When Is Equipment Not 'Equipment'? Inventory Leasing or Leasing to Rental Companies

Revised Article '9-320 (paralleling former Article '9-307) provides enhanced rights to certain parties who purchase inventory, stating: 'a buyer in ordinary course of business … takes free of a security interest created by the buyer's seller, even if security interest is perfected and the buyer knows of its existence.' This rule is used to invalidate a perfected security interest in a debtor's inventory when that inventory is sold in a manner that 'comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices.' Article '1-201(9). The idea is that inventory lenders expect for their debtors to sell inventory to make profits, and that this rule does not adversely impact the inventory lender since the lender's interest in the inventory is not cut off by '9-320 until the goods are actually sold by the debtor and since the lender's security interest will continue in identifiable proceeds generated by the sale. (Note, of course inventory lenders also often take a security interest in accounts generated by the sale of the inventory rather than merely relying on the proceeds rules of Article 9 of the UCC.) The rule also encourages the marketability of goods and protects the interest of buyers who assume that they have clear title to goods they purchase from vendors in the business of selling goods of that kind. See, Barkley Clark, The Law of Secured Transactions Under the Uniform Commercial Code, Vol. 1, '3.04(1).

This section of the Uniform Commercial Code will only come into play if the lease between the Lessor and the Lessee is deemed to be a 'disguised lease' or a 'lease intended as security' under '1-201(37) instead of a true lease. In such a situation, the leased property would be owned by the Lessee, and the Lessor would merely have a perfected security interest. Assuming that the Lessee is in the business of selling goods of this sort, this provision of the UCC grants the Lessee the right to transfer title to a Sublessee or other purchaser and invalidate any security interest held by the Lessor in the leased property even if the Lessor's security interest is properly perfected. It should be noted that even if a Sublessee knows of the security interest, that Sublessee would still take free of such security interest unless it knew that the sale violated the Lessor's rights.

Power to Transfer and Entrusting Under '2-403

Section 2-403(3) of the UCC contains a similar provision, often called the 'entrustment provision.' This section states, in pertinent part: 'any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business.'

For example, if an owner takes his watch to a jeweler for repairs and the jeweler is in the business of selling watches that are both new and used, a sale by the jeweler to a buyer in the ordinary course of business will cut off the owner's right to the watch. The owner would still have a cause of action for conversion against the jeweler who had the power but not the right to convey title to the buyer. Although there has been much criticism of this fairly radical shift from the common law, the concept of the entrustment provision has been supported by many commentators. The general idea is that, in most cases, the equities between the entruster-owner and a buyer in the ordinary course are equal and that the balance is therefore tipped in favor of the latter because doing so frees that marketplace and promotes commerce.

There are a few key elements that are necessary to establish an entrustment claim. First, there must be an actual 'entrustment' of the goods by delivery of possession of those goods. Second, the party who receives the goods must be a merchant who deals in goods of that kind. Third, the merchant must make a sale of the goods to a buyer in ordinary course of business. See, Prenger v. Baker, 542 N.W.2d 805 (Iowa 1996).

With respect to the first element, the term entrusting is defined very broadly to include 'any delivery and any acquiescence and retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods had been such as to be larcenous under the criminal law.' UCC '2-403(3). Given this broad definition, it is extremely likely that a Lessor's delivery of the leased property to a Lessee will constitute an entrustment.

Indeed, there is specific authority on point in the leasing context. For example, in Carlson v. Rivera, 382 So. 2d 825 (1980, Fla App D4), the court found an 'entrustment' when a company leased an automobile to a person who is in the business of selling automobiles, thereby allowing the lessee to convey full title to a purchaser of those automobiles. In Sumner v. Fel-Air, 680 P. 2d 1109 (Alaska, 1984), the court noted that a lessee with an option to purchase an airplane had been sufficiently entrusted with the plane to convey good title to a third party purchaser given that the lessee was a merchant who regularly sold used planes.

