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What's New in the Law

BY Robert W. Ihne
August 28, 2008

Ability to Collect Rentals Under Article 2A Finance Leases or Leases With 'Hell or High Water' and/or Waiver
Of Defenses Provisions

CN Funding, LLC v. The Ensig Group, Ltd., 2008 WL 2340660 (N.Y.App.Div. June 10, 2008)

This brief decision partially overturns a questionable trial court decision holding that a lease was not enforceable due to lack of consideration since the equipment had not been delivered by a vendor that had filed for bankruptcy. The appellate court notes that although the lease did not qualify as an Article 2A finance lease, the parties had agreed to treat it as such and the lessee agreed to pay the lessor notwithstanding any failure by the vendor to deliver the equipment. This decision, however, declines to award summary judgment to the lessor since the record presented an issue of fact as to whether the lessor was aware of the vendor's bankruptcy before signing the lease, in which case the lessee may have a defense to payment.

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