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BUSINESS AND COMMERCE CODE

TITLE 1. UNIFORM COMMERCIAL CODE

CHAPTER 2A. LEASES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2A.101. SHORT TITLE. This chapter shall be known and may

be cited as the Uniform Commercial Code--Leases.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.102. SCOPE. This chapter applies to any transaction,

regardless of form, that creates a lease of goods. This chapter

does not apply to a transaction that creates an interest in or

lease of real estate, except to the extent that provision is made

for leases of fixtures by Section 2A.309.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.103. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In this

chapter unless the context otherwise requires:

(1) "Buyer in the ordinary course of business" means a person

who in good faith and without knowledge that the sale to him or

her is in violation of the ownership rights or security interest

or leasehold interest of a third party in the goods buys in the

ordinary course from a person in the business of selling goods of

that kind but does not include a pawnbroker. "Buying" may be for

cash or by exchange of other property or on secured or unsecured

credit and includes acquiring goods or documents of title under a

preexisting contract for sale but does not include a transfer in

bulk or as security for or in total or partial satisfaction of a

money debt.

(2) "Cancellation" occurs when either party puts an end to the

lease contract for default by the other party.

(3) "Commercial unit" means a unit of goods as by commercial

usage is a single whole for purposes of lease and division of

which materially impairs its character or value on the market or

in use. A commercial unit may be a single article, as a machine,

or a set of articles, as a suite of furniture or a line of

machinery, or a quantity, as a gross or carload, or any other

unit treated in use or in the relevant market as a single whole.

(4) "Conforming" goods or performance under a lease contract

means performance or goods that are in accordance with the

obligations under the lease contract.

(5) "Consumer lease" means a lease that a lessor regularly

engaged in the business of leasing or selling makes to a lessee

who is an individual and who takes under the lease primarily for

a personal, family, or household purpose, if the total payments

to be made under the lease contract, excluding payments for

options to renew or buy, do not exceed $25,000.

(6) "Fault" means a wrongful act, omission, breach, or default.

(7) "Finance lease" means a lease with respect to which:

(A) the lessor does not select, manufacture, or supply the

goods;

(B) the lessor acquires the goods or the right to possession and

use of the goods in connection with the lease; and

(i) the lessee receives a copy of the contract by which the

lessor acquired the goods or the right to possession and use of

the goods before signing the lease contract;

(ii) the lessee's approval of the contract by which the lessor

acquired the goods or the right to possession and use of the

goods is a condition to effectiveness of the lease contract;

(iii) the lessee, before signing the lease contract, receives an

accurate and complete statement designating the promises and

warranties, and any disclaimers of warranties, limitations or

modifications of remedies, or liquidated damages, including those

of a third party, such as the manufacturer of the goods, provided

to the lessor by the person supplying the goods in connection

with or as part of the contract by which the lessor acquired the

goods or the right to possession and use of the goods; or

(iv) if the lease is not a consumer lease, the lessor, before

the lessee signs the lease contract, informs the lessee in

writing (a) of the identity of the person supplying the goods to

the lessor, unless the lessee has selected that person and

directed the lessor to acquire the goods or the right to

possession and use of the goods from that person, (b) that the

lessee is entitled under this chapter to the promises and

warranties, including those of any third party, provided to the

lessor by the person supplying the goods in connection with or as

part of the contract by which the lessor acquired the goods or

the right to possession and use of the goods, and (c) that the

lessee may communicate with the person supplying the goods to the

lessor and receive an accurate and complete statement of those

promises and warranties, including any disclaimers and

limitations of them or of remedies.

(8) "Goods" means all things that are moveable at the time of

identification to the lease contract, or are fixtures (Section

2A.309), but the term does not include money, documents,

instruments, accounts, chattel paper, general intangibles, or

minerals or the like, including oil and gas, before extraction.

The term also includes the unborn young of animals.

(9) "Installment lease contract" means a lease contract that

authorizes or requires the delivery of goods in separate lots to

be separately accepted, even though the lease contract contains

the clause "each delivery is a separate lease" or its equivalent.

(10) "Lease" means a transfer of the right to possession and use

of goods for a term in return for consideration, but a sale,

including a sale on approval or a sale or return, or retention or

creation of a security interest is not a lease. Unless the

context clearly indicates otherwise, the term includes a

sublease.

(11) "Lease agreement" means the bargain, with respect to the

lease, of the lessor and the lessee in fact as found in their

language or by implication from other circumstances including

course of dealing or usage of trade or course of performance as

provided by this chapter. Unless the context clearly indicates

otherwise, the term includes a sublease agreement.

(12) "Lease contract" means the total legal obligation that

results from the lease agreement as affected by this chapter and

any other applicable rules of law. Unless the context clearly

indicates otherwise, the term includes a sublease contract.

(13) "Leasehold interest" means the interest of the lessor or

the lessee under a lease contract.

(14) "Lessee" means a person who acquires the right to

possession and use of goods under a lease. Unless the context

clearly indicates otherwise, the term includes a sublessee.

(15) "Lessee in ordinary course of business" means a person who

in good faith and without knowledge that the lease to him or her

is in violation of the ownership rights or security interest or

leasehold interest of a third party in the goods, leases in

ordinary course from a person in the business of selling or

leasing goods of that kind but does not include a pawnbroker.

"Leasing" may be for cash or by exchange of other property or on

secured or unsecured credit and includes acquiring goods or

documents of title under a preexisting lease contract but does

not include a transfer in bulk or as security for or in total or

partial satisfaction of a money debt.

