Chapter 411

411.310(4) (4) The interest of a lessor or a lessee under a lease contract described in sub. (2) or (3) is subordinate to the interest of any of the following:

411.310(4)(a) (a) A buyer in the ordinary course of business or a lessee in the ordinary course of business of any interest in the whole acquired after the goods become accessions.

411.310(4)(b) (b) A creditor with a security interest in the whole perfected before the lease contract is made to the extent that the creditor makes subsequent advances without knowledge of the lease contract.

411.310(5) (5) When under subs. (2) and (4) or under subs. (3) and (4) a lessor or a lessee of accessions holds an interest that is superior to all interests in the whole, the lessor or the lessee may on default, expiration, termination or cancellation of the lease contract by the other party but subject to the lease contract and this chapter, or if necessary to enforce his or her other rights and remedies under this chapter, remove the goods from the whole, free and clear of all interests in the whole, but he or she shall reimburse any holder of an interest in the whole who is not the lessee and who has not otherwise agreed for the cost of repair of any physical injury but not for any diminution in value of the whole caused by the absence of the goods removed or by any necessity for replacing them. A person entitled to reimbursement may refuse permission to remove until the party seeking removal gives adequate security for the performance of this obligation.

411.310 History History: 1991 a. 148.

411.311 411.311 Priority subject to subordination. Nothing in this chapter prevents subordination by agreement by any person entitled to priority.

411.311 History History: 1991 a. 148.

subch. IV of ch. 411 SUBCHAPTER IV

PERFORMANCE OF LEASE CONTRACT:
REPUDIATED, SUBSTITUTED AND EXCUSED

411.401 411.401 Insecurity: adequate assurance of performance.

411.401(1) (1) A lease contract imposes an obligation on each party that the other’s expectation of receiving due performance shall not be impaired.

411.401(2) (2) If reasonable grounds for insecurity arise with respect to the performance of either party, the insecure party may demand in writing adequate assurance of due performance. Until the insecure party receives that assurance, if commercially reasonable the insecure party may suspend any performance for which he or she has not already received the agreed return.

411.401(3) (3) A repudiation of the lease contract occurs if assurance of due performance adequate under the circumstances of the particular case is not provided to the insecure party within a reasonable time, not to exceed 30 days after receipt of a demand by the other party.

411.401(4) (4) Between merchants, the reasonableness of grounds for insecurity and the adequacy of any assurance offered shall be determined according to commercial standards.

411.401(5) (5) Acceptance of a nonconforming delivery or payment does not prejudice the aggrieved party’s right to demand adequate assurance of future performance.

411.401 History History: 1991 a. 148.

411.402 411.402 Anticipatory repudiation. If either party repudiates a lease contract with respect to a performance not yet due under the lease contract, the loss of which performance will substantially impair the value of the lease contract to the other, the aggrieved party may do any of the following:

411.402(1) (1) For a commercially reasonable time, await retraction of repudiation and performance by the repudiating party.

411.402(2) (2) Make demand under s. 411.401 and await assurance of future performance adequate under the circumstances of the particular case.

411.402(3) (3) Resort to any right or remedy upon default under the lease contract or this chapter, even though the aggrieved party has notified the repudiating party that the aggrieved party would await the repudiating party’s performance and assurance and has urged retraction. In addition, whether or not the aggrieved party is pursuing one of the foregoing remedies, the aggrieved party may suspend performance or, if the aggrieved party is the lessor, proceed in accordance with s. 411.524.

411.402 History History: 1991 a. 148.

411.403 411.403 Retraction of anticipatory repudiation.

411.403(1) (1) Until the repudiating party’s next performance is due, the repudiating party may retract the repudiation unless the aggrieved party has, since the repudiation, canceled the lease contract or materially changed the aggrieved party’s position or otherwise indicated that the aggrieved party considers the repudiation final.

411.403(2) (2) Retraction may be by any method that clearly indicates to the aggrieved party that the repudiating party intends to perform under the lease contract and includes any assurance demanded under s. 411.401.

411.403(3) (3) Retraction reinstates a repudiating party’s rights under a lease contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation.

411.403 History History: 1991 a. 148.

411.404 411.404 Substituted performance.

411.404(1) (1) If without fault of the lessee, the lessor and the supplier, the agreed berthing, loading or unloading facilities fail or the agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable, but a commercially reasonable substitute is available, the substitute performance shall be tendered and accepted.

