Both take property free of prior encumbrances, under the appropriate conditions, and are essential to commercial enterprise. In a sale transaction, the UCC provides warranties of title and against infringement by any claims of another person. There are similar warranties in UCC2A, although title is not protected, since title remains in the lessor. This warranty applies to all lease contracts. Infringement, however, is not warranted against in finance leases, and this warranty only binds a merchant-lessor, who deals regularly in goods of the kind.
Implied warranties are of two kinds, merchantability and fitness for a particular purpose.
The warranty of merchantability operates between merchants, and assures the resalability of goods. The fitness warranty presumes a purpose and reliance upon the lessor to supply goods fit for the purpose. Both kinds of implied warranties can be excluded or modified by agreement. The finance lessor does not directly make such warranties. Generally, a lessee's rights under a lease contract or the residual rights of a lessor are freely transferable, unless the contract prohibits the transfer or unless transfer risks the other party's contract rights.