(16) "Lessor" means a person who transfers the right to

possession and use of goods under a lease. Unless the context

clearly indicates otherwise, the term includes a sublessor.

(17) "Lessor's residual interest" means the lessor's interest in

the goods after the expiration, termination, or cancellation of

the lease contract.

(18) "Lien" means a charge against or interest in goods to

secure payment of a debt or performance of an obligation, but the

term does not include a security interest.

(19) "Lot" means a parcel or a single article that is the

subject matter of a separate lease or delivery, whether or not it

is sufficient to perform the lease contract.

(20) "Merchant lessee" means a lessee that is a merchant with

respect to goods of the kind subject to the lease.

(21) "Present value" means the amount as of a date certain of

one or more sums payable in the future, discounted to the date

certain. The discount is determined by the interest rate

specified by the parties if the rate was not manifestly

unreasonable at the time the transaction was entered into;

otherwise, the discount is determined by a commercially

reasonable rate that takes into account the facts and

circumstances of each case at the time the transaction was

entered into.

(22) "Purchase" includes taking by sale, lease, mortgage,

security interest, pledge, gift, or any other voluntary

transaction creating an interest in goods.

(23) "Sublease" means a lease of goods the right to possession

and use of which was acquired by the lessor as a lessee under an

existing lease.

(24) "Supplier" means a person from whom a lessor buys or leases

goods to be leased under a finance lease.

(25) "Supply contract" means a contract under which a lessor

buys or leases goods to be leased.

(26) "Termination" occurs when either party pursuant to a power

created by agreement or law puts an end to the lease contract

otherwise than for default.

(b) Other definitions applying to this chapter and the sections

in which they appear are:

"Accessions". Section 2A.310(a).

"Construction mortgage". Section 2A.309(a)(4).

"Encumbrance". Section 2A.309(a)(5).

"Fixtures". Section 2A.309(a)(1).

"Fixture filing". Section 2A.309(a)(2).

"Purchase money lease". Section 2A.309(a)(3).

chapter:

"Account". Section 9.102(a)(2).

"Between merchants". Section 2.104(c).

"Buyer". Section 2.103(a)(1).

"Chattel paper". Section 9.102(a)(11).

"Consumer goods". Section 9.102(a)(23).

"Document". Section 9.102(a)(30).

"Entrusting". Section 2.403(c).

"General intangible". Section 9.102(a)(42).

"Instrument". Section 9.102(a)(47).

"Merchant". Section 2.104(a).

"Mortgage". Section 9.102(a)(55).

"Pursuant to commitment". Section 9.102(a)(69).

"Receipt". Section 2.103(a)(3).

"Sale". Section 2.106(a).

"Sale on approval". Section 2.326.

"Sale or return". Section 2.326.

"Seller". Section 2.103(a)(4).

(d) In addition Chapter 1 contains general definitions and

principles of construction and interpretation applicable

throughout this chapter.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1999, 76th Leg., ch. 414, Sec. 2.19, eff.

July 1, 2001; Acts 2003, 78th Leg., ch. 542, Sec. 4, eff. Sept.

1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch.

122, Sec. 13, eff. September 1, 2005.

Sec. 2A.104. LEASES SUBJECT TO OTHER LAWS. (a) A lease,

although subject to this chapter, is also subject to any

applicable:

(1) certificate of title statute of this state, including

Chapter 501, Transportation Code, Chapter 31, Parks and Wildlife

Code, and Subchapter E, Chapter 1201, Occupations Code;

(2) certificate of title statute of another jurisdiction

(Section 2A.105); or

(3) consumer law of this state, both decisional and statutory,

including, to the extent that they apply to a lease transaction:

(A) Titles 6, 7, 8, 9, and 14;

(B) Subtitle A, Title 11;

602, 603, 604, and 2001;

(D) Section 65.017, Civil Practice and Remedies Code;

(E) Chapter 1201, Occupations Code; and

(F) Chapter 25, Transportation Code.

(b) In case of conflict between this chapter, other than

Sections 2A.105, 2A.304(c) and 2A.305(c), and any statute or law

referred to in Subsection (a), the statute or law controls.

effect specified therein.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 30.176, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 1276, Sec. 14A.753, eff.

Sept. 1, 2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.03, eff. April 1, 2009.

Sec. 2A.105. TERRITORIAL APPLICATION OF CHAPTER TO GOODS COVERED

BY CERTIFICATE OF TITLE. Subject to the provisions of Sections

2A.304(c) and 2A.305(c), with respect to goods covered by a

certificate of title issued under a statute of this state or of

another jurisdiction, compliance and the effect of compliance or

noncompliance with a certificate of title statute are governed by

the law (including the conflict of laws rules) of the

jurisdiction issuing the certificate until the earlier of:

(1) surrender of the certificate; or

(2) four months after the goods are removed from that

jurisdiction and thereafter until a new certificate of title is

issued by another jurisdiction.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.106. LIMITATION ON POWER OF PARTIES TO CONSUMER LEASE TO

CHOOSE APPLICABLE LAW AND JUDICIAL FORUM. (a) If the law chosen

by the parties to a consumer lease is that of a jurisdiction

other than a jurisdiction in which the lessee resides at the time

the lease agreement becomes enforceable or within 30 days

thereafter or in which the goods are to be used, the choice is

not enforceable.

