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(810 ILCS 5/Art.
2A Pt. 5 Sub. B heading)
B.
Default by Lessor
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(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
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been paid and is just under the circumstances;
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(c)
cover and recover damages as to all goods
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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
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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
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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) (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) (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) (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) (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
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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
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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
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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) (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) (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
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supplier could have cured it (Section
2A-513); or
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(b)
between merchants if the lessor or the supplier
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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 on the face of the documents.
(Source: P.A. 87-493.)
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(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
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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
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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) (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
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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
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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,
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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
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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) (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
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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
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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) (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 1-102(3) 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. 87-493.)
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(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 1-102(3) 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. 87-493.)
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(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
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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
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resulting from any breach of warranty.
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(Source: P.A. 87-493.)
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(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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