Chapter 411

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.

411.507 411.507 Proof of market rent: time and place.

411.507(1) (1) Damages based on market rent are determined according to the rent for the use of the goods concerned for a lease term identical to the remaining lease term of the original lease agreement and prevailing at the times specified in ss. 411.519 and 411.528.

411.507(2) (2) If evidence of rent for the use of the goods concerned for a lease term identical to the remaining lease term of the original lease agreement and prevailing at the times or places described in this chapter is not readily available, the rent prevailing within any reasonable time before or after the time described or at any other place or for a different lease term that in commercial judgment or under usage of trade would serve as a reasonable substitute for the one described may be used, making any proper allowance for the difference, including the cost of transporting the goods to or from the other place.

411.507(3) (3) Evidence of a relevant rent prevailing at a time or place or for a lease term other than the one described in this chapter offered by one party is not admissible unless he or she has given the other party notice that the court finds sufficient to prevent unfair surprise.

411.507(4) (4) If the prevailing rent or value of any goods regularly leased in any established market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of that market are admissible in evidence. The circumstances of the preparation of the report may be shown to affect its weight but not its admissibility.

411.507 History History: 1991 a. 148.

411.508 411.508 Lessee’s remedies.

411.508(1) (1) If a lessor fails to deliver the goods in conformity to the lease contract or repudiates the lease contract, or a lessee rightfully rejects the goods or justifiably revokes acceptance of the goods, 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, the lessor is in default under the lease contract and the lessee may do any of the following:

411.508(1)(a) (a) Cancel the lease contract.

411.508(1)(b) (b) Recover so much of the rent and security as has been paid and is just under the circumstances.

411.508(1)(c) (c) Cover and recover damages as to all goods affected whether or not they have been identified to the lease contract, or recover damages for nondelivery.

411.508(1)(d) (d) Exercise any other rights or pursue any other remedies provided in the lease contract.

411.508(2) (2) If a lessor fails to deliver the goods in conformity to the lease contract or repudiates the lease contract, in addition to the remedies under sub. (1), the lessee may do any of the following:

411.508(2)(a) (a) If the goods have been identified, recover them.

411.508(2)(b) (b) In a proper case, obtain specific performance or replevy the goods.

411.508(3) (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 s. 411.519 (3).

411.508(4) (4) If a lessor has breached a warranty, whether express or implied, the lessee may recover damages.

411.508(5) (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 s. 411.527 (5).

411.508(6) (6) Subject to s. 411.407, 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 a default under the lease contract from any part of the rent still due under the same lease contract.

411.508 History History: 1991 a. 148.

411.509 411.509 Lessee’s rights on improper delivery; rightful rejection.

411.509(1) (1) Subject to s. 411.510, 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.

411.509(2) (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.

411.509 History History: 1991 a. 148.

411.510 411.510 Installment lease contracts: rejection and default.

411.510(1) (1) Under an installment lease contract a lessee may reject a 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 sub. (2) and the lessor or the supplier gives adequate assurance of its cure, the lessee shall accept that delivery.

411.510(2) (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.

411.510 History History: 1991 a. 148.

411.511 411.511 Merchant lessee’s duties as to rightfully rejected goods.

411.511(1) (1) Subject to any security interest of a lessee, 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.

411.511(2) (2) If a merchant lessee disposes of goods under sub. (1) or any other lessee disposes of goods under s. 411.512 (1) (b), 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 a commission as is usual in the trade, or if there is none, to a reasonable sum not exceeding 10 percent of the gross proceeds.

411.511(3) (3) In complying with this section or s. 411.512, the lessee is held only to good faith. Good faith conduct under this subsection is neither acceptance or conversion nor the basis of an action for damages.

411.511(4) (4) A purchaser who purchases in good faith from a lessee under this section or s. 411.512 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 chapter.

411.511 History History: 1991 a. 148.

411.512 411.512 Lessee’s duties as to rightfully rejected goods.

411.512(1) (1) Except as otherwise provided with respect to goods that threaten to decline in value speedily and subject to any security interest of a lessee, all of the following apply:

411.512(1)(a) (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.

411.512(1)(b) (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 as provided in s. 411.511 (2).

411.512(1)(c) (c) Except as provided in pars. (a) and (b), the lessee has no further obligations with regard to goods rightfully rejected.

411.512(2) (2) Action by the lessee under sub. (1) is not acceptance or conversion.

411.512 History History: 1991 a. 148.

411.513 411.513 Cure by lessor of improper tender or delivery; replacement.