(b) If the judicial forum chosen by the parties to a consumer

lease is a forum located in a jurisdiction other than the

jurisdiction in which the lessee in fact signed the lease

agreement, resides at the commencement of the action, or resided

at the time the lease contract became enforceable or in which the

goods are in fact used by the lessee, the choice is not

enforceable.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.107. WAIVER OR RENUNCIATION OF CLAIM OR RIGHT AFTER

DEFAULT. A claim or right arising out of an alleged default or

breach of warranty may be discharged in whole or in part without

consideration by a written waiver or renunciation signed and

delivered by the aggrieved party.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.108. UNCONSCIONABILITY. (a) If the court as a matter

of law finds a lease contract or any clause of a lease contract

to have been unconscionable at the time it was made, the court

may refuse to enforce the lease contract, or it may enforce the

remainder of the lease contract without the unconscionable

clause, or it may so limit the application of any unconscionable

clause as to avoid any unconscionable result.

(b) With respect to a consumer lease, if the court as a matter

of law finds that a lease contract or any clause of a lease

contract has been induced by unconscionable conduct or that

unconscionable conduct has occurred in the collection of a claim

arising from a lease contract, the court may grant appropriate

relief.

Subsection (a) or (b), the court, on its own motion or that of a

party, shall afford the parties a reasonable opportunity to

present evidence as to the setting, purpose, and effect of the

lease contract or clause thereof or of the conduct.

(d) In an action in which the lessee claims unconscionability

with respect to a consumer lease:

(1) if the court finds unconscionability under Subsection (a) or

(b), the court shall award reasonable attorney's fees to the

lessee;

(2) if the court does not find unconscionability and the lessee

claiming unconscionability has brought or maintained an action he

or she knew to be groundless, the court shall award reasonable

attorney's fees to the party against whom the claim is made; and

(3) in determining attorney's fees, the amount of the recovery

on behalf of the claimant under Subsections (a) and (b) is not

controlling.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.109. OPTION TO ACCELERATE AT WILL. (a) A term

providing that one party or the party's successor in interest may

accelerate payment or performance or require collateral or

additional collateral "at will" or "when the party deems himself

or herself insecure" or in words of similar import must be

construed to mean that the party has power to do so only if the

party in good faith believes that the prospect of payment or

performance is impaired.

(b) With respect to a consumer lease, the burden of establishing

good faith under Subsection (a) is on the party who exercises the

power; otherwise the burden of establishing lack of good faith is

on the party against whom the power has been exercised.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

SUBCHAPTER B. FORMATION AND CONSTRUCTION OF LEASE CONTRACT

Sec. 2A.201. STATUTE OF FRAUDS. (a) A lease contract is not

enforceable by way of action or defense unless:

(1) the total payments to be made under the lease contract,

excluding payments for options to renew or buy, are less than

$1,000; or

(2) there is a writing, signed by the party against whom

enforcement is sought or by that party's authorized agent,

sufficient to indicate that a lease contract has been made

between the parties and to describe the goods leased and the

lease term.

(b) Any description of leased goods or of the lease term is

sufficient and satisfies Subsection (a)(2), whether or not it is

specific, if it reasonably identifies what is described.

incorrectly states a term agreed upon, but the lease contract is

not enforceable under Subsection (a)(2) beyond the lease term and

the quantity of goods shown in the writing.

(d) A lease contract that does not satisfy the requirements of

Subsection (a), but which is valid in other respects, is

enforceable:

(1) if the goods are to be specially manufactured or obtained

for the lessee and are not suitable for lease or sale to others

in the ordinary course of the lessor's business, and the lessor,

before notice of repudiation is received and under circumstances

that reasonably indicate that the goods are for the lessee, has

made either a substantial beginning of their manufacture or

commitments for their procurement;

(2) if the party against whom enforcement is sought admits in

that party's pleading, testimony or otherwise in court that a

lease contract was made, but the lease contract is not

enforceable under this provision beyond the quantity of goods

admitted;

(3) with respect to goods that have been received and accepted

by the lessee; or

(4) if the lease contract would otherwise be enforceable under

general principles of equitable estoppel, detrimental reliance or

unjust enrichment.

(e) The lease term under a lease contract referred to in

Subsection (d) is:

(1) if there is a writing signed by the party against whom

enforcement is sought or by that party's authorized agent

specifying the lease term, the term so specified;

(2) if the party against whom enforcement is sought admits in

that party's pleading, testimony, or otherwise in court a lease

term, the term so admitted; or

(3) a reasonable lease term.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.202. FINAL WRITTEN EXPRESSION; PAROL OR EXTRINSIC

EVIDENCE. Terms with respect to which the confirmatory memoranda

of the parties agree or which are otherwise set forth in a

writing intended by the parties as a final expression of their

agreement with respect to such terms as are included therein may

not be contradicted by evidence of a prior agreement or of a

contemporaneous oral agreement but may be explained or

supplemented:

(1) by course of dealing or usage of trade or by course of

performance; and

(2) by evidence of consistent additional terms unless the court

finds the writing to have been intended also as a complete and

exclusive statement of the terms of the agreement.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.203. SEALS INOPERATIVE. The affixing of a seal to a

writing evidencing a lease contract or an offer to enter into a

lease contract does not render the writing a sealed instrument

and the law with respect to sealed instruments does not apply to

the lease contract or offer.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.204. FORMATION IN GENERAL. (a) A lease contract may be

made in any manner sufficient to show agreement, including

conduct by both parties which recognizes the existence of a lease

contract.

