2005 Nevada Chapter 104A — Uniform Commercial CodeAdditional Articles
CHAPTER 104A - UNIFORM COMMERCIALCODEADDITIONAL ARTICLES
APPLICABILITY OF LAWS
NRS 104A.010 Applicabilityof and references to Uniform Commercial Code.
NRS 104A.200 Lawapplicable to transactions entered into before January 1, 1990.
ARTICLE 2A
LEASES
Part 1
General Provisions
NRS 104A.2101 Shorttitle.
NRS 104A.2102 Scope.
NRS 104A.2103 Definitionsand index of definitions.
NRS 104A.2104 Leasessubject to other law.
NRS 104A.2105 Territorialapplication of article to goods covered by certificate of title.
NRS 104A.2106 Limitationon power of parties to consumer lease to choose applicable law and judicialforum.
NRS 104A.2107 Waiveror renunciation of claim or right after default.
NRS 104A.2108 Unconscionability.
NRS 104A.2109 Optionto accelerate at will.
Part 2
Formation and Construction of Lease Contract
NRS 104A.2201 Statuteof frauds.
NRS 104A.2202 Finalwritten expression: Parol or extrinsic evidence.
NRS 104A.2203 Sealsinoperative.
NRS 104A.2204 Formationin general.
NRS 104A.2205 Firmoffers.
NRS 104A.2206 Offerand acceptance in formation of lease contract.
NRS 104A.2207 Courseof performance or practical construction. [Repealed.]
NRS 104A.2208 Modification,rescission and waiver.
NRS 104A.2209 Lesseeunder finance lease as beneficiary of supply contract.
NRS 104A.2210 Expresswarranties.
NRS 104A.2211 Warrantiesagainst interference and against infringement; lessees obligation againstinfringement.
NRS 104A.2212 Impliedwarranty of merchantability.
NRS 104A.2213 Impliedwarranty of fitness for particular purpose.
NRS 104A.2214 Exclusionor modification of warranties.
NRS 104A.2215 Cumulationand conflict of warranties express or implied.
NRS 104A.2216 Third-partybeneficiaries of express and implied warranties.
NRS 104A.2217 Identification.
NRS 104A.2218 Insuranceand proceeds.
NRS 104A.2219 Riskof loss.
NRS 104A.2220 Effectof default on risk of loss.
NRS 104A.2221 Casualtyto identified goods.
Part 3
Effect of Lease Contract
NRS 104A.2301 Enforceabilityof lease contract.
NRS 104A.2302 Titleto and possession of goods.
NRS 104A.2303 Alienabilityof partys interest under lease contract or of lessors residual interest ingoods; delegation of performance; transfer of rights.
NRS 104A.2304 Subsequentlease of goods by lessor.
NRS 104A.2305 Saleor sublease of goods by lessee.
NRS 104A.2306 Priorityof certain liens arising by operation of law.
NRS 104A.2307 Priorityof liens arising by attachment or levy on, security interests in and otherclaims to goods.
NRS 104A.2308 Specialrights of creditors.
NRS 104A.2309 Lessorsand lessees rights when goods become fixtures.
NRS 104A.2310 Lessorsand lessees rights when goods become accessions.
NRS 104A.2311 Prioritysubject to subordination.
Part 4
Performance of Lease Contract: Repudiated, Substituted and Excused
NRS 104A.2401 Insecurity:Adequate assurance of performance.
NRS 104A.2402 Anticipatoryrepudiation.
NRS 104A.2403 Retractionof anticipatory repudiation.
NRS 104A.2404 Substitutedperformance.
NRS 104A.2405 Excusedperformance.
NRS 104A.2406 Procedureon excused performance.
NRS 104A.2407 Irrevocablepromises: Finance leases.
Part 5
Default
NRS 104A.2501 Default:Procedure.
NRS 104A.2502 Noticeafter default.
NRS 104A.2503 Modificationor impairment of rights and remedies.
NRS 104A.2504 Liquidationof damages.
NRS 104A.2505 Cancellationand termination, and effect of cancellation, termination, rescission or fraudon rights and remedies.
NRS 104A.2506 Statuteof limitations.
NRS 104A.2507 Proofof market rent: Time and place.
NRS 104A.2508 Lesseesremedies.
NRS 104A.2509 Lesseesrights on improper delivery; rightful rejection.
NRS 104A.2510 Installmentlease contracts: Rejection and default.
NRS 104A.2511 Merchantlessees duties as to rightfully rejected goods.
NRS 104A.2512 Lesseesduties as to rightfully rejected goods.
NRS 104A.2513 Cureby lessor of improper tender or delivery; replacement.
NRS 104A.2514 Waiverof lessees objections.
NRS 104A.2515 Acceptanceof goods.
NRS 104A.2516 Effectof acceptance of goods; notice of default; burden of establishing default afteracceptance; notice of claim or litigation to person answerable over.
NRS 104A.2517 Revocationof acceptance of goods.
NRS 104A.2518 Cover;substitute goods.
NRS 104A.2519 Lesseesdamages for nondelivery, repudiation, default and breach of warranty in regardto accepted goods.
NRS 104A.2520 Lesseesincidental and consequential damages.
NRS 104A.2521 Lesseesright to specific performance or replevin.
NRS 104A.2522 Lesseesright to goods on lessors insolvency.
NRS 104A.2523 Lessorsremedies.
NRS 104A.2524 Lessorsright to identify goods to lease contract.
NRS 104A.2525 Lessorsright to possession of goods.
NRS 104A.2526 Lessorsstoppage of delivery in transit or otherwise.
NRS 104A.2527 Lessorsrights to dispose of goods.
NRS 104A.2528 Lessorsdamages for nonacceptance, failure to pay, repudiation or other default.
NRS 104A.2529 Lessorsaction for the rent.
NRS 104A.2530 Lessorsincidental damages.
NRS 104A.2531 Standingto sue third parties for injury to goods.
NRS 104A.2532 Lessorsrights to residual interest.
ARTICLE 4A
FUNDS TRANSFERS
Part 1
Subject Matter and Definitions
NRS 104A.4101 Shorttitle.
NRS 104A.4102 Subjectmatter.
NRS 104A.4103 Paymentorder: Definitions.
NRS 104A.4104 Fundstransfer: Definitions.
NRS 104A.4105 Otherdefinitions.
NRS 104A.4106 Timepayment order is received.
NRS 104A.4107 FederalReserve regulations and operating circulars.
NRS 104A.4108 Exclusionof consumer transactions governed by federal law.
Part 2
Issue and Acceptance of Payment Order
NRS 104A.4201 Securityprocedure.
NRS 104A.4202 Authorizedand verified payment orders.
NRS 104A.4203 Unenforceabilityof certain verified payment orders.
NRS 104A.4204 Refundof payment and duty of customer to report with respect to unauthorized paymentorder.
NRS 104A.4205 Erroneouspayment orders.
NRS 104A.4206 Transmissionof payment order through funds-transfer or other communication system.
NRS 104A.4207 Misdescriptionof beneficiary.
NRS 104A.4208 Misdescriptionof intermediary bank or beneficiarys bank.
NRS 104A.4209 Acceptanceof payment order.
NRS 104A.4210 Rejectionof payment order.
NRS 104A.4211 Cancellationand amendment of payment order.
NRS 104A.4212 Liabilityand duty of receiving bank regarding unaccepted payment order.
Part 3
Execution of Senders Payment Order by Receiving Bank
NRS 104A.4301 Executionand execution date.
NRS 104A.4302 Obligationof receiving bank in execution of payment order.
NRS 104A.4303 Erroneousexecution of payment order.
NRS 104A.4304 Dutyof sender to report erroneously executed payment order.
NRS 104A.4305 Liabilityfor late or improper execution or failure to execute payment order.
Part 4
Payment
NRS 104A.4401 Paymentdate.
NRS 104A.4402 Obligationof sender to pay receiving bank.
NRS 104A.4403 Paymentby sender to receiving bank.
NRS 104A.4404 Obligationof beneficiarys bank to pay and give notice to beneficiary.
NRS 104A.4405 Paymentby beneficiarys bank to beneficiary.
NRS 104A.4406 Paymentby originator to beneficiary; discharge of underlying obligation.
Part 5
Miscellaneous Provisions
NRS 104A.4501 Variationby agreement and effect of funds-transfer system rule.
NRS 104A.4502 Creditorsprocess served on receiving bank; setoff by beneficiarys bank.
NRS 104A.4503 Injunctionor restraining order with respect to funds transfer.
NRS 104A.4504 Orderin which items and payment orders may be charged to account; order of withdrawalsfrom account.
NRS 104A.4505 Preclusionof objection to debit of customers account.
NRS 104A.4506 Rateof interest.
NRS 104A.4507 Choiceof law.
_________
APPLICABILITY OF LAWS
NRS
1. The provisions of Article 1 of the UniformCommercial Code apply to this chapter as if the provisions of this chapter wereincluded in chapter 104 of NRS.
2. Unless limited by specific statute, a reference inNRS to the Uniform Commercial Code or to chapter104 of NRS shall be deemed to refer to chapter104 of NRS together with this chapter.
(Added to NRS by 1989, 340; A 1989, 721;
NRS
(Added to NRS by 1989, 340; A 1989, 721)
ARTICLE 2A
LEASES
Part 1
General Provisions
NRS
(Added to NRS by 1989, 340; A 1989, 721)
NRS
(Added to NRS by 1989, 340; A 1989, 721)
NRS
1. In this Article unless the context otherwiserequires:
(a) Buyer in ordinary course of business means aperson who, in good faith and without knowledge that the sale to him is inviolation of the ownership, rights or security interest or leasehold interestof a third party in the goods buys in ordinary course from a person in thebusiness 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 orunsecured credit and includes acquiring goods or documents of title under apreexisting contract for sale but does not include a transfer in bulk or as securityfor or in total or partial satisfaction of a money debt.
(b) Cancellation occurs when either party puts an endto the lease contract for default by the other party.
(c) Commercial unit means such a unit of goods as bycommercial usage is a single whole for purposes of lease and division of whichmaterially impairs its character or value on the market or in use. A commercialunit may be a single Article, as a machine, or a set of Articles, as a suite offurniture or a line of machinery, or a quantity, as a gross or carload, or anyother unit treated in use or in the relevant market as a single whole.
(d) Conforming goods or performance under a leasecontract means goods or performance that are in accordance with the obligationsunder the lease contract.
(e) Consumer lease means a lease that a lessorregularly engaged in the business of leasing or selling makes to a lessee whois a natural person and who takes under the lease primarily for a personal,family or household purpose.
(f) Fault means wrongful act, omission, breach ordefault.
(g) Finance lease means a lease with respect towhich:
(1) The lessor does not select, manufacture orsupply the goods;
(2) The lessor acquires the goods or the rightto possession and use of the goods in connection with the lease; and
(3) One of the following occurs:
(I) The lessee receives a copy of thecontract by which the lessor acquired the goods or the right to possession anduse of the goods before signing the lease contract;
(II) The lessees approval of the contractby which the lessor acquired the goods or the right to possession and use of thegoods is a condition to effectiveness of the lease contract;
(III) The lessee, before signing the leasecontract, receives an accurate and complete statement designating the promisesand warranties, and any disclaimers of warranties, limitations or modificationsof remedies, or liquidated damages, including those of a third party, such asthe manufacturer of the goods, provided to the lessor by the person supplyingthe goods in connection with or as part of the contract by which the lessoracquired the goods or the right to possession and use of the goods; or
(IV) If the lease is not a consumer lease,the lessor, before the lessee signs the lease contract, informs the lessee inwriting of the identity of the person supplying the goods to the lessor, unlessthe lessee has selected that person and directed the lessor to acquire thegoods or the right to possession and use of the goods from that person, thatthe lessee is entitled under this Article to the promises and warranties,including those of any third party, provided to the lessor by the personsupplying the goods in connection with or as part of the contract by which thelessor acquired the goods or the right to possession and use of the goods, andthat the lessee may communicate with the person supplying the goods to thelessor and receive an accurate and complete statement of those promises andwarranties, including any disclaimers and limitations of them or of remedies.
(h) Goods means all things that are movable at thetime of identification to the lease contract, or are fixtures (
(i) Installment lease contract means a lease contractthat authorizes or requires the delivery of goods in separate lots to beseparately accepted, even though the lease contract contains a clause eachdelivery is a separate lease or its equivalent.
(j) Lease means a transfer of the right to possessionand use of goods for a term in return for consideration, but a sale, includinga sale on approval or a sale or return, or retention or creation of a securityinterest is not a lease. Unless the context clearly indicates otherwise, theterm includes a sublease.
(k) Lease agreement means the bargain, with respectto the lease, of the lessor and the lessee in fact as found in their languageor by implication from other circumstances including course of dealing or usageof trade or course of performance as provided in this Article. Unless thecontext clearly indicates otherwise, the term includes a sublease agreement.
(l) Lease contract means the total legal obligationthat results from the lease agreement as affected by this Article and any otherapplicable rules of law. Unless the context clearly indicates otherwise, theterm includes a sublease contract.
(m) Leasehold interest means the interest of thelessor or the lessee under a lease contract.
(n) Lessee means a person who acquires the right topossession and use of goods under a lease. Unless the context clearly indicatesotherwise, the term includes a sublessee.
(o) Lessee in ordinary course of business means aperson who in good faith and without knowledge that the lease to him is inviolation of the ownership rights or security interest or leasehold interest ofa third party in the goods leases in ordinary course from a person in thebusiness of selling or leasing goods of that kind but does not include apawnbroker. Leasing may be for cash or by exchange of other property or onsecured or unsecured credit and includes acquiring goods or documents of titleunder a preexisting lease contract but does not include a transfer in bulk oras security for or in total or partial satisfaction of a money debt.
(p) Lessor means a person who transfers the right topossession and use of goods under a lease. Unless the context clearly indicatesotherwise, the term includes a sublessor.
(q) Lessors residual interest means the lessorsinterest in the goods after expiration, termination or cancellation of thelease contract.
(r) Lien means a charge against or interest in goodsto secure payment of a debt or performance of an obligation, but the term doesnot include a security interest.
(s) Lot means a parcel or a single Article that isthe subject matter of a separate lease or delivery, whether or not it issufficient to perform the lease contract.
(t) Merchant lessee means a lessee that is a merchantwith respect to goods of the kind subject to the lease.
