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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. 5 Sub. B
(810 ILCS 5/Art. 2A Pt. 5 Sub. B heading)
B.
Default by Lessor
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810 ILCS 5/2A-508
(810 ILCS 5/2A-508) (from Ch. 26, par. 2A-508)
Sec. 2A-508.
Lessee's remedies.
(1) If a lessor fails to deliver the goods in conformity to
the lease contract (Section 2A-509) or repudiates the lease
contract (Section 2A-402), or a lessee rightfully rejects the
goods (Section 2A-509) or justifiably revokes acceptance of the
goods (Section 2A-517), then with respect to any goods
involved, and with respect to all of the goods if under an
installment lease contract the value of the whole lease contract is
substantially impaired (Section 2A-510), the lessor is in default
under the lease contract and the lessee may:
(a) cancel the lease contract (Section 2A-505(1));
(b) recover so much of the rent and security as has | | been paid and is just under the circumstances;
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(c) cover and recover damages as to all goods
| | affected whether or not they have been identified to the lease contract (Sections 2A-518 and 2A-520), or recover damages for nondelivery (Sections 2A-519 and 2A-520);
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(d) exercise any other rights or pursue any other
| | remedies provided in the lease contract.
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(2) If a lessor fails to deliver the goods in conformity to
the lease contract or repudiates the lease contract, the lessee may
also:
(a) if the goods have been identified, recover them
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(b) in a proper case, obtain specific performance or
| | replevy the goods (Section 2A-521).
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(3) If a lessor is otherwise in default under a lease
contract, the lessee may exercise the rights and pursue the remedies
provided in the lease contract, which may include a right to cancel the
lease, and in Section 2A-519(3).
(4) If a lessor has breached a warranty, whether express
or implied, the lessee may recover damages (Section 2A-519(4)).
(5) On rightful rejection or justifiable revocation of
acceptance, a lessee has a security interest in goods in the
lessee's possession or control for any rent and security that has
been paid and any expenses reasonably incurred in their
inspection, receipt, transportation, and care and custody and
may hold those goods and dispose of them in good faith and in a
commercially reasonable manner, subject to
Section 2A-527(5).
(6) Subject to the provisions of Section 2A-407, a lessee,
on notifying the lessor of the lessee's intention to do so, may
deduct all or any part of the damages resulting from any default
under the lease contract from any part of the rent still due
under the same lease contract.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-509
(810 ILCS 5/2A-509) (from Ch. 26, par. 2A-509)
Sec. 2A-509.
Lessee's rights on improper delivery;
rightful rejection.
(1) Subject to the provisions of Section 2A-510 on default
in installment lease contracts, if the goods or the tender or
delivery fail in any respect to conform to the lease contract, the
lessee may reject or accept the goods or accept any commercial
unit or units and reject the rest of the goods.
(2) Rejection of goods is ineffective unless it is within a
reasonable time after tender or delivery of the goods and the
lessee seasonably notifies the lessor.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-510
(810 ILCS 5/2A-510) (from Ch. 26, par. 2A-510)
Sec. 2A-510.
Installment lease contracts; rejection
and default.
(1) Under an installment lease contract, a lessee may
reject any delivery that is nonconforming if the nonconformity
substantially impairs the value of that delivery and cannot be
cured or the nonconformity is a defect in the required
documents; but if the nonconformity does not fall within
subsection (2) and the lessor or the supplier gives adequate
assurance of its cure, the lessee must accept that delivery.
(2) Whenever nonconformity or default with respect to one
or more deliveries substantially impairs the value of the
installment lease contract as a whole there is a default with
respect to the whole. But, the aggrieved party reinstates the
installment lease contract as a whole if the aggrieved party
accepts a nonconforming delivery without seasonably notifying of
cancellation or brings an action with respect only to past
deliveries or demands performance as to future deliveries.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-511
(810 ILCS 5/2A-511) (from Ch. 26, par. 2A-511)
Sec. 2A-511.
Merchant lessee's duties as to rightfully
rejected goods.
(1) Subject to any security interest of a lessee
(Section 2A-508(5)), if a lessor or a supplier has no agent or
place of business at the market of rejection, a merchant lessee,
after rejection of goods in his or her possession or control,
shall follow any reasonable instructions received from the lessor
or the supplier with respect to the goods. In the absence of
those instructions, a merchant lessee shall make reasonable
efforts to sell, lease, or otherwise dispose of the goods for the
lessor's account if they threaten to decline in value speedily.
