2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 2A - Leases › Part 5 - DEFAULT › Section 55-2A-519 - Lessee's damages for non-delivery, repudiation, default and breach of warranty in regard to accepted goods.

(1) Except as otherwise provided with respect to damages liquidated in the lease agreement (Section 55-2A-504 NMSA 1978) or otherwise determined pursuant to agreement of the parties (Sections 55-1-302 and 55-2A-503 NMSA 1978), if a lessee elects not to cover or a lessee elects to cover and the cover is by lease agreement that for any reason does not qualify for treatment under Subsection (2) of Section 55-2A-518 NMSA 1978, or is by purchase or otherwise, the measure of damages for non-delivery or repudiation by the lessor or for rejection or revocation of acceptance by the lessee is the present value, as of the date of the default, of the then market rent minus the present value as of the same date of the original rent, computed for the remaining lease term of the original lease agreement, together with incidental and consequential damages, less expenses saved in consequence of the lessor's default.
(2) Market rent is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.
(3) Except as otherwise agreed, if the lessee has accepted goods and given notification (Subsection (3) of Section 55-2A-516 NMSA 1978), the measure of damages for nonconforming tender or delivery or other default by a lessor is the loss resulting in the ordinary course of events from the lessor's default as determined in any manner that is reasonable together with incidental and consequential damages, less expenses saved in consequence of the lessor's default.
(4) Except as otherwise agreed, the measure of damages for breach of warranty is the present value at the time and place of acceptance of the difference between the value of the use of the goods accepted and the value if they had been as warranted for the lease term, unless special circumstances show proximate damages of a different amount, together with incidental and consequential damages, less expenses saved in consequence of the lessor's default or breach of warranty.
History:
1978 Comp., § 55-2A-519, enacted by Laws 1992, ch. 114, § 74; 2005, ch. 144, § 41.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
Uniform Statutory Source.
— Sections 2-713 and 2-714 [55-2-713 and 55-2-714 NMSA 1978, respectively].
Changes.
— Substantially revised.
1. Subsection (1), a revised version of the provisions of Section 2-713(1) [55-2-713 NMSA 1978], states the basic rule governing the measure of lessee's damages for non-delivery or repudiation by the lessor or for rightful rejection or revocation of acceptance by the lessee. This measure will apply, absent agreement to the contrary, if the lessee does not cover or if the cover does not qualify under Section 2A-518 [55-2A-518 NMSA 1978]. There is no sanction for cover that does not qualify.
2. The measure of damage is the present value, as of the date of default, of the market rent for the remaining term of the lease less the present value of the original rent for the remaining term of the lease, plus incidental and consequential damages less expenses saved in consequence of the default. Note that the reference in Section 2A-519(1) [55-2A-519 NMSA 1978] is to the date of default not to the date of an event of default. An event of default under a lease agreement becomes a default under a lease agreement only after the expiration of any relevant period of grace and compliance with any notice requirements under this Article and the lease agreement. American Bar Foundation, Commentaries on Indentures, § 5-1, at 216-217 (1971). Section 2A-501(1) [55-2A-501 NMSA 1978]. This conclusion is also a function of whether, as a matter of fact or law, the event of default has been waived, suspended or cured. Sections 2A-103(4) and 1-103 [55-2A-103 and 55-1-103 NMSA 1978, respectively].
3. Subsection (2), a revised version of the provisions of Section 2-713(2) [55-2-713 NMSA 1978], states the rule with respect to determining market rent.
4. Subsection (3), a revised version of the provisions of Section 2-714(1) and (3) [55-2-714 NMSA 1978], states the measure of damages where goods have been accepted and acceptance is not revoked. The subsection applies both to defaults which occur at the inception of the lease and to defaults which occur subsequently, such as failure to comply with an obligation to maintain the leased goods. The measure in essence is the loss, in the ordinary course of events, flowing from the default.
5. Subsection (4), a revised version of the provisions of Section 2-714(2) [55-2-714 NMSA 1978], states the measure of damages for breach of warranty. The measure in essence is the present value of the difference between the value of the goods accepted and of the goods if they had been as warranted.
6. Subsections (1), (3) and (4) specifically state that the parties may by contract vary the damages rules stated in those subsections.
Cross References:
— Sections 2-713(1), 2-713(2), 2-714 and Section 2A-518 [55-2-713, 55-2-714 and 55-2A-518 NMSA 1978, respectively].
"Conforming". Section 2A-103(1)(d) [55-2A-103(1)(d) NMSA 1978].
"Delivery". Section 1-201(b)(15) [55-1-201(b)(15) NMSA 1978].
"Goods". Section 2A-103(1)(h) [2A-103(1)(h) NMSA 1978].
"Lease". Section 2A-103(1)(j) [55-2A-103(1)(j) NMSA 1978].
"Lease agreement". Section 2A-103(1)(k) [55-2A-103(1)(k) NMSA 1978].
"Lessee". Section 2A-103(1)(n) [55-2A-103(1)(n) NMSA 1978].
"Lessor". Section 2A-103(1)(p) [55-2A-103(1)(p) NMSA 1978].
"Notification". Section 1-202 [55-1-202 NMSA 1978].
"Present value". Section 1-201(b)(28) [55-1-201(b)(28) NMSA 1978].
"Value". Section 1-204 [55-1-204 NMSA 1978].
ANNOTATIONS
The 2005 amendment,
effective January 1, 2006, changed the statutory reference in Subsection (1) from Section 55-1-102 NMSA 1978 to Section 55-1-302 NMSA 1978.