Article 2A — Leases · Section 2a-303
Explore the key provisions and implications of UCC § 2a-303 concerning the leasing of goods under Article 2A.
Source: U.C.C. § 2a-303
A lease contract is enforceable despite a material breach by either party, as long as there has been partial performance, and a party is not entitled to any damages due to the other party's breach after any right to terminate the lease has been waived or compromised.
UCC § 2a-303 outlines that even if one party breaches a lease, the contract can still be enforced if there has been partial performance. Also, if a party waives their right to terminate the lease after a breach, they cannot claim damages for that breach.
An agreement between the lessor and lessee, where the lessor provides goods for use by the lessee in exchange for rent.
A significant failure to perform contractual obligations that allows the non-breaching party to terminate the contract.
Example 1
A lessee makes timely payments for the first few months but fails to pay rent in month four. If the lessor continues to accept late payments, they cannot later claim damages related to the earlier breach.
Example 2
A company leases machinery but later discovers defects that disrupt operations. Even though this constitutes a breach, if the company continues to use the machinery and makes rental payments, they have partly performed under the lease.