Instructions are not reasonable if on demand indemnity for
expenses is not forthcoming.
(2) If a merchant lessee (subsection (1)) or any other
lessee (Section 2A-512) disposes of goods, he or she is
entitled to reimbursement either from the lessor or the supplier
or out of the proceeds for reasonable expenses of caring for and
disposing of the goods and, if the expenses include no
disposition commission, to such commission as is usual in the
trade or, if there is none, to a reasonable sum not exceeding
10% of the gross proceeds.
(3) In complying with this Section or Section 2A-512, the
lessee is held only to good faith. Good faith conduct hereunder
is neither acceptance or conversion nor the basis of an action
for damages.
(4) A purchaser who purchases in good faith from a
lessee pursuant to this Section or Section 2A-512 takes the goods
free of any rights of the lessor and the supplier even though
the lessee fails to comply with one or more of the requirements
of this Article.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-512
(810 ILCS 5/2A-512) (from Ch. 26, par. 2A-512)
Sec. 2A-512.
Lessee's duties as to rightfully rejected
goods.
(1) Except as otherwise provided with respect to goods
that threaten to decline in value speedily (Section 2A-511) and
subject to any security interest of a lessee (Section 2A-508(5)):
(a) the lessee, after rejection of goods in the | | lessee's possession, shall hold them with reasonable care at the lessor's or the supplier's disposition for a reasonable time after the lessee's seasonable notification of rejection;
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(b) if the lessor or the supplier gives no
| | instructions within a reasonable time after notification of rejection, the lessee may store the rejected goods for the lessor's or the supplier's account or ship them to the lessor or the supplier or dispose of them for the lessor's or the supplier's account with reimbursement in the manner provided in Section 2A-511; but
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(c) the lessee has no further obligations with regard
| | to goods rightfully rejected.
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(2) Action by the lessee pursuant to subsection (1) is not
acceptance or conversion.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-513
(810 ILCS 5/2A-513) (from Ch. 26, par. 2A-513)
Sec. 2A-513.
Cure by lessor of improper tender or
delivery; replacement.
(1) If any tender or delivery by the lessor or the
supplier is rejected because nonconforming and the time for
performance has not yet expired, the lessor or the supplier may
seasonably notify the lessee of the lessor's or the supplier's
intention to cure and may then make a conforming delivery
within the time provided in the lease contract.
(2) If the lessee rejects a nonconforming tender that the
lessor or the supplier had reasonable grounds to believe would
be acceptable with or without money allowance, the lessor or the
supplier may have a further reasonable time to substitute a
conforming tender if he or she seasonably notifies the lessee.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-514
(810 ILCS 5/2A-514) (from Ch. 26, par. 2A-514)
Sec. 2A-514. Waiver of lessee's objections.
(1) In rejecting goods, a lessee's failure to state a
particular defect that is ascertainable by reasonable inspection
precludes the lessee from relying on the defect to justify
rejection or to establish default:
(a) if, stated seasonably, the lessor or the supplier | | could have cured it (Section 2A-513); or
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(b) between merchants if the lessor or the supplier
| | after rejection has made a request in writing for a full and final written statement of all defects on which the lessee proposes to rely.
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(2) A lessee's failure to reserve rights when paying rent
or other consideration against documents precludes recovery of
the payment for defects apparent in
the documents.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-515
(810 ILCS 5/2A-515) (from Ch. 26, par. 2A-515)
Sec. 2A-515.
Acceptance of goods.
(1) Acceptance of goods occurs after the lessee has had a
reasonable opportunity to inspect the goods and
(a) the lessee signifies or acts with respect to the | | goods in a manner that signifies to the lessor or the supplier that the goods are conforming or that the lessee will take or retain them in spite of their nonconformity; or
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(b) the lessee fails to make an effective rejection
| | of the goods (Section 2A-509(2)).
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(2) Acceptance of a part of any commercial unit is
acceptance of that entire unit.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-516
(810 ILCS 5/2A-516) (from Ch. 26, par. 2A-516)
Sec. 2A-516.