411.404(2) (2) If the agreed means or manner of payment fails because of domestic or foreign governmental regulation, all of the following apply:

411.404(2)(a) (a) The lessor may withhold or stop delivery or cause the supplier to withhold or stop delivery unless the lessee provides a means or manner of payment that is commercially a substantial equivalent.

411.404(2)(b) (b) If delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the lessee’s obligation unless the regulation is discriminatory, oppressive or predatory.

411.404 History History: 1991 a. 148.

411.405 411.405 Excused performance. Subject to s. 411.404 on substituted performance, the following apply:

411.405(1) (1) Delay in delivery or nondelivery in whole or in part by a lessor or a supplier who complies with subs. (2) and (3) is not a default under the lease contract if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the lease contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order, whether or not the regulation or order later proves to be invalid.

411.405(2) (2) If the causes mentioned in sub. (1) affect only part of the lessor’s or the supplier’s capacity to perform, he or she shall allocate production and deliveries among his or her customers but at his or her option may include regular customers not then under contract for sale or lease as well as his or her own requirements for further manufacture. He or she may allocate in any manner that is fair and reasonable.

411.405(3) (3) The lessor seasonably shall notify the lessee and in the case of a finance lease the supplier seasonably shall notify the lessor and the lessee, if known, that there will be delay or nondelivery and, if allocation is required under sub. (2), of the estimated quota available for the lessee.

411.405 History History: 1991 a. 148.

411.406 411.406 Procedure on excused performance.

411.406(1) (1) If the lessee receives notification of a material or indefinite delay or an allocation justified under s. 411.405, the lessee may by written notification to the lessor as 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, do any of the following:

411.406(1)(a) (a) Terminate the lease contract.

411.406(1)(b) (b) Except in a finance lease that is not a consumer lease, modify the lease contract by accepting the available quota in substitution, with due allowance from the rent payable for the balance of the lease term for the deficiency but without further right against the lessor.

411.406(2) (2) If after receipt of a notification from the lessor under s. 411.405 the lessee fails to modify the lease agreement within a reasonable time not exceeding 30 days, the lease contract lapses with respect to any deliveries affected.

411.406 History History: 1991 a. 148.

411.407 411.407 Irrevocable promises: finance leases.

411.407(1) (1) In the case of a finance lease that is not a consumer lease, the lessee’s promises under the lease contract become irrevocable and independent upon the lessee’s acceptance of the goods.

411.407(2) (2) A promise that becomes irrevocable and independent under sub. (1) is effective and enforceable between the parties, and by or against 3rd parties including assignees of the parties, and is not subject to cancellation, termination, modification, repudiation, excuse or substitution without the consent of the party to whom the promise runs.

411.407(3) (3) This section does not affect the validity under any other law of a covenant in a lease contract making the lessee’s promises irrevocable and independent upon the lessee’s acceptance of the goods.

411.407 History History: 1991 a. 148.

411.407 Annotation Brothers at Arms Length: UCC Article 2A, Captive Finance Companies and the Close-Connection Doctrine. Smith. 1999 WLR 1052.

subch. V of ch. 411 SUBCHAPTER V

DEFAULT

411.501 411.501 Default: Procedure.

411.501(1) (1) Whether the lessor or the lessee is in default under a lease contract is determined by the lease agreement and this chapter.

411.501(2) (2) If the lessor or the lessee is in default under the lease contract, the party seeking enforcement has rights and remedies as provided in this chapter and, except as limited by this chapter, as provided in the lease agreement.

411.501(3) (3) If the lessor or the lessee is in default under the lease contract, the party seeking enforcement may reduce the party’s claim to judgment, or otherwise enforce the lease contract by self-help or any available judicial procedure or nonjudicial procedure, including administrative proceeding, arbitration or the like, in accordance with this chapter.

411.501(4) (4) Except as otherwise provided in s. 401.305 (1), this chapter or the lease agreement, the rights and remedies in subs. (2) and (3) are cumulative.

411.501(5) (5) If the lease agreement covers both real property and goods, the party seeking enforcement may proceed under this subchapter as to the goods, or under other applicable law as to both the real property and the goods in accordance with that party’s rights and remedies in respect of the real property, in which case this subchapter does not apply.

411.501 History History: 1991 a. 148; 2009 a. 320.

411.502 411.502 Notice after default. Except as otherwise provided in this chapter or the lease agreement, the lessor or lessee in default under the lease contract is not entitled to notice of default or notice of enforcement from the other party to the lease agreement.

411.502 History History: 1991 a. 148.

411.503 411.503 Modification or impairment of rights and remedies.

