2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 2A - Leases › Part 1 - GENERAL PROVISIONS › Section 55-2A-102 - Scope.

This article applies to any transaction, regardless of form, that creates a lease.
History:
1978 Comp., § 55-2A-102, enacted by Laws 1992, ch. 114, § 9.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
Uniform statutory source.
— Section 9-102(1) [55-9-102 NMSA 1978]. Throughout this Article, unless otherwise stated, references to "Section" are to other sections of this Act.
Changes.
— Substantially revised.
Purposes.
—
1. This Article governs transactions as diverse as the lease of a hand tool to an individual for a few hours and the leveraged lease of a complex line of industrial equipment to a multi-national organization for a number of years.
To achieve that end it was necessary to provide that this Article applies to any transaction, regardless of form, that creates a lease. Since lease is defined as a transfer of an interest in goods (Section 2A-103(1)(j)) [55-2A-103 NMSA 1978] and goods is defined to include fixtures (Section 2A-103(1)(h)), application is limited to the extent the transaction relates to goods, including fixtures. Further, since the definition of lease does not include a sale (Section 2-106(1)) [55-2-106 NMSA 1978] or retention or creation of a security interest (Section 1-201(b)(35)) [55-1-201 NMSA 1978], application is further limited; sales and security interests are governed by other Articles of this Act.
2. In recognition of the diversity of the transactions to be governed, the sophistication of many of the parties to these transactions, and the common law tradition as it applies to the bailment for hire or lease, freedom of contract has been preserved. DeKoven, Proceedings After Default by the Lessee Under a True Lease of Equipment, in 1C P. Coogan, W. Hogan, D. Vagts, Secured Transactions Under the Uniform Commercial Code, § 29B.02[2] (1986). Thus, despite the extensive regulatory scheme established by this Article, the parties to a lease will be able to create private rules to govern their transaction. Sections 2A-103(4) [55-2A-103 NMSA 1978] and 1-102(3) [55-1-102 NMSA 1978]. However, there are special rules in this Article governing consumer leases, as well as other state and federal statutes, that may further limit freedom of contract with respect to consumer leases.
3. A court may apply this Article by analogy to any transaction, regardless of form, that creates a lease of personal property other than goods, taking into account the expressed intentions of the parties to the transaction and any differences between a lease of goods and a lease of other property.
Further, parties to a transaction creating a lease of personal property other than goods, or a bailment of personal property, may provide by agreement that this Article applies. Upholding the parties' choice is consistent with the spirit of this Article.
4. If the lease-of-goods aspects of a hybrid lease do not predominate, under Subsection (2)(a)(i) the provisions of this Article which relate primarily to the lease-of-goods aspects of the transaction apply and those that relate primarily to the transaction as a whole do not apply. Under Subsection (2)(b), if the lease-of-goods aspects of a hybrid lease predominate, this Article applies to the transaction.
5. Relevant factors in determining whether the lease-of-goods aspects of a hybrid lease predominate include the language of the agreement and the portion of the total price that is attributable to the lease of goods, although neither is determinative. An agreed-upon allocation of a portion of the total price to the right to possession and use of the goods is ordinarily binding on the parties, as is an agreement that the transaction includes or does not include a finance lease.
6. A finance lease, defined in Section 2A-103(1)(g) [55-2A-103 NMSA 1978], may be included in a hybrid lease in which the lease-of-goods aspects of the transaction do not predominate. In such a situation, Subsection (2)(a)(ii) makes Section 2A-209 [55-2A-209 NMSA 1978] applicable and Subsection (2)(a)(iii) addresses the application of Section 2A-407 [55-2A-407 NMSA 1978] to the promises made by the lessee under the finance lease. That latter section applies to those promises that are consideration for the lessee's right to possession and use of the leased goods. Whether a promise of a lessee so qualifies is a question of fact but an agreed-upon allocation of a portion of the total price to the right to possession and use of the leased goods is ordinarily binding on the parties. The fact that Subsection (2)(a)(ii) and (iii) expressly make Sections 2A-209 and 2A-407 applicable if the lease is a finance lease does not prevent application of other provisions of this Article relating to finance leases pursuant to Subsection (2)(b).