(b) An agreement sufficient to constitute a lease contract may

be found although the moment of its making is undetermined.

does not fail for indefiniteness if the parties have intended to

make a lease contract and there is a reasonably certain basis for

giving an appropriate remedy.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.205. FIRM OFFERS. An offer by a merchant to lease goods

to or from another person in a signed writing that by its terms

gives assurance it will be held open is not revocable, for lack

of consideration, during the time stated or, if no time is

stated, for a reasonable time, but in no event may the period of

irrevocability exceed three months. Any such term of assurance on

a form supplied by the offeree must be separately signed by the

offeror.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.206. OFFER AND ACCEPTANCE IN FORMATION OF LEASE

CONTRACT. (a) Unless otherwise unambiguously indicated by the

language or circumstances, an offer to make a lease contract must

be construed as inviting acceptance in any manner and by any

medium reasonable in the circumstances.

(b) If the beginning of a requested performance is a reasonable

method of acceptance, an offeror who is not notified of

acceptance within a reasonable time may treat the offer as having

lapsed before acceptance.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.208. MODIFICATION, RESCISSION AND WAIVER. (a) An

agreement modifying a lease contract needs no consideration to be

binding.

(b) A signed lease agreement that excludes modification or

rescission except by a signed writing may not be otherwise

modified or rescinded, but, except as between merchants, such a

requirement on a form supplied by a merchant must be separately

signed by the other party.

satisfy the requirements of Subsection (b), it may operate as a

waiver.

(d) A party who has made a waiver affecting an executory portion

of a lease contract may retract the waiver by reasonable

notification received by the other party that strict performance

will be required of any term waived, unless a retraction would be

unjust in view of a material change of position in reliance on

the waiver.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.209. LESSEE UNDER FINANCE LEASE AS BENEFICIARY OF SUPPLY

CONTRACT. (a) The benefit of a supplier's promises to the

lessor under the supply contract and of all warranties, whether

express or implied, including those of any third party provided

in connection with or as part of the supply contract, extends to

the lessee to the extent of the lessee's leasehold interest under

a finance lease related to the supply contract, but is subject to

the terms of the warranty and of the supply contract and all

defenses or claims arising therefrom.

(b) The extension of the benefit of a supplier's promises and of

warranties to the lessee (Section 2A.209(a)) does not:

(1) modify the rights and obligations of the parties to the

supply contract, whether arising therefrom or otherwise; or

(2) impose any duty or liability under the supply contract on

the lessee.

supplier and the lessor is effective between the supplier and the

lessee unless, before the modification or rescission, the

supplier has received notice that the lessee has entered into a

finance lease related to the supply contract. If the modification

or rescission is effective between the supplier and the lessee,

the lessor is deemed to have assumed, in addition to the

obligations of the lessor to the lessee under the lease contract,

promises of the supplier to the lessor and warranties that were

so modified or rescinded as they existed and were available to

the lessee before modification or rescission.

(d) In addition to the extension of the benefit of the

supplier's promises and of warranties to the lessee under

Subsection (a), the lessee retains all rights that the lessee may

have against the supplier which arise from an agreement between

the lessee and the supplier or under other law.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.210. EXPRESS WARRANTIES. (a) Express warranties by the

lessor are created as follows:

(1) Any affirmation of fact or promise made by the lessor to the

lessee that relates to the goods and becomes part of the basis of

the bargain creates an express warranty that the goods will

conform to the affirmation or promise.

(2) Any description of the goods which is made part of the basis

of the bargain creates an express warranty that the goods will

conform to the description.

(3) Any sample or model that is made part of the basis of the

bargain creates an express warranty that the whole of the goods

will conform to the sample or model.

(b) It is not necessary to the creation of an express warranty

that the lessor use formal words, such as "warrant" or

"guarantee," or that the lessor have a specific intention to make

a warranty, but an affirmation merely of the value of the goods

or a statement purporting to be merely the lessor's opinion or

commendation of the goods does not create a warranty.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.211. WARRANTIES AGAINST INTERFERENCE AND AGAINST

INFRINGEMENT; LESSEE'S OBLIGATION AGAINST INFRINGEMENT. (a)

There is in a lease contract a warranty that for the lease term

no person holds a claim to or interest in the goods that arose

from an act or omission of the lessor other than a claim by way

of infringement or the like, which will interfere with the

lessee's enjoyment of its leasehold interest.

(b) Except in a finance lease there is in a lease contract by a

lessor who is a merchant regularly dealing in goods of the kind a

warranty that the goods are delivered free of the rightful claim

of any person by way of infringement or the like.

supplier shall hold the lessor and the supplier harmless against

a claim by way of infringement or the like that arises out of

compliance with the specifications.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.212. IMPLIED WARRANTY OF MERCHANTABILITY. (a) Except

in a finance lease, a warranty that the goods will be

merchantable is implied in a lease contract if the lessor is a

merchant with respect to goods of that kind.

(b) Goods to be merchantable must be at least such as:

(1) pass without objection in the trade under the description in

the lease agreement;

(2) in the case of fungible goods, are of fair average quality

within the description;

(3) are fit for the ordinary purposes for which goods of that

type are used;

(4) run, within the variation permitted by the lease agreement,

of even kind, quality, and quantity within each unit and among

all units involved;

(5) are adequately contained, packaged, and labeled as the lease

agreement may require; and

(6) conform to any promises or affirmations of fact made on the

container or label.

usage of trade.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.213. IMPLIED WARRANTY OF FITNESS FOR PARTICULAR PURPOSE.

Except in a finance lease, if the lessor at the time the lease

contract is made has reason to know of any particular purpose for

which the goods are required and that the lessee is relying on

the lessor's skill or judgment to select or furnish suitable

goods, there is in the lease contract an implied warranty that

the goods will be fit for that purpose.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.214. EXCLUSION OR MODIFICATION OF WARRANTIES. (a)

Words or conduct relevant to the creation of an express warranty

and words or conduct tending to negate or limit a warranty must

be construed whenever reasonable, as consistent with each other;

but, subject to the provisions of Section 2A.202 on parol or

extrinsic evidence, negation or limitation is inoperative to the

extent that the construction is unreasonable.

