Chapter 411

411.212 History History: 1991 a. 148.

411.213 411.213 Implied warranty of fitness for particular purpose. Except in a finance lease, if the lessor when 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.

411.213 History History: 1991 a. 148.

411.214 411.214 Exclusion or modification of warranties.

411.214(1) (1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit a warranty shall be construed wherever reasonable as consistent with each other; but, subject to s. 411.202, negation or limitation is inoperative to the extent that the construction is unreasonable.

411.214(2) (2) Subject to sub. (3), to exclude or modify the implied warranty of merchantability or a part of it the language shall mention “merchantability”, be by a writing and be conspicuous. Subject to sub. (3), to exclude or modify an implied warranty of fitness the exclusion shall 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.”

411.214(3) (3) Notwithstanding sub. (2), but subject to sub. (4), all of the following apply:

411.214(3)(a) (a) Unless the circumstances indicate otherwise, all implied warranties are excluded by expressions such as “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.

411.214(3)(b) (b) If the lessee before entering into the lease contract examines the goods or the sample or model as fully as desired or refuses to examine the goods, there is no implied warranty with regard to defects that an examination ought in the circumstances to have revealed.

411.214(3)(c) (c) An implied warranty may also be excluded or modified by course of dealing, course of performance, or usage of trade.

411.214(4) (4) To exclude or modify a warranty against interference or against infringement or any part of that warranty, the language shall 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.

411.214 History History: 1991 a. 148.

411.215 411.215 Cumulation and conflict of warranties express or implied. Warranties, whether express or implied, shall 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, all of the following apply:

411.215(1) (1) Exact or technical specifications displace an inconsistent sample or model or general language of description.

411.215(2) (2) A sample from an existing bulk displaces inconsistent general language of description.

411.215(3) (3) Express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose.

411.215 History History: 1991 a. 148.

411.216 411.216 Third-party beneficiaries of express and implied warranties. A warranty to or for the benefit of a lessee under this chapter, whether express or implied, extends to any natural person who is in the family or household of the lessee or who is a guest in the lessee’s home if it is reasonable to expect that the person may use, consume or be affected by the goods and who is injured in person by breach of the warranty. This section does not displace principles of law and equity that extend a warranty to or for the benefit of a lessee to other persons. The operation of this section may not be excluded, modified or limited, 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 a beneficiary designated under this section.

411.216 History History: 1991 a. 148.

411.217 411.217 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 when any of the following occurs:

411.217(1) (1) The lease contract is made if the lease contract is for a lease of goods that are existing and identified.

411.217(2) (2) 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.

411.217(3) (3) The young are conceived, if the lease contract is for a lease of unborn young of animals.

411.217 History History: 1991 a. 148.

411.218 411.218 Insurance and proceeds.

411.218(1) (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.

411.218(2) (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.

411.218(3) (3) Notwithstanding a lessee’s insurable interest under subs. (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.

411.218(4) (4) Nothing in this section impairs an insurable interest recognized under any other statute or rule of law.

411.218(5) (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.

411.218 History History: 1991 a. 148.

411.219 411.219 Risk of loss.

411.219(1) (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.

411.219(2) (2) Subject to s. 411.220, if risk of loss is to pass to the lessee and the time of passage is not stated, all of the following apply:

411.219(2)(a) (a) If the lease contract requires or authorizes the goods to be shipped by carrier and the lease contract does not require delivery at a particular destination, the risk of loss passes to the lessee when the goods are delivered to the carrier; but if the lease contract does require delivery at a particular destination and the goods are tendered while in the possession of the carrier, the risk of loss passes to the lessee when the goods are so tendered as to enable the lessee to take delivery.

411.219(2)(b) (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.

411.219(2)(c) (c) In any case not within par. (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.

411.219 History History: 1991 a. 148.

411.220 411.220 Effect of default on risk of loss.

411.220(1) (1) If risk of loss is to pass to the lessee and the time of passage is not stated, all of the following apply:

411.220(1)(a) (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.

411.220(1)(b) (b) If the lessee rightfully revokes acceptance, the lessee, 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.

411.220(2) (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.

411.220 History History: 1991 a. 148.

411.221 411.221 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 under the lease agreement or s. 411.219, then all of the following apply:

411.221(1) (1) If the loss is total, the lease contract is avoided.

411.221(2) (2) 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.

