§ 2A—103. Definitions and index of definitions
(1) In this article unless the context otherwise requires:
(a) “Buyer in ordinary course of business” means a person who in good faith and without
knowledge that the sale to him or her is in violation of the ownership rights or security
interest or leasehold interest of a third party in the goods, buys in ordinary course
from a person in the business of selling goods of that kind but does not include a
pawnbroker. “Buying” may be for cash or by exchange of other property or on secured
or unsecured credit and includes acquiring goods or documents of title under a preexisting
contract for sale but does not include a transfer in bulk or as security for or in
total or partial satisfaction of a money debt.
(b) “Cancellation” occurs when either party puts an end to the lease contract for default
by the other party.
(c) “Commercial unit” means such a unit of goods as by commercial usage is a single whole
for purposes of lease and division of which materially impairs its character or value
on the market or in use. A commercial unit may be a single article, as a machine,
or a set of articles, as a suite of furniture or a line of machinery, or a quantity,
as a gross or carload, or any other unit treated in use or in the relevant market
as a single whole.
(d) “Conforming” goods or performance under a lease contract means goods or performance
that are in accordance with the obligations under the lease contract.
(e) “Consumer lease” means a lease that a lessor regularly engaged in the business of
leasing or selling makes to a lessee who is an individual and who takes under the
lease primarily for a personal, family, or household purpose.
(f) “Fault” means wrongful act, omission, breach, or default.
(g) “Finance lease” means a lease with respect to which:
(i) the lessor does not select, manufacture, or supply the goods;
(ii) the lessor acquires the goods or the right to possession and use of the goods in connection
with the lease; and
(iii) one of the following occurs:
(A) the lessee receives a copy of the contract by which the lessor acquired the goods
or the right to possession and use of the goods before signing the lease contract;
(B) the lessee’s approval of the contract by which the lessor acquired the goods or the
right to possession and use of the goods is a condition to effectiveness of the lease
contract;
(C) the lessee, before signing the lease contract, receives an accurate and complete statement
designating the promises and warranties, and any disclaimers of warranties, limitations
or modifications of remedies, or liquidated damages, including those of a third party,
such as the manufacturer of the goods, provided to the lessor by the person supplying
the goods in connection with or as part of the contract by which the lessor acquired
the goods or the right to possession and use of the goods; or
(D) if the lease is not a consumer lease, the lessor, before the lessee signs the lease
contract, informs the lessee in writing: of the identity of the person supplying the
goods to the lessor, unless the lessee has selected that person and directed the lessor
to acquire the goods or the right to possession and use of the goods from that person;
that the lessee is entitled under this article to the promises and warranties, including
those of any third party, provided to the lessor by the person supplying the goods
in connection with or as part of the contract by which the lessor acquired the goods
or the right to possession and use of the goods; and that the lessee may communicate
with the person supplying the goods to the lessor and receive an accurate and complete
statement of those promises and warranties, including any disclaimers and limitations
of them or of remedies.
(h) “Goods” means all things that are movable at the time of identification to the lease contract, or are fixtures (§ 2A—309), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals.
(h.1) “Hybrid lease” means a single transaction involving a lease of goods and:
(i) the provision of services;
(ii) a sale of other goods; or
(iii) a sale, lease, or license of property other than goods.
(i) “Installment lease contract” means a lease contract that authorizes or requires the
delivery of goods in separate lots to be separately accepted, even though the lease
contract contains a clause “each delivery is a separate lease” or its equivalent.
(j) “Lease” means a transfer of the right to possession and use of goods for a term in
return for consideration, but a sale, including a sale on approval or a sale or return,
or retention or creation of a security interest is not a lease. Unless the context
clearly indicates otherwise, the term includes a sublease.
(k) “Lease agreement” means the bargain, with respect to the lease, of the lessor and
the lessee in fact as found in their language or by implication from other circumstances
including course of dealing or usage of trade or course of performance as provided
in this article. Unless the context clearly indicates otherwise, the term includes
a sublease agreement.