(u) Present value means the amount as of a datecertain of one or more sums payable in the future, discounted to the datecertain. The discount is determined by the interest rate specified by theparties if the rate was not manifestly unreasonable at the time the transactionwas entered into; otherwise, the discount is determined by a commerciallyreasonable rate that takes into account the facts and circumstances of eachcase at the time the transaction was entered into.
(v) Purchase includes taking by sale, lease,mortgage, security interest, pledge, gift or any other voluntary transactioncreating an interest in goods.
(w) Sublease means a lease of goods the right topossession and use of which was acquired by the lessor as a lessee under anexisting lease.
(x) Supplier means a person from whom a lessor buysor leases goods to be leased under a finance lease.
(y) Supply contract means a contract under which alessor buys or leases goods to be leased.
(z) Termination occurs when either party pursuant toa power created by agreement or law puts an end to the lease contract otherwisethan for default.
2. Other definitions applying to this Article and thesections in which they appear are:
Accessions.
Construction mortgage.
Encumbrance.
Fixtures.
Fixture filing.
Purchase money lease.
3. The following definitions in other Articles applyto this Article:
Account.
Between merchants.
Buyer.
Chattel paper.
Consumer goods.
Document.
Entrusting.
General intangible.
Instrument.
Merchant.
Mortgage.
Pursuant to commitment.
Receipt.
Sale.
Sale on approval.
Sale or return.
Seller.
4. In addition, Article 1 contains general definitionsand principles of construction and interpretation applicable throughout thisArticle.
(Added to NRS by 1989, 340; A 1989, 721; 1991, 413;
NRS
1. A lease, although subject to this Article, is alsosubject to any applicable:
(a) Certificate of title statute of this State,including any applicable provision of chapters 482,488 and 489of NRS;
(b) Certificate of title statute of anotherjurisdiction (NRS 104A.2105); or
(c) Consumer protection statute of this State,including any applicable provision of NRS97.297, 97.299,
2. In case of conflict between this Article, otherthan NRS 104A.2105, subsection 3 of
3. Failure to comply with an applicable law has onlythe effect specified therein.
(Added to NRS by 1989, 343; A 1989, 721; 1991, 416)
NRS
1. Surrender of the certificate; or
2. Four months after the goods are removed from thatjurisdiction,
andthereafter until a new certificate of title is issued by another jurisdiction.
(Added to NRS by 1989, 343; A 1989, 721)
NRS
1. If the law chosen by the parties to a consumerlease is that of a jurisdiction other than a jurisdiction in which the lesseeresides at the time the lease agreement becomes enforceable or within 30 daysthereafter or in which the goods are to be used, the choice is not enforceable.
2. If the judicial forum chosen by the parties to aconsumer lease is a forum that would not otherwise have jurisdiction over thelessee, the choice is not enforceable.
(Added to NRS by 1989, 343; A 1989, 721)
NRS
(Added to NRS by 1989, 344; A 1989, 721)
NRS
1. If the court as a matter of law finds a leasecontract or any clause of a lease contract to have been unconscionable at thetime it was made the court may refuse to enforce the lease contract, or it mayenforce the remainder of the lease contract without the unconscionable clause,or it may so limit the application of any unconscionable clause as to avoid anyunconscionable result.
2. With respect to a consumer lease, if the court as amatter of law finds that a lease contract or any clause of a lease contract hasbeen induced by unconscionable conduct or that unconscionable conduct hasoccurred in the collection of a claim arising from a lease contract, the courtmay grant appropriate relief.
3. Before making a finding of unconscionability undersubsection 1 or 2, the court, on its own motion or that of a party, shallafford the parties a reasonable opportunity to present evidence as to thesetting, purpose and effect of the lease contract or a clause thereof, or ofthe conduct.
4. In an action in which the lessee claimsunconscionability with respect to a consumer lease:
(a) If the court finds unconscionability undersubsection 1 or 2, the court shall award reasonable attorneys fees to thelessee.
(b) If the court does not find unconscionability andthe lessee claiming unconscionability has brought or maintained an action heknew to be groundless, the court shall award reasonable attorneys fees to theparty against whom the claim is made.
(c) In determining attorneys fees, the amount of therecovery on behalf of the claimant under subsections 1 and 2 is notcontrolling.
(Added to NRS by 1989, 344; A 1989, 721)
NRS
1. A term providing that one party or his successor ininterest may accelerate payment or performance or require collateral oradditional collateral at will or when he deems himself insecure or in wordsof similar import must be construed to mean that he has power to do so only ifhe in good faith believes that the prospect of payment or performance isimpaired.
2. With respect to a consumer lease, the burden ofestablishing good faith under subsection 1 is on the party who exercised thepower; otherwise the burden of establishing lack of good faith is on the partyagainst whom the power has been exercised.
(Added to NRS by 1989, 344; A 1989, 721)
Part 2
Formation and Construction of Lease Contract
NRS
1. A lease contract is not enforceable by way ofaction or defense unless:
(a) The total payments to be made under the leasecontract, excluding payments for options to renew or buy, are less than $1,000;or
(b) There is a writing, signed by the party againstwhom enforcement is sought or by that partys authorized agent, sufficient toindicate that a lease contract has been made between the parties and todescribe the goods leased and the lease term.
2. Any description of leased goods or of the leaseterm is sufficient and satisfies paragraph (b) of subsection 1, whether or notit is specific, if it reasonably identifies what is described.
3. A writing is not insufficient because it omits orincorrectly states a term agreed upon, but the lease contract is notenforceable under paragraph (b) of subsection 1 beyond the lease term and thequantity of goods shown in the writing.
4. A lease contract that does not satisfy therequirements of subsection 1, but which is valid in other respects, isenforceable:
(a) If the goods are to be specially manufactured orobtained for the lessee and are not suitable for lease or sale to others in theordinary course of the lessors business, and the lessor, before notice ofrepudiation is received and under circumstances that reasonably indicate thatthe goods are for the lessee, has made either a substantial beginning of theirmanufacture or commitments for their procurement;
(b) If the party against whom enforcement is soughtadmits in that partys pleading, testimony or otherwise in court that a leasecontract was made, but the lease contract is not enforceable under thisprovision beyond the quantity of goods admitted; or
(c) With respect to goods that have been received andaccepted by the lessee.
5. The lease term under a lease contract referred toin subsection 4 is:
(a) If there is a writing signed by the party againstwhom enforcement is sought or by that partys authorized agent specifying thelease term, the term so specified;
(b) If the party against whom enforcement is soughtadmits in that partys pleading, testimony or otherwise in court a lease term,the term so admitted; or
(c) A reasonable lease term.
(Added to NRS by 1989, 344; A 1989, 721)
NRS
1. By course of dealing or usage of trade or by courseof performance; and
2. By evidence of consistent additional terms,
unless thecourt finds the writing to have been intended also as a complete and exclusivestatement of the terms of the agreement.
(Added to NRS by 1989, 345; A 1989, 721)
NRS
(Added to NRS by 1989, 345; A 1989, 721)
NRS
1. A lease contract may be made in any mannersufficient to show agreement, including conduct by both parties whichrecognizes the existence of a lease contract.
2. An agreement sufficient to constitute a leasecontract may be found although the moment of its making is undetermined.
3. Although one or more terms are left open, a leasecontract does not fail for indefiniteness if the parties have intended to makea lease contract and there is a reasonably certain basis for giving anappropriate remedy.
(Added to NRS by 1989, 345; A 1989, 721)
NRS
(Added to NRS by 1989, 346; A 1989, 721)
NRS
1. Unless otherwise unambiguously indicated by thelanguage or circumstances, an offer to make a lease contract must be construedas inviting acceptance in any manner and by any medium reasonable in thecircumstances.
2. If the beginning of a requested performance is areasonable mode of acceptance, an offeror who is not notified of acceptancewithin a reasonable time may treat the offer as having lapsed beforeacceptance.
(Added to NRS by 1989, 346; A 1989, 721)
NRS
NRS
1. An agreement modifying a lease contract needs noconsideration to be binding.
2. A signed lease agreement that excludes modificationor rescission except by a signed writing may not be otherwise modified or rescinded,but, except as between merchants, such a requirement on a form supplied by amerchant must be separately signed by the other party.
3. Although an attempt at modification or rescissiondoes not satisfy the requirements of subsection 2, it may operate as a waiver.
4. A party who has made a waiver affecting anexecutory portion of a lease contract may retract the waiver by reasonablenotification received by the other party that strict performance will berequired of any term waived, unless the retraction would be unjust in view of amaterial change of position in reliance on the waiver.
(Added to NRS by 1989, 346; A 1989, 721)
NRS
1. The benefit of the suppliers promises to thelessor under the supply contract and of all warranties, whether express orimplied, including those of any third party provided in connection with or aspart of the supply contract, extends to the lessee to the extent of thelessees leasehold interest under a finance lease related to the supplycontract, but subject to the terms of the warranty and of the supply contractand all defenses or claims arising therefrom.
2. The extension of the benefit of a supplierspromises and of warranties to the lessee (subsection 1) does not:
(a) Modify the rights and obligations of the parties tothe supply contract, whether arising therefrom or otherwise; or
(b) Impose any duty or liability under the supplycontract on the lessee.
3. Any modification or rescission of the supplycontract by the supplier and the lessor is effective between the supplier andthe lessee unless, before the modification or rescission, the supplier has receivednotice that the lessee has entered into a finance lease related to the supplycontract. If the modification or rescission is effective between the supplierand the lessee, the lessor is deemed to have assumed, in addition to hisobligations to the lessee under the lease contract, promises of the supplier tothe lessor and warranties that were so modified or rescinded as they existedand were available to the lessee before modification or rescission.
4. In addition to the extension of the benefit of thesuppliers promises and of warranties to the lessee under subsection 1, thelessee retains all rights that he may have against the supplier which arisefrom an agreement between him and the supplier or under other law.
(Added to NRS by 1989, 346; A 1989, 721; 1991, 417)
NRS
1. Express warranties by the lessor are created asfollows:
(a) Any affirmation of fact or promise made by thelessor to the lessee which relates to the goods and becomes part of the basisof the bargain creates an express warranty that the goods will conform to theaffirmation or promise.
(b) Any description of the goods which is made part ofthe basis of the bargain creates an express warranty that the goods willconform to the description.
(c) Any sample or model that is made part of the basisof the bargain creates an express warranty that the whole of the goods willconform to the sample or model.
2. It is not necessary to the creation of an expresswarranty that the lessor use formal words, such as warrant or guarantee, orthat the lessor have a specific intention to make a warranty, but anaffirmation merely of the value of the goods or a statement purporting to bemerely the lessors opinion or commendation of the goods does not create awarranty.
(Added to NRS by 1989, 347; A 1989, 721)
NRS
1. There is in a lease contract a warranty that forthe lease term no person holds a claim to or interest in the goods that arosefrom an act or omission of the lessor, other than a claim by way ofinfringement or the like, which will interfere with the lessees enjoyment ofits leasehold interest.
2. Except in a finance lease there is in a leasecontract by a lessor who is a merchant regularly dealing in goods of the kind awarranty that the goods are delivered free of the rightful claim of any personby way of infringement or the like.
3. A lessee who furnishes specifications to a lessoror a supplier shall hold the lessor and the supplier harmless against any claimby way of infringement or the like that arises out of compliance with thespecifications.
(Added to NRS by 1989, 347; A 1989, 721)
NRS
1. Except in a finance lease, a warranty that thegoods will be merchantable is implied in a lease contract if the lessor is amerchant with respect to goods of that kind.
2. Goods to be merchantable must be at least such as:
(a) Pass without objection in the trade under thedescription in the lease agreement;
(b) In the case of fungible goods, are of fair averagequality within the description;
(c) Are fit for the ordinary purposes for which goodsof that type are used;
(d) Run, within the variation permitted by the leaseagreement, of even kind, quality and quantity within each unit and among allunits involved;
(e) Are adequately contained, packaged and labeled asthe lease agreement may require; and
(f) Conform to any promises or affirmations of factmade on the container or label.
3. Other implied warranties may arise from course ofdealing or usage of trade.
(Added to NRS by 1989, 347; A 1989, 721)
NRS
(Added to NRS by 1989, 348; A 1989, 721)
NRS
1. Words or conduct relevant to the creation of anexpress warranty and words or conduct tending to negate or limit a warrantymust be construed wherever reasonable as consistent with each other; but, subjectto the provisions of NRS 104A.2202 onparol or extrinsic evidence, negation or limitation is inoperative to theextent that the construction is unreasonable.
2. Subject to subsection 3, to exclude or modify theimplied warranty of merchantability or any part of it the language must mentionmerchantability, be by a writing and be conspicuous. Subject to subsection 3,to exclude or modify any implied warranty of fitness the exclusion must be by awriting and be conspicuous. Language to exclude all implied warranties offitness is sufficient if it is in writing, is conspicuous and states, forexample, There is no warranty that the goods will be fit for a particularpurpose.
3. Notwithstanding subsection 2, but subject tosubsection 4:
(a) Unless the circumstances indicate otherwise, allimplied warranties are excluded by expressions like as is, or with allfaults, or by other language that in common understanding calls the lesseesattention to the exclusion of warranties and makes plain that there is noimplied warranty, if in writing and conspicuous;
(b) If the lessee before entering into the leasecontract has examined the goods or the sample or model as fully as desired orhas refused to examine the goods, there is no implied warranty with regard todefects that an examination ought in the circumstances to have revealed; and
(c) An implied warranty may also be excluded ormodified by course of dealing, course of performance or usage of trade.
4. To exclude or modify a warranty againstinterference or against infringement (NRS104A.2211) or any part of it, the language must be specific, be by a writingand be conspicuous, unless the circumstances, including course of performance,course of dealing or usage of trade, give the lessee reason to know that thegoods are being leased subject to a claim or interest of any person.
(Added to NRS by 1989, 348; A 1989, 721)
NRS
1. Exact or technical specifications displace aninconsistent sample or model or general language of description.
2. A sample from an existing bulk displaces inconsistentgeneral language of description.
3. Express warranties displace inconsistent impliedwarranties other than an implied warranty of fitness for a particular purpose.
