LD 2245
pg. 472
Page 471 of 493 An Act to Adopt the Model Revised Article 9 Secured Transactions Page 473 of 493
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LR 1087
Item 1

 
event of default, the prejudiced party may recover damages; or,
if the damage remedy would be ineffective adequately to protect
that party, the court can order cancellation of the lease
contract or enjoin the transfer. This rule that such provisions
generally are enforceable is subject to subsections (3) and (4)
subsection (3) and Section 9-407 [Maine cite section 9-1407],
which make such provisions unenforceable in certain instances.

 
2. The first such instance is described in subsection (3). A
Under Section 9-407, [Maine cite section 9-1407] a provision in a
lease agreement which prohibits the creation or enforcement of a
security interest, including sales of lease contracts subject to
Article 9 (Sections 9-102(1)(b) and 9-104(f) Section 9-109(a)(3))
[Maine cite section 9-1109, subsection (1), paragraph (c)], or
makes it an event of default is generally not enforceable,
reflecting the policy of Section 9-406 [Maine cite section 9-
1406] and former Section 9-318(4). However, inasmuch as the
creation of a security interest includes the sale of a lease
contract, if there are then unperformed duties on the part of the
lessor/seller, there could be a delegation of duties in the sale,
and, if such a delegation actually takes place and is of a
material performance, a provision in a lease agreement
prohibiting it or making it an event of default would be
enforceable, giving rise to the rights and remedies stated in
subsection (5). The statute does not define "material." The
parties may set standards to determine its meaning. The term is
intended to exclude delegations of matters such as accounting to
a professional accountant and the performance of, as opposed to
the responsibility for, maintenance duties to a person in the
maintenance service industry.

 
3. For similar reasons, the lessor is entitled to protect its
residual interest in the goods by prohibiting anyone but the
lessee from possessing or using them. Accordingly, under
subsection (3) if there is an actual transfer by the lessee of
its right of possession or use of the goods in violation of a
provision in the lease agreement, such a provision likewise is
enforceable, giving rise to the rights and remedies stated in
subsection (5). A transfer of the lessee's right of possession
or use of the goods resulting from the enforcement of a security
interest granted by the lessee in its leasehold interest is a
"transfer by the lessee" under this subsection.

 
4. Finally, subsection (3) protects against a claim that the
creation or enforcement of a security interest in the lessor's
interest under the lease contract or in the residual interest is
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 lessee so
as to give rise to the rights and remedies stated in subsection


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