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84-2a-523. Lessor's remedies. (1) If a lessee wrongfully rejects or revokes acceptance of goods or fails to make a payment when due or repudiates with respect to a part or the whole, 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 (K.S.A. 84-2a-510), the lessee is in default under the lease contract and the lessor may:

(a) Cancel the lease contract (K.S.A. 84-2a-505(1));

(b) proceed respecting goods not identified to the lease contract (K.S.A. 84-2a-524);

(c) withhold delivery of the goods and take possession of goods previously delivered (K.S.A. 84-2a-525);

(d) stop delivery of the goods by any bailee (K.S.A. 84-2a-526);

(e) dispose of the goods and recover damages (K.S.A. 84-2a-527), or retain the goods and recover damages (K.S.A. 84-2a-528), or in a proper case recover rent (K.S.A. 84-2a-529).

(f) exercise any other rights or pursue any other remedies provided in the lease contract.

(2) If a lessor does not fully exercise a right or obtain a remedy to which the lessor is entitled under subsection (1), the lessor may recover the loss resulting in the ordinary course of events from the lessee's default as determined in any reasonable manner, together with incidental damages, less expenses saved in consequence of the lessee's default.

(3) If a lessee is otherwise in default under a lease contract, the lessor may exercise the rights and pursue the remedies provided in the lease contract, which may include a right to cancel the lease. In addition, unless otherwise provided in the lease contract:

(a) If the default substantially impairs the value of the lease contract to the lessor, the lessor may exercise the rights and pursue the remedies provided in subsection (1) or (2); or

(b) if the default does not substantially impair the value of the lease contract to the lessor, the lessor may recover as provided in subsection (2).

History: L. 1991, ch. 295, ยง 71; February 1, 1992.

KANSAS COMMENT, 1996

1. This section indexes the remedies available to the lessor when the lessee defaults. It is derived from section 84-2-703, the index of a seller's remedies under Article 2. The remedies are, to a large extent, parallel to those of Article 2, although tailored to lease contracts. The section contains no special rule for finance leases. See Official Comment 21 to this section.

2. Subsection (1) begins by identifying the four statutory events constituting default by the lessee: wrongful rejection; wrongful revocation of acceptance; failure to make a payment when due; and repudiation of the lease. If one of the events occurs, the lessor may (1) cancel (84-2a-505(1)); (2) proceed as to goods not identified in the lease contract (84-2a-524); (3) withhold delivery or take back goods previously delivered (84-2a-525); (4) stop delivery (84-2a-526); (5) dispose of the goods and recover damages (84 -2a-527), retain the goods and recover market rent damages (84-2a-528), or in a proper case recover rent (84-2a-529); and (6) pursue any other remedies set out in the lease contract. These remedies generally are cumulative. See 84-2a-501(4). Official Comments 1 and 4 make clear that this section rejects the doctrine of election of remedies, although the lessor may not be put in a better position than it would have been in had the lease contract been performed. A detailed illustration of the workings of these remedies is set out in Official Comments 5-18.

3. Under subsection (2), if a statutory default occurs but the lessor does not fully exercise its rights as set out in subsection (1) or obtain a remedy to which it is entitled under that subsection, it may recover the loss resulting in the ordinary course of events, plus incidental damages but less expenses saved as a result of the default.

4. Subsection (3) deals with defaults other than statutory defaults, i.e., defaults defined in the lease contract. In the event of such a default, the lessor may pursue any remedies as provided in the lease contract itself. In addition, unless the lease contract provides otherwise, if the default substantially impairs the value of the lease contract, the lessor may exercise any remedy set out in subsection (1) or (2). If the default does not substantially impair the value of the lease contract, the lessor may rely only on the remedy set out in subsection (2).


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