(l) “Lease contract” means the total legal obligation that results from the lease agreement
as affected by this article and any other applicable rules of law. Unless the context
clearly indicates otherwise, the term includes a sublease contract.
(m) “Leasehold interest” means the interest of the lessor or the lessee under a lease
contract.
(n) “Lessee” means a person who acquires the right to possession and use of goods under
a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.
(o) “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 but
does not include a pawnbroker. “Leasing” may be for cash or by exchange of other property
or on secured or unsecured credit and includes acquiring goods or documents of title
under a preexisting lease contract but does not include a transfer in bulk or as security
for or in total or partial satisfaction of a money debt.
(p) “Lessor” means a person who transfers the right to possession and use of goods under
a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.
(q) “Lessor’s residual interest” means the lessor’s interest in the goods after expiration,
termination, or cancellation of the lease contract.
(r) “Lien” means a charge against or interest in goods to secure payment of a debt or
performance of an obligation, but the term does not include a security interest.
(s) “Lot” means a parcel or a single article that is the subject matter of a separate
lease or delivery, whether or not it is sufficient to perform the lease contract.
(t) “Merchant lessee” means a lessee that is a merchant with respect to goods of the kind
subject to the lease.
(u) “Present value” means the amount as of a date certain of one or more sums payable
in the future, discounted to the date certain. The discount is determined by the interest
rate specified by the parties if the rate was not manifestly unreasonable at the time
the transaction was entered into; otherwise, the discount is determined by a commercially
reasonable rate that takes into account the facts and circumstances of each case at
the time the transaction was entered into.
(v) “Purchase” includes taking by sale, lease, mortgage, security interest, pledge, gift,
or any other voluntary transaction creating an interest in goods.
(w) “Sublease” means a lease of goods the right to possession and use of which was acquired
by the lessor as a lessee under an existing lease.
(x) “Supplier” means a person from whom a lessor buys or leases goods to be leased under
a finance lease.
(y) “Supply contract” means a contract under which a lessor buys or leases goods to be
leased.
(z) “Termination” occurs when either party pursuant to a power created by agreement or
law puts an end to the lease contract otherwise than for default.
(2) Other definitions applying to this article and the sections in which they appear are:
“Accessions”. § 2A—310(1).
“Construction mortgage”. § 2A—309(1)(d).
“Encumbrance”. § 2A—309(1)(e).
“Fixtures”. § 2A—309(1)(a).
“Fixture filing”. § 2A—309(1)(b).
“Purchase money lease”. § 2A—309(1)(c).
(3) The following definitions in other articles apply to this article:
“Account”. § 9—102(a)(2).
“Between merchants”. § 2—104(3).
“Buyer”. § 2—103(1)(a).
“Chattel paper”. § 9—102(a)(11).
“Consumer goods”. § 9—102(a)(23).
“Document”. § 9—102(a)(30).
“Entrusting”. § 2—403(3).
“General intangible”. § 9—102(a)(42).
“Instrument”. § 9—102(a)(47).
“Merchant”. § 2—104(1).
“Mortgage”. § 9—102(a)(55).
“Pursuant to commitment”. § 9—102(a)(71).
“Receipt”. § 2—103(1)(c).
“Sale”. § 2—106(1).
“Sale on approval”. § 2—326.
“Sale or return”. § 2—326.
“Seller”. § 2—103(1)(d).
(4) In addition, article 1 contains general definitions and principles of construction
and interpretation applicable throughout this article. (Added 1993, No. 158 (Adj. Sess.), § 10, eff. Jan. 1, 1995; amended 1999, No. 106 (Adj. Sess.), § 10, eff. July 1, 2001; 2007, No. 99 (Adj. Sess.), § 5; 2015, No. 51, § B.6, eff. June 3, 2015; 2025, No. 17, § 3, eff. July 1, 2025.)