2025 Session Last amended: 1989 session

§ 336.2A-308 — Special Rights of Creditors

Plain-Language Summary

This section gives creditors special rights when a lessor or seller fraudulently keeps possession of goods. A creditor of a lessor who still holds the leased goods can treat the lease as void if the lessor's keeping the goods is fraudulent under the law, but keeping them in good faith and in the normal course of trade for a commercially reasonable time after the lease becomes enforceable is not fraudulent. The article does not protect a lease that becomes enforceable as security for a preexisting debt under circumstances that would make it a fraudulent transfer or voidable preference. A creditor of a seller may likewise treat a sale as void for fraudulent retention, but a sale-leaseback where the seller stays on as lessee is not fraudulent if the buyer bought for value and in good faith.

336.2A-308 SPECIAL RIGHTS OF CREDITORS.

(1) A creditor of a lessor in possession of goods subject to a lease contract may treat the lease contract as void if as against the creditor retention of possession by the lessor is fraudulent under any statute or rule of law, but retention of possession in good faith and current course of trade by the lessor for a commercially reasonable time after the lease contract becomes enforceable is not fraudulent.

(2) Nothing in this article impairs the rights of creditors of a lessor if the lease contract (a) becomes enforceable, not in current course of trade but in satisfaction of or as security for a preexisting claim for money, security, or the like, and (b) is made under circumstances which under any statute or rule of law apart from this article would constitute the transaction a fraudulent transfer or voidable preference.

(3) A creditor of a seller may treat a sale or an identification of goods to a contract for sale as void if as against the creditor retention of possession by the seller is fraudulent under any statute or rule of law, but retention of possession of the goods pursuant to a lease contract entered into by the seller as lessee and the buyer as lessor in connection with the sale or identification of the goods is not fraudulent if the buyer bought for value and in good faith.

History:

1989 c 232 art 1 s 2A-308

History: History: 1989 c 232 art 1 s 2A-308

Practical Notes

A lessor’s or seller’s creditor can challenge the deal as fraudulent if the lessor or seller is just holding onto the goods, but ordinary, good faith possession in the normal course of trade is protected. A sale-and-leaseback, where the seller keeps using the goods as a lessee, is also protected as long as the buyer paid value and acted in good faith.

Source: Minnesota Office of the Revisor of Statutes