Effect of acceptance of goods; notice of
default; burden of establishing default after
acceptance; notice of claim or litigation to person
answerable over.
(1) A lessee must pay rent for any goods accepted in
accordance with the lease contract, with due allowance for goods
rightfully rejected or not delivered.
(2) A lessee's acceptance of goods precludes rejection of
the goods accepted. In the case of a finance lease, if made with
knowledge of a nonconformity, acceptance cannot be revoked
because of it. In any other case, if made with knowledge of a
nonconformity, acceptance cannot be revoked because of it
unless the acceptance was on the reasonable assumption that the
nonconformity would be seasonably cured. Acceptance does not
of itself impair any other remedy provided by this Article or the
lease agreement for nonconformity.
(3) If a tender has been accepted:
(a) within a reasonable time after the lessee | | discovers or should have discovered any default, the lessee shall notify the lessor and the supplier, if any, or be barred from any remedy against the party not notified;
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(b) except in the case of a consumer lease, within a
| | reasonable time after the lessee receives notice of litigation for infringement or the like (Section 2A-211) the lessee shall notify the lessor or be barred from any remedy over for liability established by the litigation; and
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(c) the burden is on the lessee to establish any
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(4) If a lessee is sued for breach of a warranty or other
obligation for which a lessor or a supplier is answerable over the following apply:
(a) The lessee may give the lessor or the supplier,
| | or both, written notice of the litigation. If the notice states that the person notified may come in and defend and that if the person notified does not do so that person will be bound in any action against that person by the lessee by any determination of fact common to the 2 litigations, then unless the person notified after seasonable receipt of the notice does come in and defend that person is so bound.
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(b) The lessor or the supplier may demand in writing
| | that the lessee turn over control of the litigation including settlement if the claim is one for infringement or the like (Section 2A-211) or else be barred from any remedy over. If the demand states that the lessor or the supplier agrees to bear all expense and to satisfy any adverse judgment, then unless the lessee after seasonable receipt of the demand does turn over control the lessee is so barred.
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(5) Subsections (3) and (4) apply to
any obligation of a lessee to hold the lessor or the supplier
harmless against infringement or the like (Section 2A-211).
(Source: P.A. 87-493.)
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810 ILCS 5/2A-517
(810 ILCS 5/2A-517) (from Ch. 26, par. 2A-517)
Sec. 2A-517.
Revocation of acceptance of goods.
(1) A lessee may revoke acceptance of a lot or commercial
unit whose nonconformity substantially impairs its value to the
lessee if the lessee has accepted it:
(a) except in the case of a finance lease, on the | | reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or
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(b) without discovery of the nonconformity if the
| | lessee's acceptance was reasonably induced either by the lessor's assurances or, except in the case of a finance lease, by the difficulty of discovery before acceptance.
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(2) Except in the case of a finance lease that is not a consumer lease,
a lessee may revoke acceptance of a lot or commercial unit if the lessor
defaults under the lease contract and the default substantially impairs the
value of that lot or commercial unit to the lessee.
(3) If the lease agreement so provides, the lessee may revoke acceptance
of a lot or commercial unit because of other defaults by the lessor.
(4) Revocation of acceptance must occur within a
reasonable time after the lessee discovers or should have
discovered the ground for it and before any substantial change
in condition of the goods which is not caused by the
nonconformity. Revocation is not effective until the lessee
notifies the lessor.
(5) A lessee who so revokes has the same rights and
duties with regard to the goods involved as if the lessee had
rejected them.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-518
(810 ILCS 5/2A-518) (from Ch. 26, par. 2A-518)
Sec. 2A-518. Cover; substitute goods.
(1) After a default by a lessor under the lease contract
of the type described in Section 2A-508(1), or, if agreed, after other
default by the lessor, the lessee may cover by making any purchase or lease
of or contract to purchase or lease goods in substitution for those due
from the lessor.
(2) Except as otherwise provided with respect to damages liquidated in
the lease agreement (Section 2A-504) or otherwise determined pursuant to
agreement of the parties (Sections 1-302
and 2A-503), if a lessee's
cover is by a lease agreement substantially similar to the original lease
agreement and the new lease agreement is made in good faith and in a
commercially reasonable manner, the lessee may recover
from the lessor as damages (i) the present value, as of the date
of the commencement of the term of the new lease agreement, of the rent under
the new lease agreement applicable to that period of the new lease
term which is comparable to the then remaining term of the original lease
agreement minus the present value as of the same date of the total rent for the
then remaining lease term of the original lease agreement, and (ii) any
incidental or consequential damages, less expenses saved in
consequence of the lessor's default.
