North Dakota Code 41-02.1-35 – (2A-305) Sale or sublease of goods by lessee
1. Subject to section 41-02.1-33, a buyer or sublessee from the lessee of goods under an existing lease contract obtains, to the extent of the interest transferred, the leasehold interest in the goods that the lessee had or had power to transfer, and except as provided in subsections 2 and 4 of section 41-02.1-59, takes subject to the existing lease contract. A lessee with a voidable leasehold interest has power to transfer a good leasehold interest to a good-faith buyer for value or a good-faith sublessee for value, but only to the extent set forth in the preceding sentence. When goods have been delivered under a transfer of lease, the lessee has that power even though any of the following are met:
Terms Used In North Dakota Code 41-02.1-35
- Contract: A legal written agreement that becomes binding when signed.
- 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
- Fraud: Intentional deception resulting in injury to another.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- 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
- State: when applied to the different parts of the United States, includes the District of Columbia and the territories. See North Dakota Code 1-01-49
- Statute: A law passed by a legislature.
a. The lessor was deceived as to the identity of the lessee.
b. The delivery was in exchange for a check which is later dishonored.
c. The delivery was procured through fraud punishable as larcenous under the criminal law.
2. A buyer in the ordinary course of business or a sublessee in the ordinary course of business from a lessee who is a merchant dealing in goods of that kind to whom the goods were entrusted by the lessor obtains, to the extent of the interest transferred, all of the lessor’s and lessee’s rights to the goods, and takes free of the existing lease contract.
3. A buyer or sublessee from the lessee of goods that are subject to an existing lease contract and are covered by a certificate of title issued under a statute of this state or of another jurisdiction takes no greater rights than those provided both by this section and by the certificate of title statute.