(b) Subject to Subsection (c), to exclude or modify the implied

warranty of merchantability or any part of it the language must

mention "merchantability," be by a writing, and be conspicuous.

Subject to Subsection (c), to exclude or modify an implied

warranty of fitness the exclusion must be by a writing and be

conspicuous. Language to exclude all implied warranties of

fitness is sufficient if it is in writing, is conspicuous and

states, for example, "There is no warranty that the goods will be

fit for a particular purpose."

(d):

(1) unless the circumstances indicate otherwise, all implied

warranties are excluded by expressions like "as is," or "with all

faults," or by other language that in common understanding calls

the lessee's attention to the exclusion of warranties and makes

plain that there is no implied warranty, if in writing and

conspicuous;

(2) if the lessee before entering into the lease contract has

examined the goods or the sample or model as fully as desired or

has refused to examine the goods, there is no implied warranty

with regard to defects that an examination ought in the

circumstances to have revealed; and

(3) an implied warranty also may be excluded or modified by

course of dealing, course of performance, or usage of trade.

(d) To exclude or modify a warranty against interference or

against infringement (Section 2A.211) or any part of it, the

language must be specific, be by a writing, and be conspicuous,

unless the circumstances, including course of performance, course

of dealing, or usage of trade, give the lessee reason to know

that the goods are being leased subject to a claim or interest of

any person.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.215. ACCUMULATION AND CONFLICT OF WARRANTIES EXPRESS OR

IMPLIED. Warranties, whether express or implied, must be

construed as consistent with each other and as cumulative, but if

that construction is unreasonable, the intention of the parties

determines which warranty is dominant. In ascertaining that

intention the following rules apply:

(1) exact or technical specifications displace an inconsistent

sample or model or general language of description;

(2) a sample from an existing bulk displaces inconsistent

general language of description; and

(3) express warranties displace inconsistent implied warranties

other than an implied warranty of fitness for a particular

purpose.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.216. THIRD-PARTY BENEFICIARIES OF EXPRESS AND IMPLIED

WARRANTIES. This chapter does not provide whether anyone other

than a lessee may take advantage of an express or implied

warranty of quality made to the lessee or whether the lessee or

anyone entitled to take advantage of a warranty made to the

lessee may sue a third party other than the immediate lessor, or

the supplier in a finance lease, for deficiencies in the quality

of the goods. These matters are left to the courts for their

determination.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.217. IDENTIFICATION. Identification of goods as goods

to which a lease contract refers may be made at any time and in

any manner explicitly agreed to by the parties. In the absence of

explicit agreement, identification occurs:

(1) when the lease contract is made if the lease contract is for

a lease of goods that are existing and identified;

(2) when the goods are shipped, marked, or otherwise designated

by the lessor as goods to which the lease contract refers, if the

lease contract is for a lease of goods that are not existing and

identified; or

(3) when the young are conceived, if the lease contract is for a

lease of the unborn young of animals.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.218. INSURANCE AND PROCEEDS. (a) A lessee obtains an

insurable interest when existing goods are identified to the

lease contract even though the goods identified are nonconforming

and the lessee has an option to reject them.

(b) If a lessee has an insurable interest only by reason of the

lessor's identification of the goods, the lessor, until default

or insolvency or notification to the lessee that identification

is final, may substitute other goods for those identified.

Subsections (a) and (b), the lessor retains an insurable interest

during the existence of the lease contract.

(d) Nothing in this section impairs any insurable interest

recognized under any other statute or rule of law.

(e) The parties by agreement may determine that one or more

parties have an obligation to obtain and pay for insurance

covering the goods and by agreement may determine the beneficiary

of the proceeds of the insurance.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.219. RISK OF LOSS. (a) Except in the case of a finance

lease, risk of loss is retained by the lessor and does not pass

to the lessee. In the case of a finance lease, risk of loss

passes to the lessee.

(b) Subject to the provisions of this chapter on the effect of

default on risk of loss (Section 2A.220), if risk of loss is to

pass to the lessee and the time of passage is not stated, the

following rules apply:

(1) If the lease contract requires or authorizes the goods to be

shipped by carrier:

(A) and it does not require delivery at a particular

destination, the risk of loss passes to the lessee when the goods

are duly delivered to the carrier; but

(B) if it does require delivery at a particular destination and

the goods are there duly tendered while in the possession of the

carrier, the risk of loss passes to the lessee when the goods are

there duly so tendered as to enable the lessee to take delivery.

(2) If the goods are held by a bailee to be delivered without

being moved, the risk of loss passes to the lessee on

acknowledgement by the bailee of the lessee's right to possession

of the goods.

(3) In any case not within Subdivision (1) or (2), the risk of

loss passes to the lessee on tender of delivery if the lessee is

a merchant; otherwise the risk of loss passes to the lessee on

the lessee's receipt of the goods.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.220. EFFECT OF DEFAULT ON RISK OF LOSS. (a) Where risk

of loss is to pass to the lessee and the time of passage is not

stated:

(1) if a tender or delivery of goods so fails to conform to the

lease contract as to give a right of rejection, the risk of their

loss remains with the lessor, or, in the case of a finance lease,

the supplier, until cure or acceptance; or

(2) if the lessee rightfully revokes acceptance, the lessee, to

the extent of any deficiency in the lessee's effective insurance

coverage, may treat the risk of loss as having remained with the

lessor from the beginning.

