LD 2245
pg. 474
Page 473 of 493 An Act to Adopt the Model Revised Article 9 Secured Transactions Page 475 of 493
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LR 1087
Item 1

 
default does not mean that there is "remaining performance" on
the part of the lessor. Likewise, the fact that the lessor has
potential liability under a "nonoperating" lease contract for
breaches of warranty does not mean that there is "remaining
performance". In contrast, the lessor would have "remaining
performance" under a lease contract requiring the lessor to
regularly maintain and service the goods or to provide "upgrades"
of the equipment on a periodic basis in order to avoid
obsolescence. The basic distinction is between a mere potential
duty to respond which is not "remaining performance," and an
affirmative duty to render stipulated performance. Although the
distinction may be difficult to draw in some cases, it is
instructive to focus on the difference between "operating" and
"nonoperating" leases as generally understood in the marketplace.
Even if there is "remaining performance" under a lease contract,
a transfer for security of a right to payment that is made an
event of default or that is in violation of a prohibition against
transfer does not give rise to the rights and remedies under
subsection (5) (4) if it does not constitute an actual delegation
of a material performance under subsection (3) Section 9-407
[Maine cite section 9-1407].

 
8. 4. The application of either the rule of subsection (3)
Section 9-407 [Maine cite section 9-1407] or the rule of
subsection (4) (3) to the grant by the lessor of a security
interest in the lessor's right to future payment under the lease
contract may produce the same result. Both subsections
provisions generally protect security transfers by the lessor in
particular because the creation by the lessor of a security
interest or the enforcement of that interest generally will not
prejudice the lessee's rights if it does not result in a
delegation of the lessor's duties. To the contrary, the receipt
of loan proceeds or relief from the enforcement of an antecedent
debt normally should enhance the lessor's ability to perform its
duties under the lease contract. Nevertheless, there are
circumstances where relief might be justified. For example, if
ownership of the goods is transferred pursuant to enforcement of
a security interest to a party whose ownership would prevent the
lessee from continuing to possess the goods, relief might be
warranted. See 49 U.S.C. § 1401(a) and (b) which places
limitations on the operation of aircraft in the United States
based on the citizenship or corporate qualification of the
registrant.

 
9. 5. Relief on the ground of material prejudice when the
lease agreement does not prohibit the transfer or make it an
event of default should be afforded only in extreme
circumstances, considering the fact that the party asserting
material prejudice did not insist upon a provision in the lease
agreement that would protect against such a transfer.


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