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Illinois Compiled Statutes
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COMMERCIAL CODE (810 ILCS 5/) Uniform Commercial Code. 810 ILCS 5/Art. 2A Pt. 2
(810 ILCS 5/Art. 2A Pt. 2 heading)
PART 2.
FORMATION AND CONSTRUCTION OF LEASE CONTRACT
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810 ILCS 5/2A-201
(810 ILCS 5/2A-201) (from Ch. 26, par. 2A-201)
Sec. 2A-201.
Statute of frauds.
(1) A lease contract is not enforceable by way of action
or defense unless:
(a) the total payments to be made under the lease | | contract, excluding payments for options to renew or buy, are less than $1,000; or
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(b) there is a writing, signed by the party against
| | whom enforcement is sought or by that party's authorized agent, sufficient to indicate that a lease contract has been made between the parties and to describe the goods leased and the lease term.
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(2) Any description of leased goods or of the lease term
is sufficient and satisfies subsection (1)(b), whether or not it is
specific, if it reasonably identifies what is described.
(3) A writing is not insufficient because it omits or
incorrectly states a term agreed upon, but the lease contract is
not enforceable under subsection (1)(b) beyond the lease term
and the quantity of goods shown in the writing.
(4) A lease contract that does not satisfy the
requirements of subsection (1), but which is valid in other
respects, is enforceable:
(a) if the goods are to be specially manufactured or
| | obtained for the lessee and are not suitable for lease or sale to others in the ordinary course of the lessor's business, and the lessor, before notice of repudiation is received and under circumstances that reasonably indicate that the goods are for the lessee, has made either a substantial beginning of their manufacture or commitments for their procurement;
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(b) if the party against whom enforcement is sought
| | admits in that party's pleading, testimony, or otherwise in court that a lease contract was made, but the lease contract is not enforceable under this provision beyond the quantity of goods admitted; or
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(c) with respect to goods that have been received and
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(5) The lease term under a lease contract referred to in
subsection (4) is:
(a) if there is a writing signed by the party against
| | whom enforcement is sought or by that party's authorized agent specifying the lease term, the term so specified;
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(b) if the party against whom enforcement is sought
| | admits in that party's pleading, testimony, or otherwise in court a lease term, the term so admitted; or
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(c) a reasonable lease term.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-202
(810 ILCS 5/2A-202) (from Ch. 26, par. 2A-202)
Sec. 2A-202.
Final written expression; parol or
extrinsic evidence.
Terms with respect to which the confirmatory memoranda of
the parties agree or which are otherwise set forth in a writing
intended by the parties as a final expression of their agreement
with respect to such terms as are included therein may not be
contradicted by evidence of any prior agreement or of a
contemporaneous oral agreement but may be explained or
supplemented:
(a) by course of dealing or usage of trade or by | | course of performance; and
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(b) by evidence of consistent additional terms unless
| | the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-203
(810 ILCS 5/2A-203) (from Ch. 26, par. 2A-203)
Sec. 2A-203.
Seals inoperative.
The affixing of a seal to a writing
evidencing a lease contract or an offer to enter into a lease contract does
not render the writing a sealed instrument and the law with respect to
sealed instruments does not apply to the lease contract or offer.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-204
(810 ILCS 5/2A-204) (from Ch. 26, par. 2A-204)
Sec. 2A-204.
Formation in general.
(1) A lease contract may be made in any manner
sufficient to show agreement, including conduct by both parties
which recognizes the existence of a lease contract.
(2) An agreement sufficient to constitute a lease contract
may be found although the moment of its making is
undetermined.
(3) Although one or more terms are left open, a lease
contract does not fail for indefiniteness if the parties have
intended to make a lease contract and there is a reasonably
certain basis for giving an appropriate remedy.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-205
(810 ILCS 5/2A-205) (from Ch. 26, par. 2A-205)
Sec. 2A-205.
Firm offers.
An offer by a merchant to lease goods to or
from another person in a signed writing that by its terms gives assurance
it will be held open is not revocable, for lack of consideration, during
the time stated or, if no time is stated, for a reasonable time, but in no
event may the period of irrevocability exceed 3 months. Any such term of
assurance on a form supplied by the offeree must be separately signed by
the offeror.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-206
(810 ILCS 5/2A-206) (from Ch. 26, par. 2A-206)
Sec. 2A-206.
Offer and acceptance in formation of
lease contract.
(1) Unless otherwise unambiguously indicated by the
language or circumstances, an offer to make a lease contract
must be construed as inviting acceptance in any manner and by
any medium reasonable in the circumstances.
