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What's New in the Law

BY Robert W. Ihne
February 25, 2011

Ability to Collect Rentals

Gaia Leasing LLC v. Wendelta, Inc., 2010 WL 5421324 (U.S. Dist. Ct. D. Minn. Dec. 23, 2010)

This case should motivate the assignees of equipment lessors to be sure they obtain and understand all of the documents related to the lease transaction being assigned. Although the lease in this case was not an Article 2A finance lease (the lessor had supplied the goods), it did contain a waiver of defenses (which the court confusingly refers to as a “hell-or-high-water” clause). Nevertheless, the transaction also included a document called the Condition Precedent ' the satisfaction of which was to be the trigger for the lessee's obligations to the lessor. Since the lessor was not able to satisfy the terms of the Condition Precedent, the lessee was never obligated to begin making payments under the lease to the assignee, against whom the court grants summary judgment.

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