(Added to NRS by 1989, 349; A 1989, 721)
NRS
(Added to NRS by 1989, 349; A 1989, 721)
NRS
1. When the lease contract is made if the leasecontract is for a lease of goods that are existing and identified;
2. When the goods are shipped, marked or otherwisedesignated by the lessor as goods to which the lease contract refers, if thelease contract is for a lease of goods that are not existing and identified; or
3. When the young are conceived, if the lease contractis for a lease of unborn young of animals.
(Added to NRS by 1989, 349; A 1989, 721)
NRS
1. A lessee obtains an insurable interest whenexisting goods are identified to the lease contract even though the goodsidentified are nonconforming and the lessee has an option to reject them.
2. If a lessee has an insurable interest only byreason of the lessors identification of the goods, the lessor, until defaultor insolvency or notification to the lessee that identification is final, maysubstitute other goods for those identified.
3. Notwithstanding a lessees insurable interest undersubsections 1 and 2, the lessor retains an insurable interest until an optionto buy has been exercised by the lessee and risk of loss has passed to thelessee.
4. Nothing in this section impairs any insurableinterest recognized under any other statute or rule of law.
5. The parties by agreement may determine that one ormore parties have an obligation to obtain and pay for insurance covering thegoods and by agreement may determine the beneficiary of the proceeds of theinsurance.
(Added to NRS by 1989, 349; A 1989, 721)
1. Except in the case of a finance lease, risk of lossis retained by the lessor and does not pass to the lessee. In the case of afinance lease, risk of loss passes to the lessee.
2. Subject to the provisions of this Article on theeffect of default on risk of loss (NRS104A.2220), if risk of loss is to pass to the lessee and the time ofpassage is not stated, the following rules apply:
(a) If the lease contract requires or authorizes thegoods to be shipped by carrier and it does not require delivery at a particulardestination, the risk of loss passes to the lessee when the goods are dulydelivered to the carrier, but if it does require delivery at a particulardestination and the goods are there duly tendered while in the possession ofthe carrier, the risk of loss passes to the lessee when the goods are thereduly so tendered as to enable the lessee to take delivery.
(b) If the goods are held by a bailee to be deliveredwithout being moved, the risk of loss passes to the lessee on acknowledgment bythe bailee of the lessees right to possession of the goods.
(c) In any case not within paragraph (a) or (b), therisk of loss passes to the lessee on the lessees receipt of the goods if thelessor, or, in the case of a finance lease, the supplier, is a merchant;otherwise the risk passes to the lessee on tender of delivery.
(Added to NRS by 1989, 349; A 1989, 721)
NRS
1. Where risk of loss is to pass to the lessee and thetime of passage is not stated:
(a) If a tender or delivery of goods so fails toconform to the lease contract as to give a right of rejection, the risk of theirloss remains with the lessor, or, in the case of a finance lease, the supplier,until cure or acceptance.
(b) If the lessee rightfully revokes acceptance, he, tothe extent of any deficiency in his effective insurance coverage, may treat therisk of loss as having remained with the lessor from the beginning.
2. Whether or not risk of loss is to pass to thelessee, if the lessee as to conforming goods already identified to a leasecontract repudiates or is otherwise in default under the lease contract, thelessor, or, in the case of a finance lease, the supplier, to the extent of anydeficiency in his effective insurance coverage may treat the risk of loss asresting on the lessee for a commercially reasonable time.
(Added to NRS by 1989, 350; A 1989, 721)
NRS
1. If the loss is total, the lease contract isavoided; and
2. If the loss is partial or the goods have sodeteriorated as to no longer conform to the lease contract, the lessee maynevertheless demand inspection and at his option either treat the leasecontract as avoided or, except in a finance lease that is not a consumer lease,accept the goods with due allowance from the rent payable for the balance ofthe lease term for the deterioration or the deficiency in quantity but withoutfurther right against the lessor.
(Added to NRS by 1989, 350; A 1989, 721)
Part 3
Effect of Lease Contract
NRS
(Added to NRS by 1989, 350; A 1989, 721)
NRS
(Added to NRS by 1989, 350; A 1989, 721)
NRS
1. As used in this section, creation of a securityinterest includes the sale of a lease contract that is subject to Article 9,Secured Transactions, by reason of paragraph (c) of subsection 1 of
2. Except as otherwise provided in subsection 3 and
(a) Prohibits the voluntary or involuntary transfer,including a transfer by sale, sublease, creation or enforcement of a securityinterest, or attachment, levy, or other judicial process, of an interest of aparty under the lease contract or of the lessors residual interest in thegoods; or
(b) Makes such a transfer an event of default,
gives riseto the rights and remedies provided in subsection 4, but a transfer that isprohibited or is an event of default under the lease agreement is otherwiseeffective.
3. A provision in a lease agreement which prohibits atransfer of a right to damages for default with respect to the whole leasecontract or of a right to payment arising out of the transferors dueperformance of his entire obligation, or makes such a transfer an event ofdefault, is not enforceable, and such a transfer is not a transfer thatmaterially impairs the prospect of obtaining return performance by, materiallychanges the duty of, or materially increases the burden or risk imposed on, theother party to the lease contract within the purview of subsection 4.
4. Except as otherwise provided in subsection 3 and
(a) If a transfer is made which is made an event ofdefault under a lease agreement, the party to the lease contract not making thetransfer, unless that party waives the default or otherwise agrees, has therights and remedies described in subsection 2 of
(b) If paragraph (a) is not applicable and if atransfer is made that is prohibited under a lease agreement or materiallyimpairs the prospect of obtaining return performance by, materially changes theduty of, or materially increases the burden or risk imposed on, the other partyto the lease contract, unless the party not making the transfer agrees at anytime to the transfer in the lease contract or otherwise, then, except aslimited by contract, the transferor is liable to the party not making thetransfer for damages caused by the transfer to the extent that the damagescould not reasonably be prevented by the party not making the transfer and acourt having jurisdiction may grant other appropriate relief, includingcancellation of the lease contract or an injunction against the transfer.
5. A transfer of the lease or of all my rightsunder the lease, or a transfer in similar general terms, is a transfer ofrights, and, unless the language or the circumstances, as in a transfer forsecurity, indicate the contrary, the transfer is a delegation of duties by thetransferor to the transferee. Acceptance by the transferee constitutes apromise by him to perform those duties. The promise is enforceable by eitherthe transferor or the other party to the lease contract.
6. Unless otherwise agreed by the lessor and thelessee, a delegation of performance does not relieve the transferor as againstthe other party of any duty to perform or of any liability for default.
7. In a consumer lease, to prohibit the transfer of aninterest of a party under the lease contract or to make a transfer an event ofdefault, the language must be specific, by a writing, and conspicuous.
(Added to NRS by 1989, 351; A 1989, 721; 1991, 417;
NRS
1. Subject to the provisions of
(a) The lessors transferor was deceived as to theidentity of the lessor;
(b) The delivery was in exchange for a check which islater dishonored;
(c) It was agreed that the transaction was to be acash sale; or
(d) The delivery was procured through fraud punishableas larcenous under the criminal law.
2. A subsequent lessee in the ordinary course ofbusiness from a lessor who is a merchant dealing in goods of that kind to whomthe goods were entrusted by the existing lessee from that lessor before theinterest of the subsequent lessee became enforceable against the lessorobtains, to the extent of the leasehold interest transferred, all of thelessors and the existing lessees rights to the goods, and takes free of theexisting lease contract.
3. A subsequent lessee from the lessor of goods thatare subject to an existing lease contract and are covered by a certificate oftitle issued under a statute of this State or of another jurisdiction takes nogreater rights than those provided both by this section and by the certificateof title statute.
(Added to NRS by 1989, 351; A 1989, 721)
NRS
1. Subject to the provisions of
(a) The lessor was deceived as to the identity of thelessee;
(b) The delivery was in exchange for a check which islater dishonored; or
(c) The delivery was procured through fraud punishableas larcenous under the criminal law.
2. A buyer in the ordinary course of business or asublessee in the ordinary course of business from a lessee who is a merchantdealing in goods of that kind to whom the goods were entrusted by the lessorobtains, to the extent of the interest transferred, all of the lessors andlessees rights to the goods, and takes free of the existing lease contract.
3. A buyer or sublessee from the lessee of goods thatare subject to an existing lease contract and are covered by a certificate oftitle issued under a statute of this State or of another jurisdiction takes nogreater rights than those provided both by this section and by the certificateof title statute.
(Added to NRS by 1989, 352; A 1989, 721)
NRS
(Added to NRS by 1989, 352; A 1989, 721)
NRS
1. Except as otherwise provided in
2. Except as otherwise provided in subsection 3 and inNRS 104A.2306 and
3. Except as otherwise provided in
(Added to NRS by 1989, 352; A 1989, 721; 1991, 419;
NRS
1. A creditor of a lessor in possession of goodssubject to a lease contract may treat the lease contract as void if as againstthe creditor retention of possession by the lessor is fraudulent under anystatute or rule of law, but retention of possession in good faith and currentcourse of trade by the lessor for a commercially reasonable time after thelease contract becomes enforceable is not fraudulent.
2. Nothing in this article impairs the rights ofcreditors of a lessor if the lease contract:
(a) Becomes enforceable, not in current course of tradebut in satisfaction of or as security for a preexisting claim for money,security or the like; and
(b) Is made under circumstances which under any statuteor rule of law apart from this article would constitute the transaction afraudulent transfer or voidable preference.
3. A creditor of a seller may treat a sale or anidentification of goods to a contract for sale as void if as against thecreditor retention of possession by the seller is fraudulent under any statuteor rule of law, but retention of possession of the goods pursuant to a leasecontract entered into by the seller as lessee and the buyer as lessor inconnection with the sale or identification of the goods is not fraudulent ifthe buyer bought for value and in good faith.
(Added to NRS by 1989, 353; A 1989, 721)
NRS
1. In this section:
(a) Goods are fixtures when they become so related toparticular real estate that an interest in them arises under real estate law;
(b) A fixture filing is the filing, in the officewhere a mortgage on the real estate would be filed or recorded, of a financingstatement covering goods that are or are to become fixtures and conforming tothe requirements of subsections 1 and 2 of NRS104.9502;
(c) A lease is a purchase money lease unless thelessee has possession or use of the goods or the right to possession or use ofthe goods before the lease agreement is enforceable;
(d) A mortgage is a construction mortgage to theextent it secures an obligation incurred for the construction of an improvementon land including the acquisition cost of the land, if the recorded writing soindicates; and
(e) Encumbrance includes real estate mortgages andother liens on real estate and all other rights in real estate that are notownership interests.
2. Under this Article a lease may be of goods that arefixtures or may continue in goods that become fixtures, but no lease existsunder this Article of ordinary building materials incorporated into an improvementon land.
3. This Article does not prevent creation of a leaseof fixtures pursuant to real estate law.
4. The perfected interest of a lessor of fixtures haspriority over a conflicting interest of an encumbrancer or owner of the realestate if:
(a) The lease is a purchase money lease, theconflicting interest of the encumbrancer or owner arises before the goodsbecome fixtures, the interest of the lessor is perfected by a fixture filingbefore the goods become fixtures or within 10 days thereafter, and the lesseehas an interest of record in the real estate or is in possession of the realestate; or
(b) The interest of the lessor is perfected by afixture filing before the interest of the encumbrancer or owner is of record,the lessors interest has priority over any conflicting interest of apredecessor in title of the encumbrancer or owner, and the lessee has aninterest of record in the real estate or is in possession of the real estate.
5. The interest of a lessor of fixtures, whether ornot perfected, has priority over the conflicting interest of an encumbrancer orowner of the real estate if:
(a) The fixtures are readily removable factory oroffice machines, readily removable equipment that is not primarily used orleased for use in the operation of the real estate, or readily removablereplacements of domestic appliances that are goods subject to a consumer lease,and before the goods become fixtures the lease contract is enforceable;
(b) The conflicting interest is a lien on the real estateobtained by legal or equitable proceedings after the lease contract isenforceable;
(c) The encumbrancer or owner has consented in writingto the lease or has disclaimed an interest in the goods as fixtures; or
(d) The lessee has a right to remove the goods asagainst the encumbrancer or owner. If the lessees right to remove terminates,the priority of the interest of the lessor continues for a reasonable time.
6. Notwithstanding paragraph (a) of subsection 4 butotherwise subject to subsections 4 and 5, the interest of a lessor of fixtures,including his residual interest, is subordinate to the conflicting interest ofan encumbrancer of the real estate under a construction mortgage recordedbefore the goods become fixtures if the goods become fixtures before thecompletion of the construction. To the extent given to refinance a constructionmortgage, the conflicting interest of an encumbrancer of the real estate undera mortgage has this priority to the same extent as the encumbrancer of the realestate under the construction mortgage.
7. In cases not within the preceding subsections,priority between the interest of a lessor of fixtures, including his residualinterest, and the conflicting interest of an encumbrancer or owner of the realestate who is not the lessee is determined by the priority rules governingconflicting interests in real estate.
8. If the interest of a lessor of fixtures, includinghis residual interest, has priority over all conflicting interests of allowners and encumbrancers of the real estate, the lessor or the lessee may:
(a) On default, expiration, termination or cancellationof the lease agreement but subject to the lease agreement and this Article; or
(b) If necessary to enforce his other rights andremedies under this Article,
remove thegoods from the real estate, free and clear of all conflicting interests of allowners and encumbrancers of the real estate, but he must reimburse any encumbranceror owner of the real estate who is not the lessee and who has not otherwiseagreed for the cost of repair of any physical injury, but not for anydiminution in value of the real estate caused by the absence of the goodsremoved or by any necessity of replacing them. A person entitled toreimbursement may refuse permission to remove until the party seeking removalgives adequate security for the performance of this obligation.
9. Even though the lease agreement does not create asecurity interest, the interest of a lessor of fixtures, including his residualinterest, is perfected by filing a financing statement as a fixture filing forleased goods that are or are to become fixtures in accordance with the relevantprovisions of Article 9 on secured transactions.
(Added to NRS by 1989, 353; A 1989, 721; 1991, 420;
NRS
1. Goods are accessions when they are installed inor affixed to other goods.
2. The interest of a lessor or a lessee under a leasecontract entered into before the goods became accessions is superior to allinterests in the whole except as stated in subsection 4.
