Section 440.2905 - Transfer from lessee to buyer or sublessee; power; rights; buyer in ordinary course of business; entrustment; certificate of title. - Michigan Statutes

UNIFORM COMMERCIAL CODE (EXCERPT)
Act 174 of 1962

440.2905 Transfer from lessee to buyer or sublessee; power; rights; buyer in ordinary course of business; entrustment; certificate of title.

Sec. 2A305.

(1) Subject to section 2A303, a buyer or sublessee from the lessee of goods under an existing lease contract obtains, to the extent of the interest transferred, the leasehold interest in the goods that the lessee had or had power to transfer, and except as provided in subsection (2) and section 2A511(4), takes subject to the existing lease contract. A lessee with a voidable leasehold interest has power to transfer a good leasehold interest to a good faith buyer for value or a good faith sublessee for value, but only to the extent set forth in the preceding sentence. When goods have been delivered under a transaction of lease, the lessee has that power even though any of the following apply:

(a) The lessor was deceived as to the identity of the lessee.

(b) The delivery was in exchange for a check which is later dishonored.

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

(2) A buyer in the ordinary course of business or a sublessee in the ordinary course of business from a lessee who is a merchant dealing in goods of that kind to whom the goods were entrusted by the lessor obtains, to the extent of the interest transferred, all of the lessor's and lessee's rights to the goods, and takes free of the existing lease contract.

(3) A buyer or sublessee from the lessee 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.

History: Add. 1992, Act 101, Eff. Sept. 30, 1992