411.503(1) (1) Except as otherwise provided in this chapter, the lease agreement may include rights and remedies for default in addition to or in substitution for those provided in this chapter and may limit or alter the measure of damages recoverable under this chapter.

411.503(2) (2) Resort to a remedy provided under this chapter or in the lease agreement is optional unless the remedy is expressly agreed to be exclusive. If circumstances cause an exclusive or limited remedy to fail of its essential purpose, or if provision for an exclusive remedy is unconscionable, remedy may be had as provided in this chapter.

411.503(3) (3) Consequential damages may be liquidated under s. 411.504, or may otherwise be limited, altered or excluded unless the limitation, alteration or exclusion is unconscionable. Limitation, alteration or exclusion of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation, alteration or exclusion of damages where the loss is commercial is not prima facie unconscionable.

411.503(4) (4) Rights and remedies on default by the lessor or the lessee with respect to any obligation or promise that is collateral or ancillary to the lease contract are not impaired by this chapter.

411.503 History History: 1991 a. 148.

411.504 411.504 Liquidation of damages.

411.504(1) (1) Damages payable by either party for default, or for any other act or omission, including indemnity for loss or diminution of anticipated tax benefits or loss of or damage to the lessor’s residual interest, may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the default or other act or omission.

411.504(2) (2) If the lease agreement provides for liquidation of damages, and the provision does not comply with sub. (1), or the provision is an exclusive or limited remedy that circumstances cause to fail of its essential purpose, remedy may be had as provided in this chapter.

411.504(3) (3) If the lessor justifiably withholds or stops delivery of goods because of the lessee’s default or insolvency, the lessee is entitled to restitution of any amount by which the sum of his or her payments exceeds any of the following:

411.504(3)(a) (a) The amount to which the lessor is entitled by virtue of terms liquidating the lessor’s damages in accordance with sub. (1).

411.504(3)(b) (b) In the absence of terms liquidating the lessor’s damages in accordance with sub. (1), 20 percent of the then present value of the total rent that the lessee was obligated to pay for the balance of the lease term, or, in the case of a consumer lease, the lesser of that amount or $500.

411.504(4) (4) A lessee’s right to restitution under sub. (3) is subject to offset to the extent that the lessor establishes all of the following:

411.504(4)(a) (a) A right to recover damages under provisions of this chapter other than sub. (1).

411.504(4)(b) (b) The amount or value of any benefits received by the lessee directly or indirectly by reason of the lease contract.

411.504 History History: 1991 a. 148.

411.505 411.505 Cancellation and termination and effect of cancellation, termination, rescission or fraud on rights and remedies.

411.505(1) (1) On cancellation of the lease contract, all obligations that are still executory on both sides are discharged, but any right based on earlier default or performance survives, and the canceling party also retains any remedy for default of the whole lease contract or any unperformed balance.

411.505(2) (2) On termination of the lease contract, all obligations that are still executory on both sides are discharged but any right based on earlier default or performance survives.

411.505(3) (3) Unless the contrary intention clearly appears, expressions of “cancellation”, “rescission” or the like of the lease contract may not be construed as a renunciation or discharge of any claim in damages for an earlier default.

411.505(4) (4) Rights and remedies for material misrepresentation or fraud include all rights and remedies available under this chapter for default.

411.505(5) (5) Neither rescission nor a claim for rescission of the lease contract nor rejection or return of the goods may bar or be considered inconsistent with a claim for damages or other right or remedy.

411.505 History History: 1991 a. 148.

411.506 411.506 Statute of limitations.

411.506(1) (1) An action for default under a lease contract, including breach of warranty or indemnity, shall be commenced within 4 years after the cause of action accrued. By the original lease contract the parties may reduce the period of limitation to not less than one year.

411.506(2) (2) A cause of action for default accrues when the act or omission on which the default or breach of warranty is based is or should have been discovered by the aggrieved party, or when the default occurs, whichever is later. A cause of action for indemnity accrues when the act or omission on which the claim for indemnity is based is or should have been discovered by the indemnified party, whichever is later.

411.506(3) (3) If an action commenced within the time limit under sub. (1) is so terminated as to leave available a remedy by another action for the same default or breach of warranty or indemnity, the other action may be commenced after the expiration of the time limit and within 6 months after the termination of the first action unless the termination resulted from voluntary discontinuance or from dismissal for failure or neglect to prosecute.

411.506(4) (4) This section does not alter the law on tolling of the statute of limitations nor does it apply to a cause of action that accrues before July 1, 1992.

411.506 History History: 1991 a. 148.