3. The interest of a lessor or a lessee under a leasecontract entered into at the time or after the goods became accessions issuperior to all subsequently acquired interests in the whole except as statedin subsection 4 but is subordinate to interests in the whole existing at thetime the lease contract was made unless the holders of such interests in thewhole have in writing consented to the lease or disclaimed an interest in thegoods as part of the whole.
4. The interest of a lessor or a lessee under a leasecontract described in subsection 2 or 3 is subordinate to the interest of:
(a) A buyer in the ordinary course of business or alessee in the ordinary course of business of any interest in the whole acquiredafter the goods became accessions; or
(b) A creditor with a security interest in the wholeperfected before the lease contract was made to the extent that the creditormakes subsequent advances without knowledge of the lease contract.
5. When under subsections 2 or 3 and 4 a lessor or alessee of accessions holds an interest that is superior to all interests in thewhole, the lessor or the lessee may:
(a) On default, expiration, termination or cancellationof the lease contract by the other party but subject to the provisions of thelease contract and this Article; or
(b) If necessary to enforce his other rights andremedies under this Article,
remove thegoods from the whole, free and clear of all interests in the whole, but he mustreimburse any holder of an interest in the whole who is not the lessee and whohas not otherwise agreed for the cost of repair of any physical injury but notfor any diminution in value of the whole caused by the absence of the goodsremoved or by any necessity for replacing them. A person entitled toreimbursement may refuse permission to remove until the party seeking removalgives adequate security for the performance of this obligation.
(Added to NRS by 1989, 353; A 1989, 721)
NRS
(Added to NRS by 1991, 422)
Part 4
Performance of Lease Contract: Repudiated, Substituted andExcused
NRS
1. A lease contract imposes an obligation on eachparty that the others expectation of receiving due performance will not beimpaired.
2. If reasonable grounds for insecurity arise withrespect to the performance of either party, the insecure party may demand inwriting adequate assurance of due performance. Until the insecure partyreceives that assurance, if commercially reasonable the insecure party maysuspend any performance for which he has not already received the agreedreturn.
3. A repudiation of the lease contract occurs ifassurance of due performance adequate under the circumstances of the particularcase is not provided to the insecure party within a reasonable time, not toexceed 30 days after receipt of a demand by the other party.
4. Between merchants, the reasonableness of groundsfor insecurity and the adequacy of any assurance offered must be determinedaccording to commercial standards.
5. Acceptance of any nonconforming delivery or paymentdoes not prejudice the aggrieved partys right to demand adequate assurance offuture performance.
(Added to NRS by 1989, 356; A 1989, 721)
NRS
1. For a commercially reasonable time, awaitretraction of repudiation and performance by the repudiating party;
2. Make demand pursuant to
3. Resort to any right or remedy upon default underthe lease contract or this Article, even though the aggrieved party hasnotified the repudiating party that the aggrieved party would await therepudiating partys performance and assurance and has urged retraction.
In addition,whether or not the aggrieved party is pursuing one of the foregoing remedies,the aggrieved party may suspend performance or, if the aggrieved party is thelessor, proceed in accordance with the provisions of this Article on thelessors right to identify goods to the lease contract notwithstanding defaultor to salvage unfinished goods (NRS104A.2524).
(Added to NRS by 1989, 356; A 1989, 721)
NRS
1. Until the repudiating partys next performance isdue, the repudiating party can retract the repudiation unless, since therepudiation, the aggrieved party has cancelled the lease contract or materiallychanged the aggrieved partys position or otherwise indicated that theaggrieved party considers the repudiation final.
2. Retraction may be by any method that clearlyindicates to the aggrieved party that the repudiating party intends to performunder the lease contract and includes any assurance demanded under
3. Retraction reinstates a repudiating partys rightsunder a lease contract with due excuse and allowance to the aggrieved party forany delay occasioned by the repudiation.
(Added to NRS by 1989, 356; A 1989, 721)
NRS
1. If without fault of the lessee, the lessor and thesupplier, the agreed berthing, loading or unloading facilities fail or theagreed type of carrier becomes unavailable or the agreed manner of deliveryotherwise becomes commercially impracticable, but a commercially reasonablesubstitute is available, the substitute performance must be tendered andaccepted.
2. If the agreed means or manner of payment failsbecause of domestic or foreign governmental regulation:
(a) The lessor may withhold or stop delivery or causethe supplier to withhold or stop delivery unless the lessee provides a means ormanner of payment that is commercially a substantial equivalent; and
(b) If delivery has already been taken, payment by themeans or in the manner provided by the regulation discharges the lesseesobligation unless the regulation is discriminatory, oppressive or predatory.
(Added to NRS by 1989, 357; A 1989, 721)
NRS
1. Delay in delivery or nondelivery in whole or inpart by a lessor or a supplier who complies with subsections 2 and 3 is not adefault under the lease contract if performance as agreed has been madeimpracticable by the occurrence of a contingency the nonoccurrence of which wasa basic assumption on which the lease contract was made or by compliance ingood faith with any applicable foreign or domestic governmental regulation ororder, whether or not the regulation or order later proves to be invalid.
2. If the causes mentioned in subsection 1 affect onlypart of the lessors or the suppliers capacity to perform, he shall allocateproduction and deliveries among his customers but at his option may includeregular customers not then under contract for sale or lease as well as his ownrequirements for further manufacture. He may so allocate in any manner that isfair and reasonable.
3. The lessor seasonably shall notify the lessee andin the case of a finance lease the supplier seasonably shall notify the lessorand the lessee, if known, that there will be delay or nondelivery and, ifallocation is required under subsection 2, of the estimated quota thus madeavailable for the lessee.
(Added to NRS by 1989, 357; A 1989, 721)
NRS
1. If the lessee receives notification of a materialor indefinite delay or an allocation justified under
(a) Terminate the lease contract (subsection 2 of
(b) Except in a finance lease that is not a consumerlease, modify the lease contract by accepting the available quota insubstitution, with due allowance from the rent payable for the balance of thelease term for the deficiency but without further right against the lessor.
2. If, after receipt of a notification from the lessorunder NRS 104A.2405, the lessee failsso to modify the lease agreement within a reasonable time not exceeding 30days, the lease contract lapses with respect to any deliveries affected.
(Added to NRS by 1989, 357; A 1989, 721)
NRS
1. In the case of a finance lease that is not aconsumer lease the lessees promises under the lease contract becomeirrevocable and independent upon the lessees acceptance of the goods.
2. A promise that has become irrevocable andindependent under subsection 1:
(a) Is effective and enforceable between the parties,and by or against third parties including assignees of the parties; and
(b) Is not subject to cancellation, termination,modification, repudiation, excuse or substitution without the consent of theparty to whom the promise runs.
3. This section does not affect the validity under anyother law of a covenant in any lease contract making the lessees promisesirrevocable and not dependent upon his acceptance of the goods.
(Added to NRS by 1989, 358; A 1989, 721; 1991, 422)
Part 5
Default
NRS
1. Whether the lessor or the lessee is in defaultunder a lease contract is determined by the lease agreement and this Article.
2. If the lessor or the lessee is in default under thelease contract, the party seeking enforcement has rights and remedies asprovided in this Article and, except as limited by this Article, as provided inthe lease agreement.
3. If the lessor or the lessee is in default under thelease contract, the party seeking enforcement may reduce the partys claim tojudgment, or otherwise enforce the lease contract by self-help or any availablejudicial procedure or nonjudicial procedure, including an administrativeproceeding, arbitration or the like, in accordance with this Article.
4. Except as otherwise provided in subsection 1 of
5. If the lease agreement covers both real propertyand goods, the party seeking enforcement may proceed under this part as to thegoods, or under other applicable law as to both the real property and the goodsin accordance with his rights and remedies in respect of the real property, inwhich case this part does not apply.
(Added to NRS by 1989, 358; A 1989, 721; 1991, 422;
NRS
(Added to NRS by 1989, 358; A 1989, 721)
NRS
1. Except as otherwise provided in this article, thelease agreement may include rights and remedies for default in addition to orin substitution for those provided in this article and may limit or alter themeasure of damages recoverable under this article.
2. Resort to a remedy provided under this article orin the lease agreement is optional unless the remedy is expressly agreed to beexclusive. If circumstances cause an exclusive or limited remedy to fail of itsessential purpose, or provision for an exclusive remedy is unconscionable,remedy may be had as provided in this article.
3. Consequential damages may be liquidated under
4. Rights and remedies on default by the lessor or thelessee with respect to any obligation or promise collateral or ancillary to thelease contract are not impaired by this article.
(Added to NRS by 1989, 358; A 1989, 721; 1991, 422)
NRS
1. Damages payable by either party for default, or anyother act or omission, including indemnity for loss or diminution ofanticipated tax benefits or loss or damage to lessors residual interest, maybe liquidated in the lease agreement but only at an amount or by a formula thatis reasonable in light of the then anticipated harm caused by the default orother act or omission.
2. If the lease agreement provides for liquidation ofdamages, and such provision does not comply with subsection 1, or suchprovision is an exclusive or limited remedy that circumstances cause to fail ofits essential purpose, remedy may be had as provided in the Article.
3. If the lessor justifiably withholds or stopsdelivery of goods because of the lessees default or insolvency (
(a) The amount to which the lessor is entitled byvirtue of terms liquidating the lessors damages in accordance with subsection1; or
(b) In the absence of those terms, 20 percent of thethen present value of the total rent the lessee was obligated to pay for thebalance of the lease term, or, in the case of a consumer lease, the lesser ofsuch amount or $500.
4. A lessees right to restitution under subsection 3is subject to offset to the extent the lessor establishes:
(a) A right to recover damages under the provisions ofthis Article other than subsection 1; and
(b) The amount or value of any benefits received by thelessee directly or indirectly by reason of the lease contract.
(Added to NRS by 1989, 359; A 1989, 721)
NRS
1. On cancellation of the lease contract, allobligations that are still executory on both sides are discharged, but anyright based on prior default or performance survives, and the cancelling partyalso retains any remedy for default of the whole lease contract or anyunperformed balance.
2. On termination of the lease contract, allobligations that are still executory on both sides are discharged but any rightbased on prior default or performance survives.
3. Unless the contrary intention clearly appears,expressions of cancellation, rescission or the like of the lease contractmay not be construed as a renunciation or discharge of any claim in damages foran antecedent default.
4. Rights and remedies for material misrepresentationor fraud include all rights and remedies available under this article fordefault.
5. Neither rescission nor a claim for rescission ofthe lease contract nor rejection or return of the goods may bar or be deemedinconsistent with a claim for damages or other right or remedy.
(Added to NRS by 1989, 359; A 1989, 721)
NRS
1. An action for default under a lease contract,including breach of warranty or indemnity, must be commenced within 4 yearsafter the cause of action accrued. In a lease that is not a consumer lease, bythe original lease contract the parties may reduce the period of limitation tonot less than one year.
2. A cause of action for default accrues when the actor omission on which the default or breach of warranty is based is or shouldhave been discovered by the aggrieved party, or when the default occurs,whichever is later. A cause of action for indemnity accrues when the act oromission on which the claim for indemnity is based is or should have beendiscovered by the indemnified party, whichever is later.
3. If an action commenced within the time limited bysubsection 1 is so terminated as to leave available a remedy by another actionfor the same default or breach of warranty or indemnity, the other action maybe commenced after the expiration of the time limited and within 6 months afterthe termination of the first action unless the termination resulted fromvoluntary discontinuance or from dismissal for failure or neglect to prosecute.
4. This section does not alter the law on tolling ofthe statute of limitations nor does it apply to causes of action that haveaccrued before January 1, 1990.
(Added to NRS by 1989, 359; A 1989, 720, 721)
NRS
1. Damages based on market rent (
2. If evidence of rent for the use of the goodsconcerned for a lease term identical to the remaining lease term of theoriginal lease agreement and prevailing at the times or places described inthis article is not readily available, the rent prevailing within anyreasonable time before or after the time described or at any other place or fora different lease term which in commercial judgment or under usage of tradewould serve as a reasonable substitute for the one described may be used,making any proper allowance for the difference, including the cost oftransporting the goods to or from the other place.
3. Evidence of a relevant rent prevailing at a time orplace or for a lease term other than the one described in this article offeredby one party is not admissible unless and until he has given the other partynotice the court finds sufficient to prevent unfair surprise.
4. If the prevailing rent or value of any goodsregularly leased in any established market is in issue, reports in officialpublications or trade journals or in newspapers or periodicals of generalcirculation published as the reports of that market are admissible in evidence.The circumstances of the preparation of the report may be shown to affect itsweight but not its admissibility.
(Added to NRS by 1989, 360; A 1989, 721)
NRS
1. If a lessor fails to deliver the goods inconformity to the lease contract (NRS104A.2509) or repudiates the lease contract (
(a) Cancel the lease contract (subsection 1 of
(b) Recover so much of the rent and security as hasbeen paid and is just under the circumstances;
(c) Cover and recover damages as to all goods affectedwhether or not they have been identified to the lease contract (
(d) Exercise any other rights or pursue any otherremedies provided in the lease contract.
2. If a lessor fails to deliver the goods inconformity to the lease contract or repudiates the lease contract, the lesseemay also:
(a) If the goods have been identified, recover them (
(b) In a proper case, obtain specific performance orreplevy the goods (NRS 104A.2521).
3. If a lessor is otherwise in default under a leasecontract, the lessee may exercise the rights and pursue the remedies providedin the lease contract, which may include a right to cancel the lease, and insubsection 3 of NRS 104A.2519.
4. If a lessor has breached a warranty, whetherexpress or implied, the lessee may recover damages (subsection 4 of
5. On rightful rejection or justifiable revocation ofacceptance, a lessee has a security interest in goods in the lesseespossession or control for any rent and security that has been paid and anyexpenses reasonably incurred in their inspection, receipt, transportation andcare and custody and may hold those goods and dispose of them in good faith andin a commercially reasonable manner, subject to the provisions of subsection 5of NRS 104A.2527.
6. Subject to the provisions of
(Added to NRS by 1989, 360; A 1989, 721; 1991, 423)
NRS
1. Subject to the provisions of
2. Rejection of goods is ineffective unless it iswithin a reasonable time after tender or delivery of the goods and the lesseeseasonably notifies the lessor.