Although there are a few cases in California with opposite holdings, those cases turn on non-uniform UCC language (See e.g., Mercedes-Benz Credit Corporation, 110 Cal.App.4th 53 (2003) and Budget Rent-A-Car of Southern California v. Bergman, 121 Cal. App. 2d 256 (1981)). The California legislature added language to the standard UCC definition of 'entrustment' found in '2-403(3) so that delivery must have been provided to the merchant 'for the purpose of sale, obtaining offers to purchase, locating a buyer, or the like.' 110 Cal. App.4th at 58. As such, this article does not rely on those California cases as precedent.

With respect to the second element, the term merchant means 'a person who deals in goods of the kind or otherwise by the person's occupation holds that person out as having knowledge or skill peculiar to the practices or goods involved in the transaction … ' UCC '2-104(1). Whether a Lessee qualifies as a merchant is a question of fact. See, Prenger v. Baker, supra, at 808.

With respect to the third element, there must be a sale to a 'buyer in ordinary course.' This issue was addressed earlier in this article. The key points are that: (a) the UCC definition of 'buyer' is much more narrow than the definition of 'purchaser'; (b) protections afforded by the entrustment provisions only protect 'buyers' in the ordinary course; and (c) there is some indication that certain sublessees may not qualify as buyers and, as such, to the extent the Sublessee does not 'buy' Equipment from the Lessee, it may not be able to claim the benefits of this provision.

If the underlying transaction between the Lessor is a 'disguised security interest' or a 'lease intended as security' instead of a 'true lease,' this entrustment provision provides the exact same protection to a Sublessee as does '9-320 addressed above. This overlap occurs since the Lessor is the 'secured party' and the 'entruster' in such situations. In other situations where the entruster is not the Secured Party, these two provisions address different issues. For example, consider a Secured Party with a security interest in all of the Debtor's assets. If the Debtor 'entrusts' certain assets to a merchant and that merchant sells the assets to a buyer in ordinary course, '2-403(2) would provide the buyer only with all of the entruster's rights (which were still subject to the Secured Party's security interest). Since '9-320 only voids a security interest created by the buyer's seller, the Secured Party's security interest would not be voided by that provision either. However, if the underlying transaction were a true lease, the Sublessee would be unable to rely on '9-320 since the Lessor would not have any security interest to be extinguished. In that event, the Sublessee would rely much more heavily on this entrustment provision.

Rights of Buyers and Sublessee in Ordinary Course Under '2A-305.

Section 2A-305 provides a similar mechanism to that found in '2-403 addressed above and states 'a buyer in the ordinary course of business or a sublessee in the 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.' UCC '2A-305(2).

This section provides a Lessee who is a merchant dealing in goods of that kind with the ability to convey to the Sublessee greater rights than the Lessee has under the Lease. As stated by one well-respected commentator: 'if an owner leases goods to a dealer and the dealer is in the business of dealing in such goods both new and used, a sale by the dealer to a buyer in the ordinary course of business will cut off the owner's rights, and a lease to a lessee in the ordinary course of business will cut off the owner's rights to the extent of the lease.' Hawkland, Uniform Commercial Code Series, '2A-305:02.

Again, this provision is similar in many respects to '2-403 addressed above. The official comments to '2A-305 note that '[t]here appears to be substantial overlap between Section 2-403(2) and Section 2A-305(2) with respect to a buyer in ordinary course of business [but that] an examination of [Article 2A's] definition of buyer in ordinary course of business makes clear that this reference was necessary to treat entrusting in the context of a lease.' Although there is more than one difference between the two provisions, the most important one for this article is that '2A-305 provides protections for 'sublessees in ordinary course of business' and not merely 'buyers in ordinary course.' Although the term 'sublessee in ordinary course of business' is not defined in the UCC, the term 'lessee in ordinary course of business' means 'a person who in good faith and without knowledge that the lease to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods leases in ordinary course from a person in the business of selling or leasing goods of that kind … ' UCC '2A-103(1)(o).

As noted earlier, ”9-320(a) and 2-403(2) only benefit a Sublessee who can establish itself to be a 'buyer in ordinary course.' However, '2A-305 also protects 'lessees in ordinary course' to the extent of their leasehold rights. To the extent a Sublessee was unable to establish itself as a 'buyer in ordinary course' it may try to rely on rights as a 'lessee in ordinary course.'