(2) If the beginning of a requested performance is a
reasonable mode of acceptance, an offeror who is not notified of
acceptance within a reasonable time may treat the offer as having
lapsed before acceptance.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-207
(810 ILCS 5/2A-207) (from Ch. 26, par. 2A-207)
Sec. 2A-207. (Blank).
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-208
(810 ILCS 5/2A-208) (from Ch. 26, par. 2A-208)
Sec. 2A-208.
Modification, rescission, and waiver.
(1) An agreement modifying a lease contract needs no
consideration to be binding.
(2) A signed lease agreement that excludes modification or
rescission except by a signed writing may not be otherwise
modified or rescinded, but, except as between merchants, such a
requirement on a form supplied by a merchant must be
separately signed by the other party.
(3) Although an attempt at modification or rescission does
not satisfy the requirements of subsection (2), it may operate as
a waiver.
(4) A party who has made a waiver affecting an
executory portion of a lease contract may retract the waiver by
reasonable notification received by the other party that strict
performance will be required of any term waived, unless the
retraction would be unjust in view of a material change of
position in reliance on the waiver.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-209
(810 ILCS 5/2A-209) (from Ch. 26, par. 2A-209)
Sec. 2A-209.
Lessee under finance lease as beneficiary
of supply contract.
(1) The benefit of a supplier's promises to the lessor
under the supply contract and of all warranties, whether
express or implied, including those of any third party provided in
connection with or as part of the supply contract, extends to the
lessee to the extent of the lessee's leasehold interest under a
finance lease related to the supply contract, but is subject to the
terms of the warranty and of the supply contract and all defenses
or claims arising therefrom.
(2) The extension of the benefit of a supplier's promises and of
warranties to the lessee (Section 2A-209(1)) does not: (i) modify the
rights and obligations of the parties to the supply contract, whether
arising therefrom or otherwise, or (ii) impose any duty or liability under
the supply contract on the lessee.
(3) Any modification or rescission of the supply contract by the
supplier and the lessor is effective between the supplier and the lessee
unless, before the modification or rescission, the supplier has received
notice that the lessee has entered into a finance lease related to the
supply contract. If the modification or rescission is effective between
the supplier and the lessee, the lessor is deemed to have assumed, in
addition to the obligations of the lessor to the lessee under the lease
contract, promises of the supplier to the lessor and warranties that were
so modified or rescinded as they existed and were available to the lessee
before modification or rescission.
(4) In addition to the extension of the benefit of the supplier's
promises and of warranties to the lessee under subsection (1), the
lessee retains all rights that the lessee may have against the supplier
which arise from an agreement between the lessee and the supplier or
under other law.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-210
(810 ILCS 5/2A-210) (from Ch. 26, par. 2A-210)
Sec. 2A-210.
Express warranties.
(1) Express warranties by the lessor are created as
follows:
(a) Any affirmation of fact or promise made by the | | lessor to the lessee which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods will conform to the affirmation or promise.
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(b) Any description of the goods which is made part
| | of the basis of the bargain creates an express warranty that the goods will conform to the description.
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(c) Any sample or model that is made part of the
| | basis of the bargain creates an express warranty that the whole of the goods will conform to the sample or model.
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(2) It is not necessary to the creation of an express
warranty that the lessor use formal words, such as "warrant" or
"guarantee", or that the lessor have a specific intention to make
a warranty, but an affirmation merely of the value of the goods
or a statement purporting to be merely the lessor's opinion or
commendation of the goods does not create a warranty.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-211
(810 ILCS 5/2A-211) (from Ch. 26, par. 2A-211)
Sec. 2A-211.
Warranties against interference and
against infringement; lessee's obligation against
infringement.
(1) There is in a lease contract a warranty that for the
lease term no person holds a claim to or interest in the goods
that arose from an act or omission of the lessor, other than a
claim by way of infringement or the like, which will interfere
with the lessee's enjoyment of its leasehold interest.
(2) Except in a finance lease, there is in a lease contract
by a lessor who is a merchant regularly dealing in goods of the
kind a warranty that the goods are delivered free of the rightful
claim of any person by way of infringement or the like.
(3) A lessee who furnishes specifications to a lessor or a
supplier shall hold the lessor and the supplier harmless against
any claim by way of infringement or the like that arises out of
compliance with the specifications.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-212
(810 ILCS 5/2A-212) (from Ch. 26, par. 2A-212)
Sec. 2A-212.
Implied warranty of merchantability.
