§ 336.2A-407 — Irrevocable Promises; Finance Leases
Plain-Language Summary
In a finance lease, the lessee's promises under the lease become irrevocable and independent once the lessee accepts the goods. After that point, those promises are enforceable between the parties and against third parties, including assignees, and cannot be canceled, terminated, modified, repudiated, excused, or substituted without the consent of the party they run to. In practical terms, the lessee must keep performing (for example, keep paying rent) even if a problem later arises with the goods. The section also does not affect the validity, under other law, of a lease covenant making the lessee's promises irrevocable and independent on acceptance.
336.2A-407 IRREVOCABLE PROMISES; FINANCE LEASES.
(1) In the case of a finance lease, the lessee’s promises under the lease contract become irrevocable and independent upon the lessee’s acceptance of the goods.
(2) A promise that has become irrevocable and independent under subsection (1):
(a) is effective and enforceable between the parties, and by or against third parties including assignees of the parties; and
(b) is not subject to cancellation, termination, modification, repudiation, excuse, or substitution without the consent of the party to whom the promise runs.
(3) This section does not affect the validity under any other law of a covenant in any lease contract making the lessee’s promises irrevocable and independent upon the lessee’s acceptance of the goods.
History:
1989 c 232 art 1 s 2A-407; 1991 c 171 art 1 s 8
History: History: 1989 c 232 art 1 s 2A-407; 1991 c 171 art 1 s 8