Article 2A — Leases · Section 2a-220
Explore the provisions of UCC § 2a-220 concerning the limitations on lessor liability regarding the leased property.
Source: U.C.C. § 2a-220
A lessor is not liable for any consequential damages resulting from any defect in the leased goods unless the lessor: (a) had knowledge of the defect and failed to inform the lessee, or (b) explicitly agreed to be liable for such damages.
This section limits a lessor's liability for consequential damages stemming from defects in leased goods unless they knew about the defect and did not inform the lessee or agreed to take on that liability. Essentially, it protects lessors from unforeseen liabilities unless they are explicitly aware of issues.
The person or entity who leases goods to another party (lessee) under a lease agreement.
Indirect damages that are not caused directly by a breach but result as a foreseeable consequence of the breach.
Example 1
A lessor leases equipment that has a known manufacturing defect but does not disclose this to the lessee. If the lessee suffers damages because of this defect, the lessor could be liable since they had knowledge of the defect.
Example 2
A lessor and lessee enter into a lease where the lessor explicitly states they will be liable for any damages caused by defects in the leased goods. If damage occurs, the lessor cannot invoke the limitation provided in § 2a-220.