(1) Except in a finance lease, a warranty that the goods
will be merchantable is implied in a lease contract if the lessor is
a merchant with respect to goods of that kind.
(2) Goods to be merchantable must be at least such as:
(a) pass without objection in the trade under the | | description in the lease agreement;
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(b) in the case of fungible goods, are of fair
| | average quality within the description;
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(c) are fit for the ordinary purposes for which goods
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(d) run, within the variation permitted by the lease
| | agreement, of even kind, quality, and quantity within each unit and among all units involved;
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(e) are adequately contained, packaged, and labeled
| | as the lease agreement may require; and
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(f) conform to any promises or affirmations of fact
| | made on the container or label.
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(3) Other implied warranties may arise from course of
dealing or usage of trade.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-213
(810 ILCS 5/2A-213) (from Ch. 26, par. 2A-213)
Sec. 2A-213.
Implied warranty of fitness for particular purpose.
Except in a finance lease, if the lessor at the time the lease
contract is made has reason to know of any particular purpose
for which the goods are required and that the lessee is relying
on the lessor's skill or judgment to select or furnish suitable
goods, there is in the lease contract an implied warranty that
the goods will be fit for that purpose.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-214
(810 ILCS 5/2A-214) (from Ch. 26, par. 2A-214)
Sec. 2A-214.
Exclusion or modification of warranties.
(1) Words or conduct relevant to the creation of an
express warranty and words or conduct tending to negate or
limit a warranty must be construed wherever reasonable as
consistent with each other; but, subject to the provisions of
Section 2A-202 on parol or extrinsic evidence, negation or
limitation is inoperative to the extent that the construction is
unreasonable.
(2) Subject to subsection (3), to exclude or modify the
implied warranty of merchantability or any part of it the
language must mention "merchantability", be by a writing, and
be conspicuous. Subject to subsection (3), to exclude or modify
any implied warranty of fitness the exclusion must be by
a writing and be conspicuous. Language to exclude all implied
warranties of fitness is sufficient if it is in writing, is conspicuous and
states, for example, "There is no warranty that the goods will be fit for a
particular purpose.".
(3) Notwithstanding subsection (2), but subject to
subsection (4),
(a) unless the circumstances indicate otherwise, all | | implied warranties are excluded by expressions like "as is" or "with all faults" or by other language that in common understanding calls the lessee's attention to the exclusion of warranties and makes plain that there is no implied warranty, if in writing and conspicuous;
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(b) if the lessee before entering into the lease
| | contract has examined the goods or the sample or model as fully as desired or has refused to examine the goods, there is no implied warranty with regard to defects that an examination ought in the circumstances to have revealed; and
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(c) an implied warranty may also be excluded or
| | modified by course of dealing, course of performance, or usage of trade.
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(4) To exclude or modify a warranty against interference
or against infringement (Section 2A-211) or any part of it, the
language must be specific, be by a writing, and be conspicuous,
unless the circumstances, including course of performance,
course of dealing, or usage of trade, give the lessee reason to
know that the goods are being leased subject to a claim or
interest of any person.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-215
(810 ILCS 5/2A-215) (from Ch. 26, par. 2A-215)
Sec. 2A-215.
Cumulation and conflict of warranties express or implied.
Warranties, whether express or implied, must be construed as
consistent with each other and as cumulative, but if that
construction is unreasonable, the intention of the parties
determines which warranty is dominant. In ascertaining that
intention the following rules apply:
(a) Exact or technical specifications displace an | | inconsistent sample or model or general language of description.
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(b) A sample from an existing bulk displaces
| | inconsistent general language of description.
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(c) Express warranties displace inconsistent implied
| | warranties other than an implied warranty of fitness for a particular purpose.
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-216
(810 ILCS 5/2A-216) (from Ch. 26, par. 2A-216)
Sec. 2A-216.
Third-party beneficiaries of express and implied
warranties. A warranty to or for the benefit of a lessee under this
Article, whether express or implied, extends to any person who
may reasonably be expected to use, consume, or be affected by
the goods and who is injured by breach of the warranty. The
operation of this Section may not be excluded, modified, or
limited with respect to injury to the person of an individual to
whom the warranty extends, but an exclusion, modification, or
limitation of the warranty, including any with respect to rights
and remedies, effective against the lessee is also effective
against the beneficiary designated under this Section.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-217
(810 ILCS 5/2A-217) (from Ch. 26, par. 2A-217)
Sec. 2A-217.
Identification.