411.221 History History: 1991 a. 148.

subch. III of ch. 411 SUBCHAPTER III

EFFECT OF LEASE CONTRACT

411.301 411.301 Enforceability of lease contract. Except as otherwise provided in this chapter, a lease contract is effective and enforceable according to its terms between the parties, against purchasers of the goods and against creditors of the parties.

411.301 History History: 1991 a. 148.

411.302 411.302 Title to and possession of goods. Except as otherwise provided in this chapter, this chapter applies whether the lessor or a 3rd party has title to the goods, and whether the lessor, the lessee, or a 3rd party has possession of the goods, notwithstanding any statute or rule of law that possession or the absence of possession is fraudulent.

411.302 History History: 1991 a. 148.

411.303 411.303 Alienability of party’s interest under lease contract or of lessor’s residual interest in goods; delegation of performance; transfer of rights.

411.303(1) (1) In this section, “creation of a security interest” includes the sale of a lease contract that is subject to ch. 409 under s. 409.109 (1) (c).

411.303(2) (2) Except as provided in sub. (3) and s. 409.407, a provision in a lease agreement that 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 that makes such a transfer an event of default, gives rise to the rights and remedies provided in sub. (4), but a transfer that is prohibited or is an event of default under the lease agreement is otherwise effective.

411.303(3) (3) A provision in a lease agreement that 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 that 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 sub. (4).

411.303(4) (4) Subject to sub. (3) and s. 409.407:

411.303(4)(a) (a) 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 under s. 411.501 (2).

411.303(4)(b) (b) If par. (a) is not applicable and if a transfer is made that is prohibited under a lease agreement or 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, 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, all of the following apply:

411.303(4)(b)1. 1. 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.

411.303(4)(b)2. 2. A court having jurisdiction may grant other appropriate relief, including cancellation of the lease contract or an injunction against the transfer.

411.303(5) (5) 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.

411.303(6) (6) 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 of any liability for default.

411.303(7) (7) 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.

411.303 History History: 1991 a. 148; 2001 a. 10.

411.304 411.304 Subsequent lease of goods by lessor.

411.304(1) (1) 

411.304(1)(a) (a) Subject to s. 411.303, a subsequent lessee from a lessor of goods under an existing lease contract obtains, to the extent of the leasehold interest transferred, the leasehold interest in the goods that the lessor had or had power to transfer, and except as provided in sub. (2) and s. 411.527 (4), takes subject to the existing lease contract.

411.304(1)(b) (b) A lessor with voidable title has power to transfer a good leasehold interest to a good faith subsequent lessee for value, but only to the extent set forth in par. (a).

411.304(1)(c) (c) If goods have been delivered under a transaction of purchase, the lessor has that power even if any of the following occurs:

411.304(1)(c)1. 1. The lessor’s transferor was deceived as to the identity of the lessor.

411.304(1)(c)2. 2. The delivery was in exchange for a check that is later dishonored.

411.304(1)(c)3. 3. It was agreed that the transaction was to be a cash sale.

411.304(1)(c)4. 4. The delivery was procured through fraud and is punishable under s. 943.20 or 943.34.

411.304(2) (2) A subsequent lessee in ordinary course of business from a lessor who is a merchant dealing in goods of that kind to whom the goods were entrusted by the existing lessee of that lessor before the interest of the subsequent lessee became enforceable against that lessor obtains, to the extent of the leasehold interest transferred, all of that lessor’s and the existing lessee’s rights to the goods, and takes free of the existing lease contract.

411.304(3) (3) A subsequent lessee from the lessor of goods that are subject to an existing lease contract and that 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 by this section and by the certificate of title statute.

411.304 History History: 1991 a. 148.

411.305 411.305 Sale or sublease of goods by lessee.

411.305(1) (1) 

411.305(1)(a) (a) Subject to s. 411.303, 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 sub. (2) and s. 411.511 (4), takes subject to the existing lease contract.

411.305(1)(b) (b) 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 par. (a).

411.305(1)(c) (c) When goods have been delivered under a transaction of lease the lessee has that power even if any of the following occurs:

411.305(1)(c)1. 1. The lessor was deceived as to the identity of the lessee.

411.305(1)(c)2. 2. The delivery was in exchange for a check that is later dishonored.

411.305(1)(c)3. 3. The delivery was procured through fraud and is punishable under s. 943.20 or 943.34.

411.305(2) (2) A buyer in ordinary course of business or a sublessee in 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.

411.305(3) (3) A buyer or sublessee from the lessee of goods that are subject to an existing lease contract and that 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 by this section and by the certificate of title statute.