47-2A305. Sale or sublease of goods by
lessee
A. Subject to the provisions of section 47-2A303, 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 B of this section and section 47-2A511,
subsection D, 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:
1. The lessor was deceived as to the identity of the lessee;
2. The delivery was in exchange for a check which is later dishonored; or
3. The delivery was procured through fraud punishable as larcenous under the
criminal law.
B. 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.
C. 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.
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