Summary and Recommendations

Lessors that allow the Lessees to sublease the leased property to a Sublessee or otherwise provide a Sublessee with use and possession of the leased property under a contract of service should be aware of special issues stemming from the resultant classification of the leased property as 'Inventory' under the UCC. First of all, special perfection rules apply, and the Lessor must be much more diligent in this regard by: 1) conducting a UCC search; 2) notifying existing lien holders of the Lessor's intent to obtain a purchase money security interest in inventory; and 3) finishing the work described in (1) and (2) and filing its financing statement before the Lessee ever receives possession of the leased property.

In addition, the Sublessees may be able to claim that they received better rights from the Lessee than the Lessee was permitted to convey pursuant to the terms of the Lease. In such an event, the Lessor may be unable to repossess leased property from a Sublessee even through the respective Lessee is in default.

Section 9-320 of the UCC applies only in the event that the underlying transaction between the Lessor and the Lessee is deemed to be a 'disguised security interest' rather than a true lease. As long as the Sublessee is 'buying' the leased property from the Lessee, there is a decent possibility that it would take free of the Lessor's security interest under this provision. Although there is some support that the term 'buy' would only refer to situations where the Lessee has been conveyed ownership of the asset by, for example, a bargain purchase option in the Sublease, broad language in the UCC definitions of 'purchase' and 'purchaser' and lack of much authority may make litigating this issue somewhat risky.

A Sublessee may also to try invalidate the Lessor's interest pursuant to the 'entrustment theory' found in UCC '2-403(2) and (3), which grants a merchant the ability to convey to a buyer in ordinary course all of the Lessee's rights in the leased property and all of the Lessor's rights of the leased property. This provision can be used even if the underlying transaction between the Lessor and the Lessee is deemed to be a true lease instead of a 'disguised security interest.' Once again, this provision should only benefit a Sublessee if it is 'buying' the leased property.

Section 2A-305 is a modified version of the entrustment theory that applies in the leasing context. It gives a Sublessee who cannot qualify as a 'buyer in ordinary course' the chance of qualifying as a 'lessee in ordinary course.' If a Sublessee is successful in establishing itself as a lessee in ordinary course, its leasehold rights could trump the Lessor's rights in the leased property.

Due to the complex and unsettled nature of this area of the law, we recommend that Lessors proceed cautiously when leasing Inventory to a Lessee. Lessors should also consider the following strategies to lessen their exposure if moving forward with such transactions:

• The Lessor could require Lessee and Sublessee to execute a Security Sub-lease and Assignment of Sublease that: 1) operates as a pledge by Lessee to Lessor of Lessee's rights under the Sublease; and 2) contains an acknow-ledgement to be executed by Sub-lessee confirming that Sublessee's rights are subject and subordinate to the Lessor's rights.
• Since the UCC definitions of 'buyer in ordinary course' and 'lessee in ordinary course' require that the Sublessee not know that its rights under the Sublease violate the Lessor's ownership or security interest in the leased property, the Lessor can take precautions to make sure Sublessees have notice of the Lessor's rights in the leased property, including the Lessor's ability to repossess and dispose of the leased property in the event of a default by the Lessee. For example, the Lessor could send a notice to the Sublessee and could place a legend on the leased equipment that clearly reflects the Lessor's rights. Although this type of protection is not as strong as that outlined above, a Lessor would likely be treated fairly well by a court if the Sublessee received a notice from the Lessor prior to the time that the Sublessee executed the Sublease which advises the Sublessee of the Lessor's rights under the Lease and the Lessor's interest in the leased property.

Ken Weinberg and Barry S. Marks are the founding partners of Marks & Weinberg, P.C. They have dealt with virtually every type of equipment and facility lease financing, and have participated in leasing financings for more than a billion dollars of equipment. In addition to being active members of three national leasing associations, the authors have published three books on equipment leasing and chapters in two equipment leasing treatises.