Example 1.
Lessor and Customer enter into a contract that provides for Lessor to: (i) lease equipment to Customer; and (ii) provide to Customer a variety of maintenance and consulting services. The services aspects of the transaction predominate. Lessor did not select, manufacture, or supply the goods; instead, the goods were selected by Customer, and Lessor acquired the goods from Supplier for the sole purpose of leasing the goods to Customer. Assume that the lease aspects of the transaction involve a finance lease under Section 2A-103(1)(g) [55-2A-103 NMSA 1978]. Pursuant to Subsection (3)(a), Sections 2A-212 [55-2A-212 NMSA 1978] and 2A-213 [55-2A-213 NMSA 1978] apply. Under those sections, because the lease aspect of the transaction is a finance lease, Lessor makes no implied warranty of merchantability or implied warranty of fitness for particular purpose. Pursuant to Subsection (2)(a)(ii), Section 2A-209 [55-2A-209 NMSA 1978] applies. Under that section, all warranties made by Supplier to Lessor extend to Customer.
Example 2.
Same facts as Example 1. As consideration for Lessor's obligations under the contract, Customer promises to pay a single monthly fee of a specified amount. The contract does not indicate what portion of the monthly fee is consideration for the services or what portion is consideration for possession and use of the equipment. Section 2A-407 [55-2A-407 NMSA 1978] applies to the lessee's promises that are consideration for the lessee's right to possession and use of the equipment. In an action involving the application of Section 2A-407, the determination of what portion of the monthly fee is for the right to possession and use of the equipment is a question of fact.
Example 3.
Same facts as Example 1 except that the lease-of-goods aspects of the transaction predominate. Section 2A-407 applies to all of the lessee's promises under the transaction.
7. Even if the lease-of-goods aspects of a hybrid lease predominate and this Article applies to the transaction, the application of this Article to a hybrid lease does not preclude the application of principles of law and equity to supplement the provisions of this Article,
see
Section 1-103(b) [55-1-103 NMSA 1978] , nor does it preclude, in appropriate circumstances, the application of other law to the non-lease-of-goods aspects of the transaction. Whether it is appropriate to apply such other law will depend in part on what purposes the other law is designed to achieve and whether application of the other law would be likely to interfere with the application of this Article.
Example 4.
Same facts as Example 3 (the lease-of-goods aspects of the transaction predominate) except that the lease is not a finance lease. This Article applies to the transaction. Nevertheless, because principles of law and equity also apply unless displaced by particular provisions the Uniform Commercial Code,
see
Section 1-103(b) [55-1-103 NSMA 1978], and this Article does not displace other law relating to whether Lessor's performance of services conforms to the contract, other law determines whether the services conform to the contract.
8. The rules of subsections (2)(a) and (2)(b) are essentially gap fillers that apply when the parties' agreement is silent on what legal rules govern the different aspects of their transaction. In general, parties are free to preclude the application of this Article to the aspects of their transaction that are not about the lease of goods.
See
Section 2-102 [55-2-102 NMSA 1978], Comment 6.
Cross references.
— Sections 1-102(3), 1-201(37), Article 2, esp. Section 2-106(1), and Sections 2A-103(1)(h), 2A-103(1)(j) and 2A-103(4) [55-1-102, 55-1-201, 55-1-106 and 55-2A-103 NMSA 1978, respectively].
Definitional cross references.
— "Lease". Section 2A-103(1)(j) [55-2A-103 NMSA 1978].
ANNOTATIONS
Effective dates.
— Laws 1992, ch. 114, § 238 made Laws 1992, ch. 114, § 9 effective July 1, 1992.