84-2a-305. (1) Subject to the provisions of K.S.A. 84-2a-303, 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 K.S.A. 84-2a-511(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:
(a) The lessor was deceived as the identity of the lessee;
(b) the delivery was in exchange for a check which is later dishonored; or
(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: L. 1991, ch. 295, ยง 35; February 1, 1992.
KANSAS COMMENT, 1996
This section deals with a lessee of goods that sells or leases the goods to another party. The provision largely parallels the previous section, 84-2a-304. Under subsection (1), the original lessee can transfer the leasehold interest it has or has power to transfer, but the subsequent lessee takes subject to the original lease contract. A lessor with a voidable leasehold interest has the power to transfer a good leasehold interest to a good faith purchaser or sublessee for value, but the purchaser or lessee likewise takes subject to the existing lease. The section also recognizes similar exceptions under which a subsequent purchaser or lessee takes free of the original lease: a purchaser in good faith from a lessee that is disposing of the goods after a rightful rejection (84-2a-511(4)) and, under subsection (2), a buyer or lessee in the ordinary course of business of goods entrusted by the lessor to the lessee. Subsection (2), unlike section 84-2a-304(2), does not have any requirement concerning the time of entrustment. Subsection (3) dealing with certificate of title statutes is analogous to section 84-2a-304(3).
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