(3) If a lessee's cover is by lease agreement that for any reason does
not qualify for treatment under subsection (2), or is by purchase or
otherwise, the lessee may recover from the lessor as if the lessee had
elected not to cover and Section 2A-519 governs.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-519
(810 ILCS 5/2A-519) (from Ch. 26, par. 2A-519)
Sec. 2A-519. Lessee's damages for nondelivery, repudiation, default, and
breach of warranty in regard to accepted goods.
(1) Except as otherwise provided with respect to damages liquidated in the
lease agreement (Section 2A-504) or otherwise determined pursuant to
agreement of the parties (Sections 1-302
and 2A-503), if a lessee elects
not to cover or a lessee elects to cover and the cover is by lease
agreement that for any reason does not qualify for treatment under Section
2A-518(2), or is by purchase or otherwise, the measure of damages for
nondelivery or repudiation by the lessor or for rejection or revocation of
acceptance by the lessee is the present value, as of the date of the
default, of the then market rent minus the present value as of the same
date of the original rent, computed for the remaining lease term of the
original lease agreement, together with incidental and consequential
damages, less expenses saved in consequence of the lessor's default.
(2) Market rent is to be determined as of the place for
tender or, in cases of rejection after arrival or revocation of
acceptance, as of the place of arrival.
(3) Except as otherwise agreed, if the lessee has accepted goods and
given notification (Section 2A-516(3)), the measure of damages for
nonconforming tender or delivery or other default by a lessor is the loss
resulting in the ordinary course of events from the lessor's
default as determined in any manner that is reasonable together
with incidental and consequential damages, less expenses saved
in consequence of the lessor's default.
(4) Except as otherwise agreed, the measure of damages for breach of
warranty is the present value at the time and place of acceptance of the
difference between the value of the use of the goods accepted and the value
if they had been as warranted for the lease term, unless special
circumstances show proximate damages of a different amount, together with
incidental and consequential damages, less expenses saved in consequence of
the lessor's default or breach of warranty.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-520
(810 ILCS 5/2A-520) (from Ch. 26, par. 2A-520)
Sec. 2A-520.
Lessee's incidental and consequential
damages.
(1) Incidental damages resulting from a lessor's default
include expenses reasonably incurred in inspection, receipt,
transportation, and care and custody of goods rightfully rejected
or goods the acceptance of which is justifiably revoked, any
commercially reasonable charges, expenses, or commissions in
connection with effecting cover, and any other reasonable
expense incident to the default.
(2) Consequential damages resulting from a lessor's
default include:
(a) any loss resulting from general or particular | | requirements and needs of which the lessor at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
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(b) injury to person or property proximately
| | resulting from any breach of warranty.
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-521
(810 ILCS 5/2A-521) (from Ch. 26, par. 2A-521)
Sec. 2A-521.
Lessee's right to specific performance or
replevin.
(1) Specific performance may be decreed if the goods are
unique or in other proper circumstances.
(2) A decree for specific performance may include any
terms and conditions as to payment of the rent, damages, or
other relief that the court deems just.
(3) A lessee has a right of replevin, detinue,
sequestration, claim and delivery, or the like for goods
identified to the lease contract if after reasonable effort the
lessee is unable to effect cover for those goods or the
circumstances reasonably indicate that the effort will be
unavailing.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-522
(810 ILCS 5/2A-522) (from Ch. 26, par. 2A-522)
Sec. 2A-522.
Lessee's right to goods on lessor's
insolvency.
(1) Subject to subsection (2) and even though the goods
have not been shipped, a lessee who has paid a part or all of
the rent and security for goods identified to a lease contract
(Section 2A-217) on making and keeping good a tender of any
unpaid portion of the rent and security due under the lease
contract may recover the goods identified from the lessor if the
lessor becomes insolvent within 10 days after receipt of the first
installment of rent and security.
(2) A lessee acquires the right to recover goods
identified to a lease contract only if they conform to the lease
contract.
(Source: P.A. 87-493.)
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