Part Two of a Two-Part Series

Part One of this series discussed special perfection rules for purchase money security interest in inventory and additional risks when leased goods are 'inventory.' This second installment addresses: buyer in ordinary course of business under revised Article '9-320(A); power to transfer and entrusting under '2-403; and rights of buyers and Sublessee in ordinary course under '2A-305.

Buyer in Ordinary Course of Business Under Revised Article '9-320(A)

Revised Article '9-320 (paralleling former Article '9-307) provides enhanced rights to certain parties who purchase inventory, stating: 'a buyer in ordinary course of business … takes free of a security interest created by the buyer's seller, even if security interest is perfected and the buyer knows of its existence.' This rule is used to invalidate a perfected security interest in a debtor's inventory when that inventory is sold in a manner that 'comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices.' Article '1-201(9). The idea is that inventory lenders expect for their debtors to sell inventory to make profits, and that this rule does not adversely impact the inventory lender since the lender's interest in the inventory is not cut off by '9-320 until the goods are actually sold by the debtor and since the lender's security interest will continue in identifiable proceeds generated by the sale. (Note, of course inventory lenders also often take a security interest in accounts generated by the sale of the inventory rather than merely relying on the proceeds rules of Article 9 of the UCC.) The rule also encourages the marketability of goods and protects the interest of buyers who assume that they have clear title to goods they purchase from vendors in the business of selling goods of that kind. See, Barkley Clark, The Law of Secured Transactions Under the Uniform Commercial Code, Vol. 1, '3.04(1).

This section of the Uniform Commercial Code will only come into play if the lease between the Lessor and the Lessee is deemed to be a 'disguised lease' or a 'lease intended as security' under '1-201(37) instead of a true lease. In such a situation, the leased property would be owned by the Lessee, and the Lessor would merely have a perfected security interest. Assuming that the Lessee is in the business of selling goods of this sort, this provision of the UCC grants the Lessee the right to transfer title to a Sublessee or other purchaser and invalidate any security interest held by the Lessor in the leased property even if the Lessor's security interest is properly perfected. It should be noted that even if a Sublessee knows of the security interest, that Sublessee would still take free of such security interest unless it knew that the sale violated the Lessor's rights.

Power to Transfer and Entrusting Under '2-403

Section 2-403(3) of the UCC contains a similar provision, often called the 'entrustment provision.' This section states, in pertinent part: 'any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business.'

For example, if an owner takes his watch to a jeweler for repairs and the jeweler is in the business of selling watches that are both new and used, a sale by the jeweler to a buyer in the ordinary course of business will cut off the owner's right to the watch. The owner would still have a cause of action for conversion against the jeweler who had the power but not the right to convey title to the buyer. Although there has been much criticism of this fairly radical shift from the common law, the concept of the entrustment provision has been supported by many commentators. The general idea is that, in most cases, the equities between the entruster-owner and a buyer in the ordinary course are equal and that the balance is therefore tipped in favor of the latter because doing so frees that marketplace and promotes commerce.

There are a few key elements that are necessary to establish an entrustment claim. First, there must be an actual 'entrustment' of the goods by delivery of possession of those goods. Second, the party who receives the goods must be a merchant who deals in goods of that kind. Third, the merchant must make a sale of the goods to a buyer in ordinary course of business. See, Prenger v. Baker , 542 N.W.2d 805 (Iowa 1996).

With respect to the first element, the term entrusting is defined very broadly to include 'any delivery and any acquiescence and retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods had been such as to be larcenous under the criminal law.' UCC '2-403(3). Given this broad definition, it is extremely likely that a Lessor's delivery of the leased property to a Lessee will constitute an entrustment.

Indeed, there is specific authority on point in the leasing context. For example, in Carlson v. Rivera, 382 So. 2d 825 (1980, Fla App D4), the court found an 'entrustment' when a company leased an automobile to a person who is in the business of selling automobiles, thereby allowing the lessee to convey full title to a purchaser of those automobiles. In Sumner v. Fel-Air, 680 P. 2d 1109 (Alaska, 1984) , the court noted that a lessee with an option to purchase an airplane had been sufficiently entrusted with the plane to convey good title to a third party purchaser given that the lessee was a merchant who regularly sold used planes.

