Opinion ID: 522973
Heading Depth: 1
Heading Rank: 2

Heading: effect of the lease

Text: 29 Sierra Diesel argues that the contract between Sierra Diesel and Burroughs is abrogated by the lease between Sierra Diesel and Lend-Lease, Inc., the named lessor in the transaction. 30 It is common for computer buyers to extend their payments over time. See Annotation, Computers--Buyer-Lessee Defenses, 37 ALR4th 110. Often they use writings that are denominated as leases but are in fact financing security arrangements. The name given to the instrument is less important in determining its true nature than is the intent of the parties and the economic reality of the transaction. R. White & J. Summers, Uniform Commercial Code, Sec. 22-3 (2d ed. 1980). 31 In Burroughs v. Century Steel, 99 Nev. 464, 664 P.2d 354 (1983) the Nevada Supreme Court examined the question of what constitutes a true lease and what constitutes a financing agreement and listed several factors. Applying the factors noted in Century Steel, Sierra Diesel's lease was in fact a financing arrangement because Sierra Diesel was responsible for maintenance, for all taxes, and for loss due to damage to the computer. Furthermore, Sierra Diesel was required to indemnify the leasing company against loss that resulted from the computer's malfunction. Sierra Diesel selected the computer without assistance from Lend-Lease. Lend-Lease did not manufacture the computer. Burroughs shipped the computer directly to Sierra Diesel and not to Lend-Lease, which never had possession of the computer. Finally, the lease nowhere explains the relation of the lease to the documents of sale between Sierra Diesel and Burroughs (a factor which supports the trial court's finding that the contracts were not integrated). 32 Sierra Diesel argues that notwithstanding all of the factors listed above, the arrangement with Lend-Lease should be regarded as a true lease because by its terms it requires Sierra Diesel to return the computer equipment to Lend-Lease at the end of the 60 month term. Mr. Cathey's deposition testimony reveals his understanding that Sierra Diesel was to own the B-80 at the end of the 60 month term. Furthermore, Sierra Diesel's whole law suit is premised on the existence of a sales contract with Burroughs supplemented by a financing agreement with Lend-Lease. 33 The agreement between Sierra Diesel and Lend-Lease is in reality a financing arrangement and does not abrogate the contract between Sierra Diesel and Burroughs.