84-2a-517. Revocation of acceptance of goods. (1) A lessee may revoke acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the lessee if the lessee has accepted it:
(a) Except in the case of a finance lease, on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or
(b) without discovery of the nonconformity if the lessee's acceptance was reasonably induced either by the lessor's assurance or, except in the case of a finance lease, by the difficulty of discovery before acceptance.
(2) Except in the case of a finance lease that is not a consumer lease, a lessee may revoke acceptance of a lot or commercial unit if the lessor defaults under the lease contract and the default substantially impairs the value of that lot or commercial unit to the lessee.
(3) If the lease agreement so provides, the lessee may revoke acceptance of a lot or commercial unit because of other defaults by the lessor.
(4) Revocation of acceptance must occur within a reasonable time after the lessee discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by the nonconformity. Revocation is not effective until the lessee notifies the lessor.
(5) A lessee who so revokes has the same rights and duties with regard to the goods involved as if the lessee had rejected them.
History: L. 1991, ch. 295, ยง 65; February 1, 1992.
KANSAS COMMENT, 1996
1. This section addresses when a lessee can revoke acceptance of goods. It is derived from section 84-2-608. For leases that are not finance leases, subsections (1), (4), and (5) of this section adopt the substance of the Article 2 analogue. For further discussion, see 1996 Kansas Comments to 84-2-608. In addition, subsections (2) and (3) provide additional grounds for revoking acceptance. Under subsection (2), a lessee (that is not a finance lessee in a non-consumer lease) may revoke acceptance of a lot or commercial unit if default by the lessor under the lease contract substantially impairs the value of the lot or commercial unit to the lessee. Official Comment 1 explains that this provision permits revocation of acceptance if the lessor defaults on any continuing obligations under the lease, such as to maintain the leased equipment. Under subsection (3), the lessee may revoke acceptance under other circumstances if the lease contract permits. In other words, the parties may themselves define what defaults are sufficiently serious to permit revocation.
2. The grounds on which a finance lessee can revoke acceptance are significantly restricted from the grounds available to other lessees. A finance lessee may not revoke acceptance under paragraph (1)(a) if it knows of a nonconformity, even if it accepts on the assumption that the nonconformity would be cured. See also 84-2a-516(2). A finance lessee in a non-consumer lease also may not revoke acceptance under paragraph (2) for a default by the lessor that substantially impairs the value of a lot or commercial unit. A finance lessee in a consumer lease may revoke on this basis. The unavailability of these grounds for revocation in finance leases is consistent with section 84-2a-407(1), which makes the finance lessee's obligations under the lease independent and irrevocable once it accepts the goods. In addition, note that the finance lessee cannot revoke its acceptance as to the supplier: the finance lessee is not a party to the supply contract, and the supplier is not a party to the lease contract.
3. A finance lessee does have two grounds on which it can revoke acceptance. First, a finance lessee may revoke acceptance if it did not discover a nonconformity (with the lease contract, not the supply contract) that substantially impairs the value of the goods and if its acceptance was reasonably induced by the lessor's assurances. See also Official Comment 1 to 84-2a-516. The difficulty of discovery is not a basis for revoking acceptance. Second, a finance lessee may revoke acceptance under subsection (3) if the lease agreement so provides.
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