(b) Whether or not risk of loss is to pass to the lessee, if the

lessee as to conforming goods already identified to a lease

contract repudiates or is otherwise in default under the lease

contract, the lessor, or, in the case of a finance lease, the

supplier, to the extent of any deficiency in the lessor's or the

supplier's effective insurance coverage may treat the risk of

loss as resting on the lessee for a commercially reasonable time.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.221. CASUALTY TO IDENTIFIED GOODS. If a lease contract

requires goods identified when the lease contract is made, and

the goods suffer casualty without fault of the lessee, the lessor

or the supplier before delivery, or the goods suffer casualty

before risk of loss passes to the lessee under the lease

agreement or Section 2A.219:

(1) if the loss is total, the lease contract is avoided; and

(2) if the loss is partial or the goods have so deteriorated as

to no longer conform to the lease contract, the lessee may

nevertheless demand inspection and at the lessee's option either

treat the lease contract as avoided or, except in a finance lease

that is not a consumer lease, accept the goods with due allowance

from the rent payable for the balance of the lease term for the

deterioration or the deficiency in quantity but without further

right against the lessor.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

SUBCHAPTER C. EFFECT OF LEASE CONTRACT

Sec. 2A.301. ENFORCEABILITY OF LEASE CONTRACT. Except as

otherwise provided in this title, a lease contract is effective

and enforceable according to its terms between the parties,

against purchasers of the goods and against creditors of the

parties.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1.

1993.

Sec. 2A.302. TITLE TO AND POSSESSION OF GOODS. Except as

otherwise provided in this title, each provision of this chapter

applies whether the lessor or a third party has title to the

goods, and whether the lessor, the lessee, or a third party has

possession of the goods, notwithstanding any statute or rule of

law that possession or the absence of possession is fraudulent.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.303. ALIENABILITY OF PARTY'S INTEREST UNDER LEASE

CONTRACT OR OF LESSOR'S RESIDUAL INTEREST IN GOODS; DELEGATION OF

PERFORMANCE; TRANSFER OF RIGHTS. (a) As used in this section,

"creation of a security interest" includes the sale of a lease

contract that is subject to Chapter 9 of this code, Secured

Transactions, by reason of Section 9.109(a)(3).

(b) Except as provided in Section 9.407(c), a provision in a

lease agreement which (1) prohibits the voluntary or involuntary

transfer, including a transfer by sale, sublease, creation or

enforcement of a security interest, or attachment, levy, or other

judicial process, of an interest of a party under the lease

contract or of the lessor's residual interest in the goods, or

(2) makes such a transfer an event of default, gives rise to the

rights and remedies provided in Subsection (d), but a transfer

that is prohibited or is an event of default under the lease

agreement is otherwise effective.

transfer of a right to damages for default with respect to the

whole lease contract or of a right to payment arising out of the

transferor's due performance of the transferor's entire

obligation, or (2) makes such a transfer an event of default, is

not enforceable, and such a transfer is not a transfer that

materially impairs the prospect of obtaining return performance

by, materially changes the duty of, or materially increases the

burden or risk imposed on, the other party to the lease contract

within the purview of Subsection (d).

(d) Subject to Section 9.407(c):

(1) if a transfer is made which is made an event of default

under a lease agreement, the party to the lease contract not

making the transfer, unless that party waives the default or

otherwise agrees, has the rights and remedies described in

Section 2A.501(b); and

(2) if Subdivision (1) is not applicable and if a transfer is

made that (A) is prohibited under a lease agreement or (B)

materially impairs the prospect of obtaining return performance

by, materially changes the duty of, or materially increases the

burden of risk imposed on, the other party to the lease contract,

unless the party not making the transfer agrees at any time to

the transfer in the lease contract or otherwise, then, except as

limited by contract, (i) the transferor is liable to the party

not making the transfer for damages caused by the transfer to the

extent that the damages could not reasonably be prevented by the

party not making the transfer and (ii) a court having

jurisdiction may grant other appropriate relief, including

cancellation of the lease contract or an injunction against the

transfer.

(e) A transfer of "the lease" or of "all my rights under the

lease," or a transfer in similar general terms, is a transfer of

rights and, unless the language or the circumstances, as in a

transfer for security, indicate the contrary, the transfer is a

delegation of duties by the transferor to the transferee.

Acceptance by the transferee constitutes a promise by the

transferee to perform those duties. This promise is enforceable

by either the transferor or the other party to the lease

contract.

(f) Unless otherwise agreed by the lessor and the lessee, a

delegation of performance does not relieve the transferor as

against the other party of any duty to perform or of any

liability for default.

(g) In a consumer lease, to prohibit the transfer of an interest

of a party under the lease contract or to make a transfer an

event of default, the language must be specific, by a writing,

and conspicuous.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1999, 76th Leg., ch. 414, Sec. 2.20, eff.

July 1, 2001.

Sec. 2A.304. SUBSEQUENT LEASE OF GOODS BY LESSOR. (a) Subject

to Section 2A.303 of this chapter, a subsequent lessee from a

lessor of goods under an existing lease contract obtains, to the

extent of the leasehold interest transferred, the leasehold

interest in the goods that the lessor had or had power to

transfer, and except as provided by Subsection (b) or Section

2A.527(d) takes subject to the existing lease contract. A lessor

with voidable title has power to transfer a good leasehold

interest to a good faith subsequent lessee for value, but only to

the extent set forth in the preceding sentence. If goods have

been delivered under a transaction of purchase, the lessor has

that power even though:

(1) the lessor's transferor was deceived as to the identity of

the lessor;

(2) the delivery was in exchange for a check which is later

dishonored;

(3) it was agreed that the transaction was to be a "cash sale";

(4) the delivery was procured through fraud punishable as

larcenous under the criminal law.