Although there are a few cases in California with opposite holdings, those cases turn on non-uniform UCC language ( See e.g., Mercedes-Benz Credit Corporation , 110 Cal.App.4th 53 (2003) and Budget Rent-A-Car of Southern California v. Bergman , 121 Cal. App. 2d 256 (1981)). The California legislature added language to the standard UCC definition of 'entrustment' found in '2-403(3) so that delivery must have been provided to the merchant 'for the purpose of sale, obtaining offers to purchase, locating a buyer, or the like.' 110 Cal. App.4th at 58. As such, this article does not rely on those California cases as precedent.

With respect to the second element, the term merchant means 'a person who deals in goods of the kind or otherwise by the person's occupation holds that person out as having knowledge or skill peculiar to the practices or goods involved in the transaction … ' UCC '2-104(1). Whether a Lessee qualifies as a merchant is a question of fact. See, Prenger v. Baker, supra, at 808.

With respect to the third element, there must be a sale to a 'buyer in ordinary course.' This issue was addressed earlier in this article. The key points are that: (a) the UCC definition of 'buyer' is much more narrow than the definition of 'purchaser'; (b) protections afforded by the entrustment provisions only protect 'buyers' in the ordinary course; and (c) there is some indication that certain sublessees may not qualify as buyers and, as such, to the extent the Sublessee does not 'buy' Equipment from the Lessee, it may not be able to claim the benefits of this provision.

If the underlying transaction between the Lessor is a 'disguised security interest' or a 'lease intended as security' instead of a 'true lease,' this entrustment provision provides the exact same protection to a Sublessee as does '9-320 addressed above. This overlap occurs since the Lessor is the 'secured party' and the 'entruster' in such situations. In other situations where the entruster is not the Secured Party, these two provisions address different issues. For example, consider a Secured Party with a security interest in all of the Debtor's assets. If the Debtor 'entrusts' certain assets to a merchant and that merchant sells the assets to a buyer in ordinary course, '2-403(2) would provide the buyer only with all of the entruster's rights (which were still subject to the Secured Party's security interest). Since '9-320 only voids a security interest created by the buyer's seller, the Secured Party's security interest would not be voided by that provision either. However, if the underlying transaction were a true lease, the Sublessee would be unable to rely on '9-320 since the Lessor would not have any security interest to be extinguished. In that event, the Sublessee would rely much more heavily on this entrustment provision.

Rights of Buyers and Sublessee in Ordinary Course Under '2A-305.

Section 2A-305 provides a similar mechanism to that found in '2-403 addressed above and states 'a buyer in the ordinary course of business or a sublessee in the 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.' UCC '2A-305(2).

This section provides a Lessee who is a merchant dealing in goods of that kind with the ability to convey to the Sublessee greater rights than the Lessee has under the Lease. As stated by one well-respected commentator: 'if an owner leases goods to a dealer and the dealer is in the business of dealing in such goods both new and used, a sale by the dealer to a buyer in the ordinary course of business will cut off the owner's rights, and a lease to a lessee in the ordinary course of business will cut off the owner's rights to the extent of the lease.' Hawkland, Uniform Commercial Code Series, '2A-305:02.

Again, this provision is similar in many respects to '2-403 addressed above. The official comments to '2A-305 note that '[t]here appears to be substantial overlap between Section 2-403(2) and Section 2A-305(2) with respect to a buyer in ordinary course of business [but that] an examination of [Article 2A's] definition of buyer in ordinary course of business makes clear that this reference was necessary to treat entrusting in the context of a lease.' Although there is more than one difference between the two provisions, the most important one for this article is that '2A-305 provides protections for 'sublessees in ordinary course of business' and not merely 'buyers in ordinary course.' Although the term 'sublessee in ordinary course of business' is not defined in the UCC, the term 'lessee in ordinary course of business' means 'a person who in good faith and without knowledge that the lease to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods leases in ordinary course from a person in the business of selling or leasing goods of that kind … ' UCC '2A-103(1)(o).

