par. 2A‑516)     Sec. 2A‑516. Effect of acceptance of goods; notice of default; burden of establishing default after acceptance; notice of claim or litigation to person answerable over.     (1) A lessee must pay rent for any goods accepted in accordance with the lease contract, with due allowance for goods rightfully rejected or not delivered.     (2) A lessee's acceptance of goods precludes rejection of the goods accepted. In the case of a finance lease, if made with knowledge of a nonconformity, acceptance cannot be revoked because of it. In any other case, if made with knowledge of a nonconformity, acceptance cannot be revoked because of it unless the acceptance was on the reasonable assumption that the nonconformity would be seasonably cured. Acceptance does not of itself impair any other remedy provided by this Article or the lease agreement for nonconformity.     (3) If a tender has been accepted:         (a) within a reasonable time after the lessee

discovers or should have discovered any default, the lessee shall notify the lessor and the supplier, if any, or be barred from any remedy against the party not notified;

(b) except in the case of a consumer lease, within a

reasonable time after the lessee receives notice of litigation for infringement or the like (Section 2A‑211) the lessee shall notify the lessor or be barred from any remedy over for liability established by the litigation; and

(c) the burden is on the lessee to establish any

default.

(4) If a lessee is sued for breach of a warranty or other obligation for which a lessor or a supplier is answerable over the following apply:         (a) The lessee may give the lessor or the supplier,

or both, written notice of the litigation. If the notice states that the person notified may come in and defend and that if the person notified does not do so that person will be bound in any action against that person by the lessee by any determination of fact common to the 2 litigations, then unless the person notified after seasonable receipt of the notice does come in and defend that person is so bound.

(b) The lessor or the supplier may demand in writing

that the lessee turn over control of the litigation including settlement if the claim is one for infringement or the like (Section 2A‑211) or else be barred from any remedy over. If the demand states that the lessor or the supplier agrees to bear all expense and to satisfy any adverse judgment, then unless the lessee after seasonable receipt of the demand does turn over control the lessee is so barred.

(5) Subsections (3) and (4) apply to any obligation of a lessee to hold the lessor or the supplier harmless against infringement or the like (Section 2A‑211). (Source: P.A. 87‑493.)

(810 ILCS 5/2A‑517) (from Ch. 26, par. 2A‑517)     Sec. 2A‑517. Revocation of acceptance of goods.     (1) A lessee may revoke acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the lessee if the lessee has accepted it:         (a) except in the case of a finance lease, on the

reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or

(b) without discovery of the nonconformity if the

lessee's acceptance was reasonably induced either by the lessor's assurances or, except in the case of a finance lease, by the difficulty of discovery before acceptance.

(2) Except in the case of a finance lease that is not a consumer lease, a lessee may revoke acceptance of a lot or commercial unit if the lessor defaults under the lease contract and the default substantially impairs the value of that lot or commercial unit to the lessee.     (3) If the lease agreement so provides, the lessee may revoke acceptance of a lot or commercial unit because of other defaults by the lessor.     (4) Revocation of acceptance must occur within a reasonable time after the lessee discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by the nonconformity. Revocation is not effective until the lessee notifies the lessor.     (5) A lessee who so revokes has the same rights and duties with regard to the goods involved as if the lessee had rejected them. (Source: P.A. 87‑493.) Illinois Forms by Issue Illinois Court Forms > Garnishment Illinois Emancipation Forms Illinois Family Forms Illinois Guardianship Forms Illinois Name Change Forms Illinois Tax Forms Illinois Law Illinois State Laws     > Illinois Child Support     > Illinois Gun Law     > Illinois Statutes Illinois Tax     > Illinois State Tax Illinois Court     > Escobedo v. Illinois     > Munn v. Illinois Illinois Labor Laws     > Illinois Unemployment     > Minimum Wage in Illinois Illinois Agencies     > Better Business Bureau Illinois     > Illinois Board of Education     > Illinois Department of Corrections     > Illinois Department of Human Services     > Illinois Department of Insurance     > Illinois Department of Natural Resources     > Illinois Department of Professional Regulation     > Illinois Department of Public Health     > Illinois Department of Revenue     > Illinois Department of Transportation     > Illinois DMV     > Illinois Secretary of State     > Illinois State Police Illinois Court Map Disclaimer All information on our site are collected from Internet. Please contact us if any information is a violation of your rights, we will remove them from our site. You can send email to: [e-mail]. Copyright © 2010-2022 Laws-info.com | All rights reserved. Tips