(Added to NRS by 1989, 361; A 1989, 721)
NRS
1. Under an installment lease contract a lessee mayreject any delivery that is nonconforming if the nonconformity substantiallyimpairs the value of that delivery and cannot be cured or the nonconformity isa defect in the required documents; but if the nonconformity does not fallwithin subsection 2 and the lessor or the supplier gives adequate assurance ofits cure, the lessee must accept that delivery.
2. Whenever nonconformity or default with respect toone or more deliveries substantially impairs the value of the installment leasecontract as a whole there is a default with respect to the whole. But, theaggrieved party reinstates the installment lease contract as a whole if theaggrieved party accepts a nonconforming delivery without seasonably notifyingof cancellation or brings an action with respect only to past deliveries ordemands performance as to future deliveries.
(Added to NRS by 1989, 361; A 1989, 721)
NRS
1. Subject to any security interest of a lessee(subsection 5 of NRS 104A.2508), if alessor or a supplier has no agent or place of business at the market ofrejection, a merchant lessee, after rejection of goods in his possession orcontrol, shall follow any reasonable instructions received from the lessor orthe supplier with respect to the goods. In the absence of those instructions amerchant lessee shall make reasonable efforts to sell, lease or otherwisedispose of the goods for the lessors account if they threaten to decline invalue speedily. Instructions are not reasonable if on demand indemnity forexpenses is not forthcoming.
2. If a merchant lessee (subsection 1) or any otherlessee (NRS 104A.2512) disposes ofgoods, he is entitled to reimbursement either from the lessor or the supplier orout of the proceeds for reasonable expenses of caring for and disposing of thegoods and, if the expenses include no disposition commission, to suchcommission as is usual in the trade, or if there is none, to a reasonable sumnot exceeding 10 percent of the gross proceeds.
3. In complying with this section or
4. A purchaser who purchases in good faith from alessee pursuant to this section or NRS104A.2512 takes the goods free of any rights of the lessor and the suppliereven though the lessee fails to comply with one or more of the requirements ofthis Article.
(Added to NRS by 1989, 361; A 1989, 721)
NRS
1. Except as otherwise provided with respect to goodsthat threaten to decline in value speedily (
(a) The lessee, after rejection of goods in thelessees possession, shall hold them with reasonable care at the lessors orsuppliers disposition for a reasonable time after the lessees seasonablenotification of rejection;
(b) If the lessor or the supplier gives no instructionswithin a reasonable time after notification of rejection, the lessee may storethe rejected goods for the lessors or the suppliers account or ship them tothe lessor or the supplier or dispose of them for the lessors or the suppliersaccount with reimbursement in the manner provided in
(c) The lessee has no further obligations with regardto goods rightfully rejected.
2. Action by the lessee pursuant to subsection 1 isnot acceptance or conversion.
(Added to NRS by 1989, 362; A 1989, 721)
NRS
1. If any tender or delivery by the lessor or thesupplier is rejected because nonconforming and the time for performance has notyet expired, the lessor or the supplier may seasonably notify the lessee of thelessors or the suppliers intention to cure and may then make a conformingdelivery within the time provided in the lease contract.
2. If the lessee rejects a nonconforming tender thatthe lessor or the supplier had reasonable grounds to believe would beacceptable with or without money allowance, the lessor or the supplier may havea further reasonable time to substitute a conforming tender if he seasonablynotifies the lessee.
(Added to NRS by 1989, 362; A 1989, 721)
NRS
1. In rejecting goods, a lessees failure to state aparticular defect that is ascertainable by reasonable inspection precludes thelessee from relying on the defect to justify rejection or to establish default:
(a) If, stated seasonably, the lessor or the suppliercould have cured it (NRS 104A.2513);or
(b) Between merchants if the lessor or the supplierafter rejection has made a request in writing for a full and final writtenstatement of all defects on which the lessee proposes to rely.
2. A lessees failure to reserve rights when payingrent or other consideration against documents precludes recovery of the paymentfor defects apparent in the documents.
(Added to NRS by 1989, 362; A 1989, 721;
NRS
1. Acceptance of goods occurs after the lessee has hada reasonable opportunity to inspect the goods and:
(a) The lessee signifies or acts with respect to thegoods in a manner that signifies to the lessor or the supplier that the goodsare conforming or that the lessee will take or retain them in spite of theirnonconformity; or
(b) The lessee fails to make an effective rejection ofthe goods (subsection 2 of NRS 104A.2509).
2. Acceptance of a part of any commercial unit isacceptance of that entire unit.
(Added to NRS by 1989, 363; A 1989, 721)
NRS
1. A lessee must pay rent for any goods accepted inaccordance with the lease contract, with due allowance for goods rightfullyrejected or not delivered.
2. A lessees acceptance of goods precludes rejectionof the goods accepted. In the case of a finance lease, if made with knowledgeof a nonconformity, acceptance cannot be revoked because of it. In any othercase, if made with knowledge of a nonconformity, acceptance cannot be revokedbecause of it unless the acceptance was on the reasonable assumption that thenonconformity would be seasonably cured. Acceptance does not of itself impairany other remedy provided by this Article or the lease agreement fornonconformity.
3. If a tender has been accepted:
(a) Within a reasonable time after the lessee discoversor should have discovered any default, the lessee shall notify the lessor andthe supplier, if any, or be barred from any remedy against the party notnotified;
(b) Except in the case of a consumer lease, within areasonable time after the lessee receives notice of litigation for infringementor the like (NRS 104A.2211) thelessee shall notify the lessor or be barred from any remedy over for liabilityestablished by the litigation; and
(c) The burden is on the lessee to establish anydefault.
4. If a lessee is sued for breach of a warranty orother obligation for which a lessor or a supplier is answerable over thefollowing apply:
(a) The lessee may give the lessor or the supplierwritten notice of the litigation. If the notice states that the person notifiedmay come in and defend and that if he does not do so he will be bound in anyaction against him by the lessee by any determination of fact common to the twolitigations, then unless the person notified after seasonable receipt of thenotice does come in and defend he is so bound.
(b) The lessor or the supplier may demand in writingthat the lessee turn over control of the litigation including settlement if theclaim is one for infringement or the like (NRS104A.2211) or else be barred from any remedy over. If the demand statesthat the lessor or the supplier agrees to bear all expense and to satisfy any adversejudgment, then unless the lessee after seasonable receipt of the demand doesturn over control the lessee is so barred.
5. Subsections 3 and 4 apply to any obligation of alessee to hold the lessor or the supplier harmless against infringement or thelike (NRS 104A.2211).
(Added to NRS by 1989, 363; A 1989, 721; 1991, 424)
NRS
1. A lessee may revoke acceptance of a lot orcommercial unit whose nonconformity substantially impairs its value to thelessee if he has accepted it:
(a) Except in the case of a finance lease, on thereasonable assumption that its nonconformity would be cured and it has not beenseasonably cured; or
(b) Without discovery of the nonconformity if thelessees acceptance was reasonably induced either by the lessors assurancesor, except in the case of a finance lease, by the difficulty of discoverybefore acceptance.
2. Except in the case of a finance lease that is not aconsumer lease, a lessee may revoke acceptance of a lot or commercial unit ifthe lessor defaults under the lease contract and the default substantiallyimpairs the value of that lot or commercial unit to the lessee.
3. If the lease agreement so provides, the lessee mayrevoke acceptance of a lot or commercial unit because of other defaults by thelessor.
4. Revocation of acceptance must occur within areasonable time after the lessee discovers or should have discovered the groundfor it and before any substantial change in condition of the goods which is notcaused by the nonconformity. Revocation is not effective until the lesseenotifies the lessor.
5. A lessee who so revokes has the same rights andduties with regard to the goods involved as if the lessee had rejected them.
(Added to NRS by 1989, 364; A 1989, 721; 1991, 425)
NRS
1. After default by a lessor under a lease contract ofthe type described in subsection 1 of NRS104A.2508, or, if agreed after other default by the lessor, the lessee maycover by making any purchase or lease of or contract to purchase or lease goodsin substitution for those due from the lessor.
2. Except as otherwise provided with respect todamages liquidated in the lease agreement (NRS104A.2504) or otherwise determined pursuant to agreement of the parties (
(a) The present value, as of the date of thecommencement of the term of the new lease agreement, of the rent under the newlease agreement applicable to that period of the new lease term which iscomparable to the then remaining term of the original lease agreement minus thepresent value as of the same date of the total rent for the remaining leaseterm of the original lease agreement; and
(b) Any incidental or consequential damages lessexpenses saved in consequence of the lessors default.
3. If a lessees cover is by lease agreement that forany reason does not qualify for treatment under subsection 2, or is by purchaseor otherwise, the lessee may recover from the lessor as if the lessee hadelected not to cover and NRS 104A.2519governs.
(Added to NRS by 1989, 364; A 1989, 721; 1991, 425;
NRS
1. Except as otherwise provided with respect todamages liquidated in the lease agreement (NRS104A.2504) or otherwise determined pursuant to agreement of the parties (
2. Market rent is to be determined as of the place fortender or, in cases of rejection after arrival or revocation of acceptance, asof the place of arrival.
3. Except as otherwise agreed, if the lessee hasaccepted goods and given notification (subsection 3 of
4. Except as otherwise agreed, the measure of damagesfor breach of warranty is the present value at the time and place of acceptanceof the difference between the value of the use of the goods accepted and thevalue if they had been as warranted for the lease term, unless specialcircumstances show proximate damages of a different amount, together withincidental and consequential damages, less expenses saved in consequence of thelessors default or breach of warranty.
(Added to NRS by 1989, 364; A 1989, 721; 1991, 426;
NRS
1. Incidental damages resulting from a lessorsdefault include expenses reasonably incurred in inspection, receipt,transportation, and care and custody of goods rightfully rejected or goods theacceptance of which is justifiably revoked, any commercially reasonablecharges, expenses or commissions in connection with effecting cover, and anyother reasonable expense incident to the default.
2. Consequential damages resulting from a lessors defaultinclude:
(a) Any loss resulting from general or particularrequirements and needs of which the lessor at the time of contracting hadreason to know and which could not reasonably be prevented by cover orotherwise; and
(b) Injury to person or property proximately resultingfrom any breach of warranty.
(Added to NRS by 1989, 365; A 1989, 721)
NRS
1. Specific performance may be decreed if the goodsare unique or in other proper circumstances.
2. A decree for specific performance may include anyterms and conditions as to payment of the rent, damages or other relief thatthe court deems just.
3. A lessee has a right of replevin, detinue,sequestration, claim and delivery, or the like for goods identified to thelease contract if after reasonable effort the lessee is unable to effect coverfor those goods or the circumstances reasonably indicate that the effort willbe unavailing.
(Added to NRS by 1989, 365; A 1989, 721)
NRS
1. Subject to subsection 2 and even though the goodshave not been shipped, a lessee who has paid a part or all of the rent andsecurity for goods identified to a lease contract (
2. A lessee acquires the right to recover goodsidentified to a lease contract only if they conform to the lease contract.
(Added to NRS by 1989, 365; A 1989, 721)
NRS
1. If a lessee wrongfully rejects or revokesacceptance of goods or fails to make a payment when due or repudiates withrespect to a part or the whole, then, with respect to any goods involved, andwith respect to all of the goods if under an installment lease contract thevalue of the whole lease contract is substantially impaired (
(a) Cancel the lease contract (subsection 1 of
(b) Proceed respecting goods not identified to thelease contract (NRS 104A.2524);
(c) Withhold delivery of the goods and take possessionof goods previously delivered (NRS104A.2525);
(d) Stop delivery of the goods by any bailee (
(e) Dispose of the goods and recover damages (
(f) Exercise any other rights or pursue any otherremedies provided in the lease contract.
2. If a lessor does not fully exercise a right orobtain a remedy to which the lessor is entitled under subsection 1, the lessormay recover the loss resulting in the ordinary course of events from thelessees default as determined in any reasonable manner, together withincidental damages, less expenses saved in consequence of the lessees default.
3. If a lessee is otherwise in default under a leasecontract, the lessor may exercise the rights and pursue the remedies providedin the lease contract which may include a right to cancel the lease. Inaddition, unless otherwise provided in the lease contract:
(a) If the default substantially impairs the value ofthe lease contract to the lessor, the lessor may exercise the rights and pursuethe remedies provided in subsections 1 and 2; or
(b) If the default does not substantially impair thevalue of the lease contract to the lessor, the lessor may recover as providedin subsection 2.
(Added to NRS by 1989, 365; A 1989, 721; 1991, 426)
NRS
1. After default by the lessee under the leasecontract of the type described in subsection 1 or paragraph (a) of subsection 3of NRS 104A.2523 or, if agreed, afterother default by the lessee, the lessor may:
(a) Identify to the lease contract conforming goods notalready identified if at the time the lessor learned of the default they werein the lessors or the suppliers possession or control; and
(b) Dispose of goods (subsection 1 of
2. If the goods are unfinished, in the exercise ofreasonable commercial judgment for the purposes of avoiding loss and ofeffective realization, an aggrieved lessor or the supplier may either completemanufacture and wholly identify the goods to the lease contract or ceasemanufacture and lease, sell or otherwise dispose of the goods for scrap orsalvage value or proceed in any other reasonable manner.
(Added to NRS by 1989, 366; A 1989, 721; 1991, 427)
NRS
1. If a lessor discovers the lessee to be insolvent,the lessor may refuse to deliver the goods.
2. After a default by the lessee under the leasecontract of the type described in subsection 1 or paragraph (a) of subsection 3of NRS 104A.2523 or, if agreed, afterother default by the lessee, the lessor has the right to take possession of thegoods. If the lease contract so provides, the lessor may require the lessee toassemble the goods and make them available to the lessor at a place to bedesignated by the lessor which is reasonably convenient to both parties.Without removal, the lessor may render unusable any goods employed in trade orbusiness, and may dispose of goods on the lessees premises (
3. The lessor may proceed under subsection 2 withoutjudicial process if it can be done without breach of the peace or the lessormay proceed by action.
(Added to NRS by 1989, 366; A 1989, 721; 1991, 427)
NRS
1. A lessor may stop delivery of goods in thepossession of a carrier or other bailee if the lessor discovers the lessee tobe insolvent and may stop delivery of carload, truckload, planeload or largershipments of express or freight if the lessee repudiates or fails to make apayment due before delivery, whether for rent, security or otherwise under thelease contract, or for any other reason the lessor has a right to withhold ortake possession of the goods.