As noted earlier, ”9-320(a) and 2-403(2) only benefit a Sublessee who can establish itself to be a 'buyer in ordinary course.' However, '2A-305 also protects 'lessees in ordinary course' to the extent of their leasehold rights. To the extent a Sublessee was unable to establish itself as a 'buyer in ordinary course' it may try to rely on rights as a 'lessee in ordinary course.'

Summary and Recommendations

Lessors that allow the Lessees to sublease the leased property to a Sublessee or otherwise provide a Sublessee with use and possession of the leased property under a contract of service should be aware of special issues stemming from the resultant classification of the leased property as 'Inventory' under the UCC. First of all, special perfection rules apply, and the Lessor must be much more diligent in this regard by: 1) conducting a UCC search; 2) notifying existing lien holders of the Lessor's intent to obtain a purchase money security interest in inventory; and 3) finishing the work described in (1) and (2) and filing its financing statement before the Lessee ever receives possession of the leased property.

In addition, the Sublessees may be able to claim that they received better rights from the Lessee than the Lessee was permitted to convey pursuant to the terms of the Lease. In such an event, the Lessor may be unable to repossess leased property from a Sublessee even through the respective Lessee is in default.

Section 9-320 of the UCC applies only in the event that the underlying transaction between the Lessor and the Lessee is deemed to be a 'disguised security interest' rather than a true lease. As long as the Sublessee is 'buying' the leased property from the Lessee, there is a decent possibility that it would take free of the Lessor's security interest under this provision. Although there is some support that the term 'buy' would only refer to situations where the Lessee has been conveyed ownership of the asset by, for example, a bargain purchase option in the Sublease, broad language in the UCC definitions of 'purchase' and 'purchaser' and lack of much authority may make litigating this issue somewhat risky.

A Sublessee may also to try invalidate the Lessor's interest pursuant to the 'entrustment theory' found in UCC '2-403(2) and (3), which grants a merchant the ability to convey to a buyer in ordinary course all of the Lessee's rights in the leased property and all of the Lessor's rights of the leased property. This provision can be used even if the underlying transaction between the Lessor and the Lessee is deemed to be a true lease instead of a 'disguised security interest.' Once again, this provision should only benefit a Sublessee if it is 'buying' the leased property.

Section 2A-305 is a modified version of the entrustment theory that applies in the leasing context. It gives a Sublessee who cannot qualify as a 'buyer in ordinary course' the chance of qualifying as a 'lessee in ordinary course.' If a Sublessee is successful in establishing itself as a lessee in ordinary course, its leasehold rights could trump the Lessor's rights in the leased property.

Due to the complex and unsettled nature of this area of the law, we recommend that Lessors proceed cautiously when leasing Inventory to a Lessee. Lessors should also consider the following strategies to lessen their exposure if moving forward with such transactions:

• The Lessor could require Lessee and Sublessee to execute a Security Sub-lease and Assignment of Sublease that: 1) operates as a pledge by Lessee to Lessor of Lessee's rights under the Sublease; and 2) contains an acknow-ledgement to be executed by Sub-lessee confirming that Sublessee's rights are subject and subordinate to the Lessor's rights.
• Since the UCC definitions of 'buyer in ordinary course' and 'lessee in ordinary course' require that the Sublessee not know that its rights under the Sublease violate the Lessor's ownership or security interest in the leased property, the Lessor can take precautions to make sure Sublessees have notice of the Lessor's rights in the leased property, including the Lessor's ability to repossess and dispose of the leased property in the event of a default by the Lessee. For example, the Lessor could send a notice to the Sublessee and could place a legend on the leased equipment that clearly reflects the Lessor's rights. Although this type of protection is not as strong as that outlined above, a Lessor would likely be treated fairly well by a court if the Sublessee received a notice from the Lessor prior to the time that the Sublessee executed the Sublease which advises the Sublessee of the Lessor's rights under the Lease and the Lessor's interest in the leased property.

Ken Weinberg and Barry S. Marks are the founding partners of Marks & Weinberg, P.C. They have dealt with virtually every type of equipment and facility lease financing, and have participated in leasing financings for more than a billion dollars of equipment. In addition to being active members of three national leasing associations, the authors have published three books on equipment leasing and chapters in two equipment leasing treatises.