(b) A subsequent lessee in the ordinary course of business from

a lessor who is a merchant dealing in goods of that kind to whom

the goods were entrusted by the existing lessee of that lessor

before the interest of the subsequent lessee became enforceable

against that lessor obtains, to the extent of the leasehold

interest transferred, all of that lessor's and the existing

lessee's rights to the goods, and takes free of the existing

lease contract.

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.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.305. SALE OR SUBLEASE OF GOODS BY LESSEE. (a) Subject

to the provisions of Section 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 by Subsection (b) and Section 2A.511, 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.

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.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.306. PRIORITY OF CERTAIN LIENS ARISING BY OPERATION OF

LAW. If a person in the ordinary course of the person's business

furnishes services or materials with respect to goods subject to

a lease contract, a lien upon those goods in the possession of

that person given by statute or rule of law for those materials

or services takes priority over any interest of the lessor or

lessee under the lease contract or this chapter unless the lien

is created by statute and the statute provides otherwise or

unless the lien is created by rule of law and the rule of law

provides otherwise.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.307. PRIORITY OF LIENS ARISING BY ATTACHMENT OR LEVY ON,

SECURITY INTERESTS IN, AND OTHER CLAIMS TO GOODS. (a) Except as

otherwise provided in Section 2A.306, a creditor of a lessee

takes subject to the lease contract.

(b) Except as otherwise provided in Subsection (c) and Sections

2A.306 and 2A.308, a creditor of a lessor takes subject to the

lease contract unless the creditor holds a lien that attached to

the goods before the lease contract became enforceable.

9.323, a lessee takes a leasehold interest subject to a security

interest held by a creditor of the lessor.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1999, 76th Leg., ch. 414, Sec. 2.21, eff.

July 1, 2001.

Sec. 2A.308. SPECIAL RIGHTS OF CREDITORS. (a) 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 or voids the

lease contract 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 and does not void

the lease contract.

(b) Nothing in this chapter impairs the rights of creditors of a

lessor if the lease contract is made under circumstances which

under any statute or rule of law apart from this chapter would

constitute the transaction a fraudulent transfer or voidable

preference.

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.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.309. LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS BECOME

FIXTURES. (a) In this section:

(1) goods are "fixtures" when they become so related to

particular real estate that an interest in them arises under real

estate law;

(2) a "fixture filing" is the filing, in the office where a

record of a mortgage on the real estate would be filed or

recorded, of a financing statement covering goods that are or are

to become fixtures and conforming to the requirements of Sections

9.502(a) and (b);

(3) a lease is a "purchase money lease" unless the lessee has

possession or use of the goods or the right to possession or use

of the goods before the lease agreement is enforceable;

(4) a mortgage is a "construction mortgage" to the extent it

secures an obligation incurred for the construction of an

improvement on land including the acquisition cost of the land,

if the recorded writing so indicates; and

(5) "encumbrance" includes real estate mortgages and other liens

on real estate and all other rights in real estate that are not

ownership interests.

(b) Under this chapter a lease may be of goods that are fixtures

or may continue in goods that become fixtures, but no lease

exists under this chapter of ordinary building materials

incorporated into an improvement on land.

fixtures pursuant to real estate law.

(d) The perfected interest of a lessor of fixtures has priority

over a conflicting interest of an encumbrancer or owner of the

real estate if:

(1) the lease is a purchase money lease, the conflicting

interest of the encumbrancer or owner arises before the goods

become fixtures, a fixture filing covering the fixtures is filed

or recorded before the goods become fixtures or within 10 days

thereafter, and the lessee has an interest of record in the real

estate or is in possession of the real estate; or

(2) the interest of the lessor is perfected by a fixture filing

before the interest of the encumbrancer or owner is of record,

the lessor's interest has priority over any conflicting interest

of a predecessor in title of the encumbrancer or owner, and the

lessee has an interest of record in the real estate or is in

possession of the real estate.

(e) The interest of a lessor of fixtures, whether or not

perfected, has priority over the conflicting interest of an

encumbrancer or owner of the real estate if:

(1) the fixtures are readily removable factory or office

machines, readily removable equipment that is not primarily used

or leased for use in the operation of the real estate, or readily

removable replacements of domestic appliances that are goods

subject to a consumer lease, and before the goods become fixtures

the lease contract is enforceable; or

(2) the conflicting interest is a lien on the real estate

obtained by legal or equitable proceedings after the lease

contract is enforceable; or

(3) the encumbrancer or owner has consented in writing to the

lease or has disclaimed an interest in the goods as fixtures; or

(4) the lessee has a right to remove the goods as against the

encumbrancer or owner. If the lessee's right to remove

terminates, the priority of the interest of the lessor continues

for a reasonable time.

(f) Notwithstanding Subsection (d)(1) but otherwise subject to

Subsections (d) and (e), the interest of a lessor of fixtures,

including the lessor's residual interest, is subordinate to the

conflicting interest of an encumbrancer of the real estate under

a construction mortgage recorded before the goods become fixtures

if the goods become fixtures before the completion of the

construction. To the extent given to refinance a construction

mortgage, the conflicting interest of an encumbrancer of the real

estate under a mortgage has this priority to the same extent as

the encumbrancer of the real estate under the construction

mortgage.

(g) In cases not within the preceding subsections, priority

between the interest of a lessor of fixtures, including the

lessor's residual interest, and the conflicting interest of an

encumbrancer or owner of the real estate who is not the lessee is

determined by the priority rules governing conflicting interests

in real estate.