2. In pursuing its remedies under subsection 1, thelessor may stop delivery until:
(a) Receipt of the goods by the lessee;
(b) Acknowledgment to the lessee by any bailee of thegoods, except a carrier, that the bailee holds the goods for the lessee; or
(c) Such an acknowledgment to the lessee by a carriervia reshipment or as a warehouse.
3. To stop delivery, a lessor shall so notify as toenable the bailee by reasonable diligence to prevent delivery of the goods.After notification, the bailee shall hold and deliver the goods according tothe directions of the lessor, but the lessor is liable to the bailee for anyensuing charges or damages. A carrier who has issued a nonnegotiable bill oflading is not obliged to obey a notification to stop received from a personother than the consignor.
(Added to NRS by 1989, 366; A 1989, 721;
NRS
1. After a default by a lessee under the leasecontract of the type described in subsection 1 or paragraph (a) of subsection 3of NRS 104A.2523 or after the lessorrefuses to deliver or takes possession of goods (
2. Except as otherwise provided with respect todamages liquidated in the lease agreement (NRS104A.2504) or otherwise determined pursuant to agreement of the parties (
(a) Accrued and unpaid rent as of the date of thecommencement of the term of the new lease agreement;
(b) The present value, as of the same date, of thetotal rent for the then remaining lease term of the original lease agreementminus the present value, as of the same date, of the rent under the new leaseagreement applicable to that period of the new lease term which is comparableto the then remaining term of the original lease agreement; and
(c) Any incidental damages allowed under
lessexpenses saved in consequence of the lessees default.
3. If the lessors disposition is by lease agreementthat for any reason does not qualify for treatment under subsection 2, or is bysale or otherwise, the lessor may recover from the lessee as if the lessor hadelected not to dispose of the goods and NRS104A.2528 governs.
4. A subsequent buyer or lessee who buys or leasesfrom the lessor in good faith for value as a result of a disposition under thissection takes the goods free of the original lease contract and any rights ofthe original lessee even though the lessor fails to comply with one or more ofthe requirements of this Article.
5. The lessor is not accountable to the lessee for anyprofit made on any disposition. A lessee who has rightfully rejected orjustifiably revoked acceptance shall account to the lessor for any excess overthe amount of the lessees security interest (subsection 5 of
(Added to NRS by 1989, 367; A 1989, 721; 1991, 427;
NRS
1. Except as otherwise provided with respect todamages liquidated in the lease agreement (NRS104A.2504) or otherwise determined pursuant to agreement of the parties (
(a) Accrued and unpaid rent as of the date of defaultif the lessee has never taken possession of the goods, or, if the lessee hastaken possession of the goods, as of the date the lessor repossesses the goodsor an earlier date on which the lessee makes a tender of the goods to thelessor;
(b) The present value as of the date determined underparagraph (a) of the total rent for the then remaining lease term of theoriginal lease agreement minus the present value as of the same date of the marketrent at the place where the goods are located computed for the same lease term;and
(c) Any incidental damages allowed under
2. If the measure of damages provided in subsection 1is inadequate to put a lessor in as good a position as performance would have,the measure of damages is the present value of the profit, including reasonableoverhead, the lessor would have made from full performance by the lessee,together with any incidental damages allowed under
(Added to NRS by 1989, 367; A 1989, 721; 1991, 428;
NRS
1. After default by the lessee under the leasecontract of the type described in subsection 1 or paragraph (a) of subsection 3of NRS 104A.2523 or, if agreed, afterother default by the lessee, if the lessor complies with subsection 2, thelessor may recover from the lessee as damages:
(a) For goods accepted by the lessee and notrepossessed by or tendered to the lessor, and for conforming goods lost ordamaged within a commercially reasonable time after risk of loss passes to thelessee (NRS 104A.2219):
(1) Accrued and unpaid rent as of the date ofentry of judgment in favor of the lessor;
(2) The present value as of the same date of therent for the then remaining lease term of the lease agreement; and
(3) Any incidental damages allowed under
lessexpenses saved in consequence of the lessees default; and
(b) For goods identified to the lease contract if thelessor is unable after reasonable effort to dispose of them at a reasonableprice or the circumstances reasonably indicate that effort will be unavailing:
(1) Accrued and unpaid rent as of the date ofentry of judgment in favor of the lessor;
(2) The present value as of the same date of therent for the then remaining lease term of the lease agreement; and
(3) Any incidental damages allowed under
lessexpenses saved in consequence of the lessees default.
2. Except as provided in subsection 3, the lessorshall hold for the lessee for the remaining lease term of the lease agreementany goods that have been identified to the lease contract and are in thelessors control.
3. The lessor may dispose of the goods at any timebefore collection of the judgment for damages obtained pursuant to subsection1. If the disposition is before the end of the remaining lease term of thelease agreement, the lessors recovery against the lessee for damages isgoverned by NRS 104A.2527 or
4. Payment of the judgment for damages obtainedpursuant to subsection 1 entitles the lessee to the use and possession of thegoods not then disposed of for the remaining lease term of and in accordancewith the lease agreement.
5. After default by the lessee under the leasecontract of the type described in subsection 1 or paragraph (a) of subsection 3of NRS 104A.2523 or, if agreed, afterother default by the lessee, a lessor who is held not entitled to rent underthis section must nevertheless be awarded damages for nonacceptance under
(Added to NRS by 1989, 368; A 1989, 721; 1991, 429)
NRS
(Added to NRS by 1989, 368; A 1989, 721)
NRS
1. If a third party so deals with goods that have beenidentified to a lease contract as to cause actionable injury to a party to the leasecontract:
(a) The lessor has a right of action against the thirdparty; and
(b) The lessee also has a right of action against thethird party if the lessee:
(1) Has a security interest in the goods;
(2) Has an insurable interest in the goods; or
(3) Bears the risk of loss under the leasecontract or has since the injury assumed that risk as against the lessor andthe goods have been converted or destroyed.
2. If at the time of the injury the party plaintiffdid not bear the risk of loss as against the other party to the lease contractand there is no arrangement between them for disposition of the recovery, hissuit or settlement, subject to his own interest, is as a fiduciary for theother party to the lease contract.
3. Either party with the consent of the other may suefor the benefit of whom it may concern.
(Added to NRS by 1989, 369; A 1989, 721)
NRS
(Added to NRS by 1991, 430)
ARTICLE 4A
FUNDS TRANSFERS
Part 1
Subject Matter and Definitions
NRS
(Added to NRS by 1991, 430)
NRS
(Added to NRS by 1991, 430)
NRS
1. In this article:
(a) Payment order means an instruction of a sender toa receiving bank, transmitted orally, electronically or in writing, to pay, orto cause another bank to pay, a fixed or determinable amount of money to abeneficiary if:
(1) The instruction does not state a conditionto payment to the beneficiary other than time of payment;
(2) The receiving bank is to be reimbursed bydebiting an account of, or otherwise receiving payment from, the sender; and
(3) The instruction is transmitted by the senderdirectly to the receiving bank or to an agent, funds-transfer system, orcommunication system for transmittal to the receiving bank.
(b) Beneficiary means the person to be paid by thebeneficiarys bank.
(c) Beneficiarys bank means the bank identified in apayment order in which an account of the beneficiary is to be credited pursuantto the order or which otherwise is to make payment to the beneficiary if theorder does not provide for payment to an account.
(d) Receiving bank means the bank to which thesenders instruction is addressed.
(e) Sender means the person giving the instruction tothe receiving bank.
2. If an instruction complying with paragraph (a) ofsubsection 1 is to make more than one payment to a beneficiary, the instructionis a separate payment order with respect to each payment.
3. A payment order is issued when it is sent to thereceiving bank.
(Added to NRS by 1991, 430)
NRS
1. Funds transfer means the series of transactions,beginning with the originators payment order, made for the purpose of makingpayment to the beneficiary of the order. The term includes any payment orderissued by the originators bank or an intermediary bank intended to carry outthe originators payment order. A funds transfer is completed by acceptance bythe beneficiarys bank of a payment order for the benefit of the beneficiary ofthe originators payment order.
2. Intermediary bank means a receiving bank otherthan the originators bank or the beneficiarys bank.
3. Originator means the sender of the first paymentorder in a funds transfer.
4. Originators bank means the receiving bank towhich the payment order of the originator is issued if the originator is not abank, or the originator if the originator is a bank.
(Added to NRS by 1991, 431)
NRS
1. In this Article:
(a) Authorized account means a deposit account of acustomer in a bank designated by the customer as a source of payment of paymentorders issued by the customer to the bank. If a customer does not so designatean account, any account of the customer is an authorized account if payment ofa payment order from that account is not inconsistent with a restriction on theuse of that account.
(b) Bank means a person engaged in the business ofbanking and includes a savings bank, savings and loan association, creditunion, and trust company. A branch or separate office of a bank is a separatebank for purposes of this Article.
(c) Customer means a person, including a bank, havingan account with a bank or from whom a bank has agreed to receive paymentorders.
(d) Funds-transfer business day of a receiving bankmeans the part of a day during which the receiving bank is open for thereceipt, processing and transmittal of payment orders and cancellations andamendments of payment orders.
(e) Funds-transfer system means a wire transfernetwork, automated clearing house, or other communication system of a clearinghouse or other association of banks through which a payment order by a bank maybe transmitted to the bank to which the order is addressed.
(f) Prove with respect to a fact means to meet theburden of establishing the fact (paragraph (h) of subsection 2 of
2. Other definitions applying to this Article and thesections in which they appear are:
Acceptance.
Beneficiary.
Beneficiarys bank.
Executed.
Execution date.
Funds transfer.
Funds-transfer system rule.
Intermediary bank.
Originator.
Originators bank.
Payment by beneficiarys bank tobeneficiary. NRS 104A.4405.
Payment by originator tobeneficiary. NRS 104A.4406.
Payment by sender to receivingbank. NRS 104A.4403.
Payment date.
Payment order.
Receiving bank.
Security procedure.
Sender.
3. The following definitions in Article 4 apply tothis Article:
Clearing house.
Item.
Suspends payments.
4. In addition Article 1 contains general definitionsand principles of construction and interpretation applicable throughout thisArticle.
(Added to NRS by 1991, 431; A
NRS
1. The time of receipt of a payment order orcommunication cancelling or amending a payment order is determined by the rulesapplicable to receipt of a notice stated in NRS104.1202. A receiving bank may fix a cutoff time or times of afunds-transfer business day for the receipt and processing of payment ordersand communications cancelling or amending payment orders. Different cutofftimes may apply to payment orders, cancellations or amendments, or to differentcategories of payment orders, cancellations or amendments. A cutoff time mayapply to senders generally or different cutoff times may apply to differentsenders or categories of payment orders. If a payment order or communicationcancelling or amending a payment order is received after the close of afunds-transfer business day or after the appropriate cutoff time on afunds-transfer business day, the receiving bank may treat the payment order orcommunication as received at the opening of the next funds-transfer businessday.
2. If this Article refers to an execution date orpayment date or states a day on which a receiving bank is required to takeaction, and the date or day does not fall on a funds-transfer business day, thenext day that is a funds-transfer business day is treated as the date or daystated, unless the contrary is stated in this Article.
(Added to NRS by 1991, 432; A
NRS
(Added to NRS by 1991, 432)
NRS
(Added to NRS by 1991, 432)
Part 2
Issue and Acceptance of Payment Order
NRS
1. Security procedure means a procedure establishedby agreement of a customer and a receiving bank to:
(a) Verify that a payment order or communicationamending or cancelling a payment order is that of the customer; or
(b) Detect error in the transmission or the content ofthe payment order or communication.
2. A security procedure may require the use of algorithmsor other codes, identifying words or numbers, encryption, callback proceduresor similar security devices.
3. Comparison of a signature on a payment order orcommunication with an authorized specimen signature of the customer is not byitself a security procedure.
(Added to NRS by 1991, 432)
NRS
1. A payment order received by the receiving bank isthe authorized order of the person identified as sender if he authorized theorder or is otherwise bound by it under the law of agency.
2. If a bank and its customer have agreed that theauthenticity of payment orders issued to the bank in the name of the customeras sender will be verified pursuant to a security procedure, a payment orderreceived by the receiving bank is effective as the order of the customer,whether or not authorized, if the security procedure is a commerciallyreasonable method of providing security against unauthorized payment orders,and the bank proves that it accepted the payment order in good faith and incompliance with the security procedure and any written agreement or instructionof the customer restricting acceptance of payment orders issued in the name ofthe customer. The bank is not required to follow an instruction that violates awritten agreement with the customer or notice of which is not received at atime and in a manner affording the bank a reasonable opportunity to act on itbefore the payment order is accepted.
3. Commercial reasonableness of a security procedureis a question of law to be determined by considering the wishes of the customerexpressed to the bank, the circumstances of the customer known to the bank,including the size, type and frequency of payment orders normally issued by thecustomer to the bank, alternative security procedures offered to the customer,and security procedures in general use by customers and receiving bankssimilarly situated. A security procedure is deemed to be commerciallyreasonable if:
(a) The security procedure was chosen by the customerafter the bank offered, and the customer refused, a security procedure that wascommercially reasonable for that customer; and
(b) The customer expressly agreed in writing to bebound by any payment order, whether or not authorized, issued in its name andaccepted by the bank in compliance with the security procedure chosen by thecustomer.
4. The term sender in this article includes thecustomer in whose name a payment order is issued if the order is the authorizedorder of the customer under subsection 1, or it is effective as the order ofthe customer under subsection 2.
5. This section applies to amendments andcancellations of payment orders to the same extent it applies to paymentorders.
6. Except as otherwise provided in this section and inparagraph (a) of subsection 1 of NRS104A.4203, rights and obligations arising under this section or
(Added to NRS by 1991, 433)
NRS
1. If an accepted payment order is not, undersubsection 1 of NRS 104A.4202, anauthorized order of a customer identified as sender, but is effective as anorder of the customer pursuant to subsection 2 of
(a) By express written agreement, the receiving bankmay limit the extent to which it is entitled to enforce or retain payment ofthe payment order.
(b) The receiving bank is not entitled to enforce orretain payment of the payment order if the customer proves that the order wasnot caused, directly or indirectly, by a person:
(1) Entrusted at any time with duties to act forthe customer with respect to payment orders or the security procedure; or
(2) Who obtained access to transmittingfacilities of the customer or who obtained, from a source controlled by thecustomer and without authority of the receiving bank, information facilitatingbreach of the security procedure, regardless of how the information wasobtained or whether the customer was at fault.
