§ 2A303. Alienability of party's interest under lease contract

or of lessor's residual interest in goods; delegation

of performance; transfer of rights.

(a) Definition.--As used in this section, the term "creation of a security interest" includes the sale of a lease contract that is subject to Division 9 (relating to secured transactions) by reason of section 9109(a)(3) (relating to scope).

(b) General rule.--Except as provided in subsection (c) and section 9407 (relating to restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest), a provision in a lease agreement which:

(1) prohibits the voluntary or involuntary transfer, including a transfer by sale, sublease, creation or enforcement of a security interest, or attachment, levy or other judicial process, of an interest of a party under the lease contract or of the lessor's residual interest in the goods; or

(2) makes such a transfer an event of default; gives rise to the rights and remedies provided in subsection (d), but a transfer that is prohibited or is an event of default under the lease agreement is otherwise effective.

(c) Transfer of right to damages.--A provision in a lease agreement which:

(1) prohibits a transfer of a right to damages for default with respect to the whole lease contract or of a right to payment arising out of the transferor's due performance of the transferor's entire obligation; or

(2) makes such a transfer an event of default; is not enforceable, and such a transfer is not 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 other party to the lease contract within the purview of subsection (d).

(d) Certain rights and remedies.--Subject to subsection (c) and section 9407:

(1) If a transfer is made which is made an event of default under a lease agreement, the party to the lease contract not making the transfer, unless that party waives the default or otherwise agrees, has the rights and remedies described in section 2A501(b) (relating to default: procedure).

(2) If paragraph (1) is not applicable and if a transfer is made that is prohibited under a lease agreement or materially impairs the prospect of obtaining return performance by, materially changes the duty of or materially increases the burden or risk imposed on the other party to the lease contract, unless the party not making the transfer agrees at any time to the transfer in the lease contract or otherwise, then, except as limited by contract, the transferor is liable to the party not making the transfer for damages caused by the transfer to the extent that the damages could not reasonably be prevented by the party not making the transfer and a court having jurisdiction may grant other appropriate relief, including cancellation of the lease contract or an injunction against the transfer.

(e) Effect and enforceability of general transfer.--A transfer of "the lease" or of "all my rights under the lease" or a transfer in similar general terms is a transfer of rights, and, unless the language or the circumstances, as in a transfer for security, indicate the contrary, the transfer is a delegation of duties by the transferor to the transferee. Acceptance by the transferee constitutes a promise by the transferee to perform those duties. The promise is enforceable by either the transferor or the other party to the lease contract.

(f) Effect of delegation of performance.--Unless otherwise agreed by the lessor and the lessee, a delegation of performance does not relieve the transferor as against the other party of any duty to perform or any liability for default.

(g) Requirements for prohibition of transfer in consumer lease.--In a consumer lease, to prohibit the transfer of an interest of a party under the lease contract or to make a transfer an event of default, the language must be specific, by a writing and conspicuous. (June 8, 2001, P.L.123, No.18, eff. July 1, 2001)

2001 Amendment. Act 18 amended subsecs. (a) and (b), deleted subsec. (c), amended and relettered subsec. (d) to subsec. (c), amended and relettered subsec. (e) to subsec. (d), relettered subsec. (f) to subsec. (e), subsec. (g) to subsec. (f) and subsec. (h) to subsec. (g) and amended subsec. (h) heading.

Cross References. Section 2A303 is referred to in sections 2A304, 2A305, 9406, 9407 of this title.