(h) If the interest of a lessor of fixtures, including the

lessor's residual interest, has priority over all conflicting

interests of all owners and encumbrancers of the real estate, the

lessor or the lessee may (1) on default, expiration, termination,

or cancellation of the lease agreement but subject to the lease

agreement and this chapter, or (2) if necessary to enforce other

rights and remedies of the lessor or lessee under this chapter,

remove the goods from the real estate, free and clear of all

conflicting interests of all owners and encumbrancers of the real

estate, but the lessor or lessee must reimburse any encumbrancer

or owner of the real estate who is not the lessee and who has not

otherwise agreed for the cost of repair of any physical injury,

but not for any diminution in value of the real estate caused by

the absence of the goods removed or by any necessity of replacing

them. A person entitled to reimbursement may refuse permission to

remove until the party seeking removal gives adequate security

for the performance of this obligation.

(i) Even though the lease agreement does not create a security

interest, the interest of a lessor of fixtures, including the

lessor's residual interest, is perfected by filing a financing

statement as a fixture filing for leased goods that are or are to

become fixtures in accordance with the relevant provisions of

Chapter 9.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1999, 76th Leg., ch. 414, Sec. 2.22, eff.

July 1, 2001.

Sec. 2A.310. LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS BECOME

ACCESSIONS. (a) Goods are "accessions" when they are installed

in or affixed to other goods.

(b) The lessor's residual interest in the accessions and the

interest of a lessor or a lessee under a lease contract entered

into before the goods became accessions are superior to all

interests in the whole except as stated in Subsection (d).

interest of a lessor or a lessee under a lease contract entered

into at the time or after the goods became accessions are

superior to all subsequently acquired interests in the whole

except as stated in Subsection (d) but are subordinate to

interests in the whole existing at the time the lease contract

was made unless the holders of such interests in the whole have

in writing consented to the lease or disclaimed an interest in

the goods as part of the whole.

(d) The lessor's residual interest in the accessions and the

interest of a lessor or a lessee under a lease contract described

by Subsection (b) or (c) are subordinate to the interest of:

(1) a buyer in the ordinary course of business or a lessee in

the ordinary course of business of any interest in the whole

acquired after the goods became accessions; or

(2) a creditor with a security interest in the whole perfected

before the lease contract was made to the extent that the

creditor makes subsequent advances without knowledge of the lease

contract.

(e) When under Subsections (b) or (c) and (d) a lessor or a

lessee of accessions holds an interest that is superior to all

interests in the whole, the lessor or the lessee may (1) on

default, expiration, termination, or cancellation of the lease

contract by the other party but subject to the provisions of the

lease contract and this chapter, or (2) if necessary to enforce

the lessor's or lessee's other rights and remedies under this

chapter, remove the goods from the whole, free and clear of all

interests in the whole, but the party must reimburse any holder

of an interest in the whole who is not the lessee and who has not

otherwise agreed for the cost of repair of any physical injury

but not for any diminution in value of the whole caused by the

absence of the goods removed or by any necessity for replacing

them. A person entitled to reimbursement may refuse permission to

remove until the party seeking removal gives adequate security

for the performance of this obligation.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

SUBCHAPTER D. PERFORMANCE OF LEASE CONTRACT: REPUDIATED,

SUBSTITUTED AND EXCUSED

Sec. 2A.401. INSECURITY: ADEQUATE ASSURANCE OF PERFORMANCE. (a)

A lease contract imposes an obligation on each party that the

other's expectation of receiving due performance will not be

impaired.

(b) If reasonable grounds for insecurity arise with respect to

the performance of either party, the insecure party may demand in

writing adequate assurance of due performance. Until the insecure

party receives that assurance, if commercially reasonable, the

insecure party may suspend any performance for which the party

has not already received the agreed return.

due performance adequate under the circumstances of the

particular case is not provided to the insecure party within a

reasonable time, not to exceed 30 days after receipt of a demand

by the other party.

(d) Between merchants, the reasonableness of grounds for

insecurity and the adequacy of any assurance offered must be

determined according to commercial standards.

(e) Acceptance of any nonconforming delivery or payment does not

prejudice the aggrieved party's right to demand adequate

assurance of future performance.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.402. ANTICIPATORY REPUDIATION. If either party

repudiates a lease contract with respect to a performance not yet

due under the lease contract, the loss of which performance will

substantially impair the value of the lease contract to the

other, the aggrieved party may:

(1) for a commercially reasonable time, await retraction of

repudiation and performance by the repudiating party;

(2) make demand pursuant to Section 2A.401 and await assurance

of future performance adequate under the circumstances of the

particular case; or

(3) resort to any right or remedy on default under the lease

contract or this chapter, even though the aggrieved party has

notified the repudiating party that the aggrieved party would

await the repudiating party's performance and assurance and has

urged retraction. In addition, whether or not the aggrieved party

is pursuing one of the foregoing remedies, the aggrieved party

may suspend performance or, if the aggrieved party is the lessor,

proceed in accordance with the provisions of this chapter on the

lessor's right to identify goods to the lease contract

notwithstanding default or to salvage unfinished goods (Section

2A.524).

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 1, eff. Sept. 1,

1993.

Sec. 2A.403. RETRACTION OF ANTICIPATORY REPUDIATION. (a) Until

the repudiating party's next performance is due, the repudiating

party can retract the repudiation unless, since the repudiation,

the aggrieved party has canceled the lease contract or materially

changed the aggrieved party's position or otherwise indicated

that the aggrieved party considers the repudiation final.

(b) Retraction may be by any method that c