Informationincludes any access device, computer software, or the like.
2. This section applies to amendments of paymentorders to the same extent it applies to payment orders.
(Added to NRS by 1991, 433)
NRS
1. If a receiving bank accepts a payment order issuedin the name of its customer as sender which is not authorized and not effectiveas the order of the customer under NRS104A.4202, or not enforceable, in whole or in part, against the customerunder NRS 104A.4203, the bank shallrefund any payment of the payment order received from the customer to theextent the bank is not entitled to enforce payment and shall pay interest onthe refundable amount calculated from the date the bank received payment to thedate of the refund. However, the customer is not entitled to interest from thebank on the amount to be refunded if he fails to exercise ordinary care todetermine that the order was not authorized by him and to notify the bank ofthe relevant facts within a reasonable time not exceeding 90 days after thedate he received notification from the bank that the order was accepted or thathis account was debited with respect to the order. The bank is not entitled toany recovery from the customer on account of a failure by him to give notificationas stated in this section.
2. Reasonable time under subsection 1 may be fixed byagreement as stated in subsection 2 of NRS104.1302, but the obligation of a receiving bank to refund payment asstated in subsection 1 may not otherwise be varied by agreement.
(Added to NRS by 1991, 434; A
NRS
1. If an accepted payment order was transmittedpursuant to a security procedure for the detection of error and the paymentorder erroneously instructed payment to a beneficiary not intended by thesender, erroneously instructed payment in an amount greater than the amountintended by the sender, or was an erroneously transmitted duplicate of apayment order previously sent by the sender, the following rules apply:
(a) If the sender proves that he or a person acting onhis behalf pursuant to NRS 104A.4206complied with the security procedure and that the error would have beendetected if the receiving bank had also complied, the sender is not obliged topay the order to the extent stated in paragraphs (b) and (c).
(b) If the funds transfer is completed on the basis ofa payment order erroneous for the first or third reason described in subsection1, the sender is not obliged to pay the order and the receiving bank isentitled to recover from the beneficiary any amount paid to the beneficiary tothe extent allowed by the law governing mistake and restitution.
(c) If the funds transfer is completed on the basis ofa payment order erroneous for the second reason described in subsection 1, thesender is not obliged to pay the order to the extent the amount received by thebeneficiary is greater than the amount intended by the sender. In that case,the receiving bank is entitled to recover from the beneficiary the excessamount received to the extent allowed by the law governing mistake andrestitution.
2. If the sender of an erroneous payment orderdescribed in subsection 1 is not obliged to pay all or part of the order, andthe sender receives notification from the receiving bank that the order was acceptedby the bank or that his account was debited with respect to the order, thesender has a duty to exercise ordinary care, on the basis of informationavailable to him, to discover the error with respect to the order and to advisethe bank of the relevant facts within a reasonable time, not exceeding 90 days,after the banks notification was received by him. If the bank proves that thesender failed to perform that duty, the sender is liable to the bank for theloss the bank proves it incurred as a result of the failure, but the liabilityof the sender may not exceed the amount of his order.
3. This section applies to amendments to paymentorders to the same extent it applies to payment orders.
(Added to NRS by 1991, 434)
NRS
1. If a payment order addressed to a receiving bank istransmitted to a funds-transfer system or other third-party communicationsystem for transmittal to the bank, the system is deemed to be an agent of thesender for the purpose of transmitting the payment order to the bank. If thereis a discrepancy between the terms of the payment order transmitted to thesystem and the terms of the payment order transmitted by the system to thebank, the terms of the payment order of the sender are those transmitted by thesystem. This section does not apply to a funds-transfer system of the FederalReserve banks.
2. This section applies to cancellations andamendments of payment orders to the same extent it applies to payment orders.
(Added to NRS by 1991, 435)
NRS
1. Except as otherwise provided in subsection 2, if,in a payment order received by the beneficiarys bank, the name, bank accountnumber or other identification of the beneficiary refers to a nonexistent orunidentifiable person or account, no person has rights as a beneficiary of theorder and acceptance of the order cannot occur.
2. If a payment order received by the beneficiarys bankidentifies the beneficiary both by name and by an identifying or bank accountnumber and the name and number identify different persons, the following rulesapply:
(a) Except as otherwise provided in subsection 3, ifthe beneficiarys bank does not know that the name and number refer todifferent persons, it may rely on the number as the proper identification ofthe beneficiary of the order. The beneficiarys bank need not determine whetherthe name and number refer to the same person.
(b) If the beneficiarys bank pays the personidentified by name or knows that the name and number identify differentpersons, no person has rights as beneficiary except the person paid by thebeneficiarys bank if that person was entitled to receive payment from the originatorof the funds transfer. If no person has rights as beneficiary, acceptance ofthe order cannot occur.
3. If a payment order described in subsection 2 isaccepted, the originators payment order described the beneficiaryinconsistently by name and number, and the beneficiarys bank pays the personidentified by number as permitted by paragraph (a) of subsection 2, thefollowing rules apply:
(a) If the originator is a bank, the originator isobliged to pay its order.
(b) If the originator is not a bank and proves that theperson identified by number was not entitled to receive payment from theoriginator, the originator is not obliged to pay its order unless theoriginators bank proves that the originator, before acceptance of his order,had notice that payment of a payment order issued by him might be made by thebeneficiarys bank on the basis of an identifying or bank account number evenif it identified a person different from the named beneficiary. Proof of noticemay be made by any admissible evidence. The originators bank satisfies theburden of proof if it proves that the originator, before the payment order wasaccepted, signed a writing stating the information to which the notice relates.
4. In a case governed by paragraph (a) of subsection2, if the beneficiarys bank rightfully pays the person identified by numberand that person was not entitled to receive payment from the originator, theamount paid may be recovered from that person to the extent allowed by the lawgoverning mistake and restitution as follows:
(a) If the originator is obliged to pay its paymentorder as stated in subsection 3, the originator has the right to recover.
(b) If the originator is not a bank and is not obligedto pay its payment order, the originators bank has the right to recover.
(Added to NRS by 1991, 435)
NRS
1. If a payment order identifies an intermediary bankor the beneficiarys bank only by an identifying number, the following rulesapply:
(a) The receiving bank may rely on the number as theproper identification of the intermediary or beneficiarys bank and need notdetermine whether the number identifies a bank.
(b) The sender is obliged to compensate the receivingbank for any loss and expenses incurred by the receiving bank as a result ofits reliance on the number in executing or attempting to execute the order.
2. If a payment order identifies an intermediary bankor the beneficiarys bank both by name and an identifying number and the nameand number identify different persons, the following rules apply:
(a) If the sender is a bank, the receiving bank mayrely on the number as the proper identification of the intermediary orbeneficiarys bank if the receiving bank, when it executes the senders order,does not know that the name and number identify different persons. Thereceiving bank need not determine whether the name and number refer to the sameperson or whether the number refers to a bank. The sender is obliged tocompensate the receiving bank for any loss and expenses incurred by thereceiving bank as a result of its reliance on the number in executing orattempting to execute the order.
(b) If the sender is not a bank and the receiving bankproves that the sender, before the payment order was accepted, had notice thatthe receiving bank might rely on the number as the proper identification of theintermediary or beneficiarys bank even if it identifies a person differentfrom the bank identified by name, the rights and obligations of the sender andthe receiving bank are governed by paragraph (a), as though the sender were abank. Proof of notice may be made by any admissible evidence. The receivingbank satisfies the burden of proof if it proves that the sender, before thepayment order was accepted, signed a writing stating the information to whichthe notice relates.
(c) Whether or not the sender is a bank, the receivingbank may rely on the name as the proper identification of the intermediary orbeneficiarys bank if the receiving bank, at the time it executes the sendersorder, does not know that the name and number identify different persons. Thereceiving bank need not determine whether the name and number refer to the sameperson.
(d) If the receiving bank knows that the name andnumber identify different persons, reliance on either the name or the number inexecuting the senders payment order is a breach of the obligation stated inparagraph (a) of subsection 1 of NRS104A.4302.
(Added to NRS by 1991, 436)
NRS
1. Except as otherwise provided in subsection 4, areceiving bank other than the beneficiarys bank accepts a payment order whenit executes the order.
2. Except as otherwise provided in subsections 3 and4, a beneficiarys bank accepts a payment order at the earliest of thefollowing times:
(a) When the bank pays the beneficiary as stated insubsection 1 or 2 of NRS 104A.4405,or notifies the beneficiary of receipt of the order or that the account of thebeneficiary has been credited with respect to the order unless the noticeindicates that the bank is rejecting the order or that funds with respect tothe order may not be withdrawn or used until receipt of payment from the senderof the order;
(b) When the bank receives payment of the entire amountof the senders order pursuant to paragraph (a) or (b) of subsection 1 of
(c) The opening of the next funds-transfer business dayof the bank following the payment date of the order if, at that time, theamount of the senders order is fully covered by a withdrawable credit balancein an authorized account of the sender or the bank has otherwise received fullpayment from the sender, unless the order was rejected before that time or isrejected within 1 hour after that time, or 1 hour after the opening of the nextbusiness day of the sender following the payment date if that time is later. Ifnotice of rejection is received by the sender after the payment date and theauthorized account of the sender does not bear interest, the bank is obliged topay interest to the sender on the amount of the order for the number of dayselapsing after the payment date to the day the sender receives notice or learnsthat the order was not accepted, counting that day as an elapsed day. If thewithdrawable credit balance during that period falls below the amount of theorder, the amount of interest payable is reduced accordingly.
3. Acceptance of a payment order cannot occur beforethe order is received by the receiving bank. Acceptance does not occur underparagraph (b) or (c) of subsection 2 if the beneficiary of the payment orderdoes not have an account with the receiving bank, the account has been closed,or the receiving bank is not permitted by law to receive credits for thebeneficiarys account.
4. A payment order issued to the originators bankcannot be accepted until the payment date if the bank is the beneficiarysbank, or the execution date if the bank is not the beneficiarys bank. If theoriginators bank executes the originators payment order before the executiondate or pays the beneficiary of the originators payment order before thepayment date and the payment order is subsequently cancelled pursuant tosubsection 2 of NRS 104A.4211, thebank may recover from the beneficiary any payment received to the extentallowed by the law governing mistake and restitution.
(Added to NRS by 1991, 437)
NRS
1. A payment order is rejected by the receiving bankby a notice of rejection transmitted to the sender orally, electronically or inwriting. A notice of rejection need not use any particular words and issufficient if it indicates that the receiving bank is rejecting the order or willnot execute or pay the order. Rejection is effective when the notice is givenif transmission is by a means that is reasonable in the circumstances. Ifnotice of rejection is given by a means that is not reasonable, rejection iseffective when the notice is received. If an agreement of the sender andreceiving bank establishes the means to be used to reject a payment order, anymeans complying with the agreement is reasonable and any means not complying isnot reasonable unless no significant delay in receipt of the notice resultedfrom the use of the noncomplying means.
2. If a receiving bank other than the beneficiarysbank fails to execute a payment order despite the existence on the executiondate of a withdrawable credit balance in an authorized account of the sendersufficient to cover the order, the following rules apply:
(a) If the sender does not receive notice of rejectionof the order on the execution date and the authorized account of the senderdoes not bear interest, the bank is obliged to pay interest to the sender onthe amount of the order for the number of days elapsing after the executiondate to the earlier of the day the order is cancelled pursuant to subsection 4of NRS 104A.4211 or the day thesender receives notice or learns that the order was not executed, counting thefinal day of the period as an elapsed day.
(b) If the withdrawable credit balance during thatperiod falls below the amount of the order, the amount of interest is reducedaccordingly.
3. If a receiving bank suspends payments, allunaccepted payment orders issued to it are deemed rejected at the time the banksuspends payments.
4. Acceptance of a payment order precludes a laterrejection of the order. Rejection of a payment order precludes a lateracceptance of the order.
(Added to NRS by 1991, 438)
NRS
1. A communication of the sender of a payment ordercancelling or amending the order may be transmitted to the receiving bankorally, electronically or in writing. If a security procedure is in effectbetween the sender and the receiving bank, the communication is not effectiveto cancel or amend the order unless the communication is verified pursuant tothe security procedure or the bank agrees to the cancellation or amendment.
2. Except as otherwise provided in subsection 1, acommunication by the sender cancelling or amending a payment order is effectiveto cancel or amend the order if notice of the communication is received at atime and in a manner affording the receiving bank a reasonable opportunity toact on the communication before the bank accepts the payment order.
3. After a payment order has been accepted,cancellation or amendment of the order is not effective unless the receivingbank agrees or a funds-transfer system rule allows cancellation or amendmentwithout agreement of the bank. The following rules also apply:
(a) With respect to a payment order accepted by areceiving bank other than the beneficiarys bank, cancellation or amendment isnot effective unless a conforming cancellation or amendment of the paymentorder issued by the receiving bank is also made.
(b) With respect to a payment order accepted by thebeneficiarys bank, cancellation or amendment is not effective unless the orderwas issued in execution of an unauthorized payment order, or because of amistake by a sender in the funds transfer which resulted in the issuance of apayment order that is a duplicate of a payment order previously issued by thesender, that orders payment to a beneficiary not entitled to receive paymentfrom the originator, or that orders payment in an amount greater than theamount the beneficiary was entitled to receive from the originator. If thepayment order is cancelled or amended, the beneficiarys bank is entitled to recoverfrom the beneficiary any amount paid to the beneficiary to the extent allowedby the law governing mistake and restitution.
4. An unaccepted payment order is cancelled byoperation of law at the close of the fifth funds-transfer business day of thereceiving bank after the execution date or payment date of the order.
5. A cancelled payment order cannot be accepted. If anaccepted payment order is cancelled, the acceptance is nullified and no personhas any right or obligation based on the acceptance. Amendment of a paymentorder is deemed to be cancellation of the original order at the time ofamendment and issue of a new payment order in the amended form at the sametime.
6. Unless otherwise provided in an agreement of theparties or in a funds-transfer system rule, if the receiving bank, afteraccepting a payment order, agrees to cancellation or amendment of the order bythe sender or is bound by a funds-transfer system rule allowing cancellation oramendment without the banks agreement, the sender, whether or not cancellationor amendment is effective, is liable to the bank for any loss and expenses,including reasonable attorneys fees, incurred by the bank as a result of thecancellation or amendment or attempted cancellation or amendment.
