North Dakota Code 41-02.1-03 – (2A-103) Definitions and index of definitions
1. In this chapter unless the context otherwise requires:
Terms Used In North Dakota Code 41-02.1-03
- Contract: A legal written agreement that becomes binding when signed.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- following: when used by way of reference to a chapter or other part of a statute means the next preceding or next following chapter or other part. See North Dakota Code 1-01-49
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
- Individual: means a human being. See North Dakota Code 1-01-49
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- paper: means any flexible material upon which it is usual to write. See North Dakota Code 1-01-27
- Person: means an individual, organization, government, political subdivision, or government agency or instrumentality. See North Dakota Code 1-01-49
- Property: includes property, real and personal. See North Dakota Code 1-01-49
a. “Buyer in ordinary course of business” means a person who in good faith and without knowledge that the sale is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. “Buying” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
b. “Cancellation” occurs when either party puts an end to the lease contract for default by the other party.
c. “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole.
d. “Conforming” goods or performance under a lease contract means goods or performance that is in accordance with the obligations under the lease contract.
e. “Consumer lease” means a lease that a lessor regularly engaged in the business of leasing or selling makes to a lessee who is an individual and who takes under the lease primarily for a personal, family, or household purpose if the total payments to be made under the lease contract, excluding payments for options to renew or buy, do not exceed twenty-five thousand dollars. f. “Fault” means wrongful act, omission, breach, or default.
g. “Finance lease” means a lease in which:
(1) The lessor does not select, manufacture, or supply the goods; (2) The lessor acquires the goods or the right to possession and use of the goods in connection with the lease; and
(3) (a) The lessee receives a copy of the contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract; (b) The lessee’s approval of the contract by which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract; (c) The lessee, before signing the lease contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations, or modifications of remedies, or liquidated damages, including those of any third party such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; or
(d) Only if the lease is not a consumer lease, before the lessee signs the lease contract the lessor informs the lessee in writing of the identity of the person supplying the goods to the lessor, unless the lessee has selected that person and directed the lessor to acquire the goods or the right to possession and use of the goods from that person, that the lessee is entitled under this chapter to the promises and warranties, including those of any third party, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods, and that the lessee may contact the person supplying the goods to the lessor and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of them or of remedies.
h. “Goods” means all things that are movable at the time of identification to the lease contract, or are fixtures (section 41-02.1-39), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals.
i. “Hybrid lease” means a single transaction involving a lease of goods and: (1) The provision of services; (2) A sale of other goods; or
(3) A sale, lease, or license of property other than goods.
j. “Installment lease contract” means a lease contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause “each delivery is a separate lease” or its equivalent.
k. “Lease” means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. Unless the context clearly indicates otherwise, the term includes a sublease.
l. “Lease agreement” means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances, including course of dealing or usage of trade or course of performance (as provided in this chapter). Unless the context clearly indicates otherwise, the term includes a sublease agreement.
m. “Lease contract” means the total legal obligation that results from the lease agreement as affected by this chapter and any other applicable rules of law.
Unless the context clearly indicates otherwise, the term includes a sublease contract.
n. “Leasehold interest” means the interest of the lessor or the lessee under a lease contract.
o. “Lessee” means a person who acquires the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.
p. “Lessee in ordinary course of business” means a person who, in good faith and without knowledge that the lease is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, leases in ordinary course from a person in the business of selling or leasing goods of that kind, but does not include a pawnbroker. “Leasing” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
q. “Lessor” means a person who transfers the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.
r. “Lessor’s residual interest” means the lessor’s interest in the goods after expiration, termination, or cancellation of the lease contract.
s. “Lien” means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest.
t. “Lot” means a parcel or a single article that is the subject matter of a separate lease or delivery, regardless of whether it is sufficient to perform the lease contract.
u. “Merchant lessee” means a lessee that is a merchant with respect to goods of the kind subject to the lease.
v. “Present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.
w. “Purchase” includes taking by sale, lease, mortgage, security interest, pledge, gift, or any other voluntary transaction creating an interest in goods.
x. “Sublease” means a lease of goods the right to possession and use of which was acquired by the lessor as a lessee under an existing lease.
y. “Supplier” means a person from whom a lessor buys or leases goods to be leased under a finance lease.
z. “Supply contract” means a contract under which a lessor buys or leases goods to be leased.
aa. “Termination” occurs when either party under a power created by agreement or law puts an end to the lease contract otherwise than for default.
2. Other definitions applying to this chapter and the sections in which they appear are:
a. “Accessions”. Subsection 1 of section 41-02.1-40.
b. “Construction mortgage”. Subdivision d of subsection 1 of section 41-02.1-39. c. “Encumbrance”. Subdivision e of subsection 1 of section 41-02.1-39.
d. “Fixture filing”. Subdivision b of subsection 1 of section 41-02.1-39. e. “Fixtures”. Subdivision a of subsection 1 of section 41-02.1-39.
f. “Purchase money lease”. Subdivision c of subsection 1 of section 41-02.1-39.
3. The following definitions also apply to this chapter:
a. “Account”. Section 41-09-02.
b. “Between merchants”. Subsection 1 of section 41-02-04.
c. “Buyer”. Subdivision a of subsection 1 of section 41-02-03. d. “Chattel paper”. Section 41-09-02.
e. “Consumer goods”. Section 41-09-02. f. “Document”. Section 41-09-02.
g. “Entrusting”. Subsection 3 of section 41-02-48. h. “General intangible”. Section 41-09-02.
i. “Instrument”. Section 41-09-02.
j. “Merchant”. Subsection 3 of section 41-02-04. k. “Mortgage”. Section 41-09-02.
l. “Pursuant to commitment”. Section 41-09-02.
m. “Receipt”. Subdivision c of subsection 1 of section 41-02-03. n. “Sale”. Subdivision d of subsection 1 of section 41-02-06.
o. “Sale on approval”. Subdivision a of subsection 1 of section 41-02-43. p. “Sale or return”. Subdivision b of subsection 1 of section 41-02-43.
q. “Seller”. Subdivision d of subsection 1 of section 41-02-03.
4. In addition, chapter 41-01 contains general definitions and principles of construction and interpretation applicable throughout this chapter.