§ 25-2A-303. Alienability of party's interest under lease contract or of lessor's residual interest in goods; delegation of performance; transfer of rights. - North Carolina Statutes

§25‑2A‑303.  Alienability of party's interest under lease contractor of lessor's residual interest in goods; delegation of performance; transferof rights.

(1)        As used in thissection, "creation of a security interest" includes the sale of alease contract that is subject to Article 9 of this Chapter, SecuredTransactions, by reason of G.S. 25‑9‑109(a)(3).

(2)        Except as providedin subsection (3) of this section and G.S. 25‑9‑407, a provision ina lease agreement which (i) prohibits the voluntary or involuntary transfer,including a transfer by sale, sublease, creation, or enforcement of a securityinterest, or attachment, levy, or other judicial process, of an interest of aparty under the lease contract or of the lessor's residual interest in thegoods; or (ii) makes such a transfer an event of default, gives rise to therights and remedies provided in subsection (4) of this section, but a transferthat is prohibited or is an event of default under the lease agreement isotherwise effective.

(3)        A provision in alease agreement which (i) prohibits a transfer of a right to damages fordefault with respect to the whole lease contract or of a right to paymentarising out of the transferor's due performance of the transferor's entireobligation, or (ii) makes such a transfer an event of default, is notenforceable, and such a transfer is not a transfer that materially impairs theprospect of obtaining return performance by, materially changes the duty of, ormaterially increases the burden or risk imposed on, the other party to thelease contract within the purview of subsection (4) of this section.

(4)        Subject tosubsection (3) of this section and G.S. 25‑9‑407:

(a)        if a transfer ismade which is made an event of default under a lease agreement, the party to thelease contract not making the transfer, unless that party waives the default orotherwise agrees, has the rights and remedies described in G.S. 25‑2A‑501(2);

(b)        if paragraph (a) isnot applicable and if a transfer is made that (i) is prohibited under a leaseagreement or (ii) materially impairs the prospect of obtaining returnperformance by, materially changes the duty of, or materially increases theburden or risk imposed on, the other party to the lease contract, unless theparty not making the transfer agrees at any time to the transfer in the leasecontract or otherwise, then, except as limited by contract, (i) the transferoris liable to the party not making the transfer for damages caused by thetransfer to the extent that the damages could not reasonably be prevented bythe party not making the transfer and (ii) a court having jurisdiction maygrant other appropriate relief, including cancellation of the lease contract oran injunction against the transfer.

(5)        A transfer of"the lease" or of "all my rights under the lease", or atransfer in similar general terms, is a transfer of rights and, unless thelanguage or the circumstances, as in a transfer for security, indicate thecontrary, the transfer is a delegation of duties by the transferor to thetransferee. Acceptance by the transferee constitutes a promise by thetransferee to perform those duties. The promise is enforceable by either thetransferor or the other party to the lease contract.

(6)        Unless otherwiseagreed by the lessor and the lessee, a delegation of performance does notrelieve the transferor as against the other party of any duty to perform or ofany liability for default.

(7)        In a consumerlease, to prohibit the transfer of an interest of a party under the leasecontract or to make a transfer an event of default, the language must bespecific, by a writing, and conspicuous. (1993, c. 463, s. 1; 2000‑169,s. 14.)