Identification of goods as goods to which a
lease contract refers may be made at any time and in any manner explicitly
agreed to by the parties. In the absence of explicit agreement,
identification occurs:
(a) when the lease contract is made if the lease | | contract is for a lease of goods that are existing and identified;
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(b) when the goods are shipped, marked, or otherwise
| | designated by the lessor as goods to which the lease contract refers, if the lease contract is for a lease of goods that are not existing and identified; or
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(c) when the young are conceived, if the lease
| | contract is for a lease of unborn young of animals.
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-218
(810 ILCS 5/2A-218) (from Ch. 26, par. 2A-218)
Sec. 2A-218.
Insurance and proceeds.
(1) A lessee obtains an insurable interest when existing
goods are identified to the lease contract even though the goods
identified are nonconforming and the lessee has an option to
reject them.
(2) If a lessee has an insurable interest only by reason
of the lessor's identification of the goods, the lessor, until
default or insolvency or notification to the lessee that
identification is final, may substitute other goods for those
identified.
(3) Notwithstanding a lessee's insurable interest under
subsections (1) and (2), the lessor retains an insurable interest
until an option to buy has been exercised by the lessee and risk
of loss has passed to the lessee.
(4) Nothing in this Section impairs any insurable interest
recognized under any other statute or rule of law.
(5) The parties by agreement may determine that one or
more parties have an obligation to obtain and pay for insurance
covering the goods and by agreement may determine the
beneficiary of the proceeds of the insurance.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-219
(810 ILCS 5/2A-219) (from Ch. 26, par. 2A-219)
Sec. 2A-219.
Risk of loss.
(1) Except in the case of a finance lease, risk of loss is
retained by the lessor and does not pass to the lessee. In the
case of a finance lease, risk of loss passes to the lessee.
(2) Subject to the provisions of this Article on the effect
of default on risk of loss (Section 2A-220), if risk of loss is to
pass to the lessee and the time of passage is not stated, the
following rules apply:
(a) If the lease contract requires or authorizes the | | goods to be shipped by carrier
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(i) and it does not require delivery at a
| | particular destination, the risk of loss passes to the lessee when the goods are duly delivered to the carrier; but
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(ii) if it does require delivery at a particular
| | destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the lessee when the goods are there duly so tendered as to enable the lessee to take delivery.
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(b) If the goods are held by a bailee to be delivered
| | without being moved, the risk of loss passes to the lessee on acknowledgment by the bailee of the lessee's right to possession of the goods.
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(c) In any case not within paragraph (a) or (b), the
| | risk of loss passes to the lessee on the lessee's receipt of the goods if the lessor, or, in the case of a finance lease, the supplier, is a merchant; otherwise the risk passes to the lessee on tender of delivery.
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-220
(810 ILCS 5/2A-220) (from Ch. 26, par. 2A-220)
Sec. 2A-220.
Effect of default on risk of loss.
(1) Where risk of loss is to pass to the lessee and the
time of passage is not stated:
(a) If a tender or delivery of goods so fails to | | conform to the lease contract as to give a right of rejection, the risk of their loss remains with the lessor, or, in the case of a finance lease, the supplier, until cure or acceptance.
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(b) If the lessee rightfully revokes acceptance, he
| | or she, to the extent of any deficiency in his or her effective insurance coverage, may treat the risk of loss as having remained with the lessor from the beginning.
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(2) Whether or not risk of loss is to pass to the lessee,
if the lessee as to conforming goods already identified to a lease
contract repudiates or is otherwise in default under the lease
contract, the lessor, or, in the case of a finance lease, the
supplier, to the extent of any deficiency in his or her
effective insurance coverage may treat the risk of loss as resting
on the lessee for a commercially reasonable time.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-221
(810 ILCS 5/2A-221) (from Ch. 26, par. 2A-221)
Sec. 2A-221.
Casualty to identified goods.
If a lease contract requires goods identified when the lease
contract is made, and the goods suffer casualty without fault of
the lessee, the lessor, or the supplier before delivery, or the
goods suffer casualty before risk of loss passes to the lessee
pursuant to the lease agreement or Section 2A-219, then:
(a) if the loss is total, the lease contract is avoided; and
(b) if the loss is partial or the goods have so deteriorated
as to no longer conform to the lease contract, the lessee may
nevertheless demand inspection and at his or her option either
treat the lease contract as avoided or, except in a finance lease
that is not a consumer lease, accept the goods with due
allowance from the rent payable for the balance of the lease term
for the deterioration or the deficiency in quantity but without
further right against the lessor.
(Source: P.A. 87-493.)
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