Chapter 411

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.

411.513(1) (1) If any tender or delivery by the lessor or the supplier is rejected because the tender or delivery is 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.

411.513(2) (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.

411.513 History History: 1991 a. 148.

411.514 411.514 Waiver of lessee’s objections.

411.514(1) (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 if any of the following circumstances exists:

411.514(1)(a) (a) The lessor or the supplier could have cured the defect if the defect had been seasonably stated.

411.514(1)(b) (b) Between merchants, the lessor or the supplier, after rejection, made a request in writing for a full and final written statement of all defects on which the lessee proposes to rely.

411.514(2) (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.

411.514 History History: 1991 a. 148; 2009 a. 322.

411.515 411.515 Acceptance of goods.

411.515(1) (1) Acceptance of goods occurs after the lessee has a reasonable opportunity to inspect the goods and any of the following occurs:

411.515(1)(a) (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.

411.515(1)(b) (b) The lessee fails to make an effective rejection of the goods.

411.515(2) (2) Acceptance of a part of any commercial unit is acceptance of that entire unit.

411.515 History History: 1991 a. 148.

411.516 411.516 Effect of acceptance of goods; notice of default; burden of establishing default after acceptance; notice of claim or litigation to person answerable over.

411.516(1) (1) A lessee shall pay rent for any goods accepted in accordance with the lease contract, with due allowance for goods rightfully rejected or not delivered.

411.516(2) (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 may not be revoked because of it. In any other case, if made with knowledge of a nonconformity, acceptance may not 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 chapter or the lease agreement for nonconformity.

411.516(3) (3) If a tender has been accepted all of the following apply:

411.516(3)(a) (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.

411.516(3)(b) (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 the lessee shall notify the lessor or be barred from any remedy over for liability established by the litigation.

411.516(3)(c) (c) The burden is on the lessee to establish any default.

411.516(4) (4) If a lessee is sued for breach of a warranty or other obligation for which a lessor or a supplier is answerable over, all of the following apply:

411.516(4)(a) (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.

411.516(4)(b) (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 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.

411.516(5) (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.

411.516 History History: 1991 a. 148.

411.517 411.517 Revocation of acceptance of goods.

411.517(1) (1) A lessee may revoke acceptance of a lot or commercial unit the nonconformity of which substantially impairs its value to the lessee if any of the following occurs:

411.517(1)(a) (a) Except in the case of a finance lease, the lessee accepted the lot or commercial unit on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured.

411.517(1)(b) (b) The lessee accepted the lot or commercial unit 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.

411.517(2) (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.

411.517(3) (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.

411.517(4) (4) Revocation of acceptance shall occur within a reasonable time after the lessee discovers or should have discovered the ground for it and before any substantial change in the condition of the goods that is not caused by the nonconformity. Revocation is not effective until the lessee notifies the lessor.

411.517(5) (5) A lessee who revokes under this section has the same rights and duties with regard to the goods involved as if the lessee had rejected them.

411.517 History History: 1991 a. 148.

411.518 411.518 Cover; substitute goods.

411.518(1) (1) After a default by a lessor under the lease contract of the type described in s. 411.508 (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.

411.518(2) (2) Except as otherwise provided with respect to damages liquidated in the lease agreement or otherwise determined pursuant to agreement of the parties, 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 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 any incidental or consequential damages, less expenses saved in consequence of the lessor’s default.

411.518(3) (3) If a lessee’s cover is by lease agreement that for any reason does not qualify under sub. (2), or is by purchase or otherwise, the lessee may recover from the lessor as if the lessee had elected not to cover and s. 411.519 governs.

411.518 History History: 1991 a. 148.

411.519 411.519 Lessee’s damages for nondelivery, repudiation, default and breach of warranty in regard to accepted goods.

411.519(1) (1) Except as otherwise provided with respect to damages liquidated in the lease agreement or otherwise determined pursuant to agreement of the parties, if a lessee elects not to cover or a lessee elects to cover and the cover is by lease agreement that does not qualify under s. 411.518 (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.

411.519(2) (2) Market rent is determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.

411.519(3) (3) Except as otherwise agreed, if the lessee has accepted goods and given notification, 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.

411.519(4) (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.

411.519 History History: 1991 a. 148.

411.520 411.520 Lessee’s incidental and consequential damages.

411.520(1) (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.

411.520(2) (2) Consequential damages resulting from a lessor’s default include all of the following:

411.520(2)(a) (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 that could not reasonably be prevented by cover or otherwise.

411.520(2)(b) (b) Injury to person or property proximately resulting from any breach of warranty.

411.520 History History: 1991 a. 148.

411.521 411.521 Lessee’s right to specific performance or replevin.

411.521(1) (1) Specific performance may be decreed if the goods are unique or may be decreed in other proper circumstances.

411.521(2) (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 considers just.

411.521(3) (3) A lessee has a right of replevin, 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.

411.521 History History: 1991 a. 148.

411.522 411.522 Lessee’s right to goods on lessor’s insolvency.

411.522(1) (1) Subject to sub. (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 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.

411.522(2) (2) A lessee acquires the right to recover goods identified to a lease contract only if they conform to the lease contract.

411.522 History History: 1991 a. 148.

411.523 411.523 Lessor’s remedies.

411.523(1) (1) If a lessee wrongfully rejects or revokes acceptance of goods or fails to make a payment when due or repudiates with respect to a part or the whole, 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 lessee is in default under the lease contract and the lessor may do any of the following:

411.523(1)(a) (a) Cancel the lease contract.

411.523(1)(b) (b) Proceed respecting goods not identified to the lease contract.