7. A payment order is not revoked by the death orlegal incapacity of the sender unless the receiving bank knows of the death orof an adjudication of incapacity by a court of competent jurisdiction and hasreasonable opportunity to act before acceptance of the order.
8. A funds-transfer system rule is not effective tothe extent it conflicts with paragraph (b) of subsection 3.
(Added to NRS by 1991, 438)
NRS
(Added to NRS by 1991, 439)
Part 3
Execution of Senders Payment Order by Receiving Bank
NRS
1. A payment order is executed by the receiving bankwhen it issues a payment order intended to carry out the payment order receivedby the bank. A payment order received by the beneficiarys bank can be acceptedbut cannot be executed.
2. Execution date of a payment order means the dayon which the receiving bank may properly issue a payment order in execution ofthe senders order. The execution date may be determined by instruction of thesender but cannot be earlier than the day the order is received and, unlessotherwise determined, is the day the order is received. If the sendersinstruction states a payment date, the execution date is the payment date or anearlier date on which execution is reasonably necessary to allow payment to thebeneficiary on the payment date.
(Added to NRS by 1991, 440)
NRS
1. Except as otherwise provided in subsections 2, 3and 4, if the receiving bank accepts a payment order pursuant to subsection 1of NRS 104A.4209, the bank has thefollowing obligations in executing the order:
(a) The receiving bank is obliged to issue, on theexecution date, a payment order complying with the senders order and to followthe senders instructions concerning any intermediary bank or funds-transfersystem to be used in carrying out the funds transfer, or the means by whichpayment orders are to be transmitted in the funds transfer. If the originatorsbank issues a payment order to an intermediary bank, the originators bank isobliged to instruct the intermediary bank according to the instruction of theoriginator. An intermediary bank in the funds transfer is similarly bound by aninstruction given to it by the sender of the payment order it accepts.
(b) If the senders instruction states that the fundstransfer is to be carried out telephonically or by wire transfer or otherwiseindicates that the funds transfer is to be carried out by the most expeditiousmeans, the receiving bank is obliged to transmit its payment order by the mostexpeditious available means, and to instruct any intermediary bank accordingly.If a senders instruction states a payment date, the receiving bank is obligedto transmit its payment order at a time and by means reasonably necessary toallow payment to the beneficiary on the payment date or as soon thereafter asis feasible.
2. Unless otherwise instructed, a receiving bankexecuting a payment order may use any funds-transfer system if use of thatsystem is reasonable in the circumstances, and issue a payment order to thebeneficiarys bank or to an intermediary bank through which a payment orderconforming to the senders order can expeditiously be issued to thebeneficiarys bank if the receiving bank exercises ordinary care in theselection of the intermediary bank. A receiving bank is not required to followan instruction of the sender designating a funds-transfer system to be used incarrying out the funds transfer if the receiving bank, in good faith,determines that it is not feasible to follow the instruction or that followingthe instruction would unduly delay completion of the funds transfer.
3. Unless paragraph (b) of subsection 1 applies or thereceiving bank is otherwise instructed, the bank may execute a payment order bytransmitting its payment order by first-class mail or by any means reasonablein the circumstances. If the receiving bank is instructed to execute thesenders order by transmitting its payment order by a particular means, thereceiving bank may issue its payment order by the means stated or by any meansas expeditious as the means stated.
4. Unless instructed by the sender:
(a) The receiving bank may not obtain payment of itscharges for services and expenses in connection with the execution of thesenders order by issuing a payment order in an amount equal to the amount ofthe senders order less the amount of the charges; and
(b) May not instruct a subsequent receiving bank toobtain payment of its charges in the same manner.
(Added to NRS by 1991, 440)
NRS
1. A receiving bank that executes the payment order ofthe sender by issuing a payment order in an amount greater than the amount ofthe senders order, or issues a payment order in execution of the sendersorder and then issues a duplicate order, is entitled to payment of the amountof the senders order under subsection 3 of
2. A receiving bank that executes the payment order ofthe sender by issuing a payment order in an amount less than the amount of thesenders order is entitled to payment of the amount of the senders order undersubsection 3 of NRS 104A.4402 if thatsubsection is otherwise satisfied and the bank corrects its mistake by issuingan additional payment order for the benefit of the beneficiary of the sendersorder. If the error is not corrected, the issuer of the erroneous order isentitled to receive or retain payment from the sender of the order it acceptedonly to the extent of the amount of the erroneous order. This subsection doesnot apply if the receiving bank executes the senders payment order by issuinga payment order in an amount less than the amount of the senders order for thepurpose of obtaining payment of its charges for services and expenses pursuantto instruction of the sender.
3. If a receiving bank executes the payment order ofthe sender by issuing a payment order to a beneficiary different from thebeneficiary of the senders order and the funds transfer is completed on thebasis of that error, the sender of the payment order that was erroneouslyexecuted and all previous senders in the funds transfer are not obliged to paythe payment orders they issued. The issuer of the erroneous order is entitledto recover from the beneficiary of the order the payment received to the extentallowed by the law governing mistake and restitution.
(Added to NRS by 1991, 441)
NRS
(Added to NRS by 1991, 441)
NRS
1. If a funds transfer is completed but execution of apayment order by the receiving bank in breach of
2. If execution of a payment order by a receiving bankin breach of NRS 104A.4302 results innoncompletion of the funds transfer, failure to use an intermediary bankdesignated by the originator, or issuance of a payment order that does notcomply with the terms of the payment order of the originator, the bank isliable to the originator for its expenses in the funds transfer and forincidental expenses and interest losses, to the extent not covered bysubsection 1, resulting from the improper execution. Except as otherwiseprovided in subsection 3, additional damages are not recoverable.
3. In addition to the amounts payable undersubsections 1 and 2, damages, including consequential damages, are recoverableto the extent provided in an express written agreement of the receiving bank.
4. If a receiving bank fails to execute a payment orderit was obliged by express agreement to execute, the receiving bank is liable tothe sender for its expenses in the transaction and for incidental expenses andinterest losses resulting from the failure to execute. Additional damages,including consequential damages, are recoverable to the extent provided in anexpress written agreement of the receiving bank, but are not otherwiserecoverable.
5. Reasonable attorneys fees are recoverable ifdemand for compensation under subsection 1 or 2 is made and refused before anaction is brought on the claim. If a claim is made for breach of an agreementunder subsection 4 and the agreement does not provide for damages, reasonableattorneys fees are recoverable if demand for compensation under subsection 4is made and refused before an action is brought on the claim.
6. Except as stated in this section, the liability ofa receiving bank under subsections 1 and 2 may not be varied by agreement.
(Added to NRS by 1991, 442)
Part 4
Payment
NRS
(Added to NRS by 1991, 442)
NRS
1. This section is subject to
2. With respect to a payment order issued to thebeneficiarys bank, acceptance of the order by the bank obliges the sender topay the bank the amount of the order, but payment is not due until the paymentdate of the order.
3. This subsection is subject to subsection 5 and to
4. If the sender of a payment order pays the order andwas not obliged to pay all or part of the amount paid, the bank receivingpayment is obliged to refund payment to the extent the sender was not obligedto pay. Except as otherwise provided in NRS104A.4204 and 104A.4304, interestis payable on the refundable amount from the date of payment.
5. If a funds transfer is not completed as stated insubsection 3 and an intermediary bank is obliged to refund payment as stated insubsection 4 but is unable to do so because not permitted by applicable law orbecause the bank suspends payments, a sender in the funds transfer thatexecuted a payment order in compliance with an instruction, as stated inparagraph (a) of subsection 1 of NRS104A.4302, to route the funds transfer through that intermediary bank isentitled to receive or retain payment from the sender of the payment order thatit accepted. The first sender in the funds transfer that issued an instructionrequiring routing through that intermediary bank is subrogated to the right ofthe bank that paid the intermediary bank to refund as stated in subsection 4.
6. The right of the sender of a payment order to beexcused from the obligation to pay the order as stated in subsection 3 or toreceive refund under subsection 4 may not be varied by agreement.
(Added to NRS by 1991, 442)
NRS
1. Payment of the senders obligation under
(a) If the sender is a bank, payment occurs when thereceiving bank receives final settlement of the obligation through a FederalReserve bank or through a funds-transfer system.
(b) If the sender is a bank and the sender credited anaccount of the receiving bank with the sender, or caused an account of thereceiving bank in another bank to be credited, payment occurs when the creditis withdrawn or, if not withdrawn, at midnight of the day on which the creditis withdrawable and the receiving bank learns of that fact.
(c) If the receiving bank debits an account of thesender with the receiving bank, payment occurs when the debit is made to theextent the debit is covered by a withdrawable credit balance in the account.
2. If the sender and receiving bank are members of afunds-transfer system that nets obligations multilaterally among participants,the receiving bank receives final settlement when settlement is complete inaccordance with the rules of the system. The obligation of the sender to paythe amount of a payment order transmitted through the funds-transfer system maybe satisfied, to the extent permitted by the rules of the system, by settingoff and applying against the senders obligation the right of the sender toreceive payment from the receiving bank of the amount of any other paymentorder transmitted to the sender by the receiving bank through thefunds-transfer system. The aggregate balance of obligations owed by each senderto each receiving bank in the funds-transfer system may be satisfied, to theextent permitted by the rules of the system, by setting off and applyingagainst that balance the aggregate balance of obligations owed to the sender byother members of the system. The aggregate balance is determined after theright of setoff stated in the second sentence of this subsection has beenexercised.
3. If two banks transmit payment orders to each otherunder an agreement that settlement of the obligations of each bank to the otherunder NRS 104A.4402 will be made atthe end of the day or other period, the total amount owed with respect to allorders transmitted by one bank shall be set off against the total amount owedwith respect to all orders transmitted by the other bank. To the extent of thesetoff, each bank has made payment to the other.
4. In a case not covered by subsection 1, the timewhen payment of the senders obligation under subsection 2 or 3 of
(Added to NRS by 1991, 443)
NRS
1. Except as otherwise provided in subsection 5 of
2. If a payment order accepted by the beneficiarysbank instructs payment to an account of the beneficiary, the bank is obliged tonotify the beneficiary of receipt of the order before midnight of the nextfunds-transfer business day following the payment date. If the payment orderdoes not instruct payment to an account of the beneficiary, the bank isrequired to notify the beneficiary only if notice is required by the order.Notice may be given by first-class mail or any other means reasonable in thecircumstances. If the bank fails to give the required notice, the bank isobliged to pay interest to the beneficiary on the amount of the payment orderfrom the day notice should have been given until the day the beneficiarylearned of receipt of the payment order by the bank. No other damages arerecoverable. Reasonable attorneys fees are also recoverable if demand forinterest is made and refused before an action is brought on the claim.
3. The right of a beneficiary to receive payment anddamages as stated in subsection 1 may not be varied by agreement or afunds-transfer system rule. The right of a beneficiary to be notified as statedin subsection 2 may be varied by agreement of the beneficiary or by afunds-transfer system rule if the beneficiary is notified of the rule beforeinitiation of the funds transfer.
(Added to NRS by 1991, 444)
NRS
1. If the beneficiarys bank credits an account of thebeneficiary of a payment order, payment of the banks obligation undersubsection 1 of NRS 104A.4404 occurswhen and to the extent the beneficiary is notified of the right to withdraw thecredit, the bank lawfully applies the credit to a debt of the beneficiary, orfunds with respect to the order are otherwise made available to the beneficiaryby the bank.
2. If the beneficiarys bank does not credit anaccount of the beneficiary of a payment order, the time when payment of thebanks obligation under subsection 1 of NRS104A.4404 occurs is governed by principles of law that determine when anobligation is satisfied.
3. Except as stated in subsections 4 and 5, if the beneficiarysbank pays the beneficiary of a payment order under a condition to payment oragreement of the beneficiary giving the bank the right to recover payment fromthe beneficiary if the bank does not receive payment of the order, thecondition to payment or agreement is not enforceable.
4. A funds-transfer system rule may provide thatpayments made to beneficiaries of funds transfers made through the system areprovisional until receipt of payment by the beneficiarys bank of the paymentorder it accepted. A beneficiarys bank that makes a payment that isprovisional under the rule is entitled to refund from the beneficiary if therule requires that both the beneficiary and the originator be given notice ofthe provisional nature of the payment before the funds transfer is initiated,the beneficiary, the beneficiarys bank and the originators bank agreed to bebound by the rule, and the beneficiarys bank did not receive payment of thepayment order that it accepted. If the beneficiary is obliged to refund paymentto the beneficiarys bank, acceptance of the payment order by the beneficiarysbank is nullified and no payment by the originator of the funds transfer to thebeneficiary occurs under NRS 104A.4406.
5. This subsection applies to a funds transfer thatincludes a payment order transmitted over a funds-transfer system that netsobligations multilaterally among participants, and has in effect a loss-sharingagreement among participants for the purpose of providing funds necessary tocomplete settlement of the obligations of one or more participants that do notmeet their settlement obligations. If the beneficiarys bank in the fundstransfer accepts a payment order and the system fails to complete settlementpursuant to its rules with respect to any payment order in the funds transfer:
(a) The acceptance by the beneficiarys bank isnullified and no person has any right or obligation based on the acceptance;
(b) The beneficiarys bank is entitled to recoverpayment from the beneficiary;
(c) No payment by the originator to the beneficiaryoccurs under NRS 104A.4406; and
(d) Subject to subsection 5 of
(Added to NRS by 1991, 444)
NRS
1. Except as otherwise provided in subsection 5 of
2. If payment under subsection 1 is made to satisfy anobligation, the obligation is discharged to the same extent discharge wouldresult from payment to the beneficiary of the same amount in money, unless:
(a) The payment under subsection 1 was made by a meansprohibited by the contract of the beneficiary with respect to the obligation;
(b) The beneficiary, within a reasonable time afterreceiving notice of receipt of the order by the beneficiarys bank, notifiedthe originator of the beneficiarys refusal of the payment;
(c) Funds with respect to the order were not withdrawnby the beneficiary or applied to a debt of the beneficiary; and
(d) The beneficiary would suffer a loss that couldreasonably have been avoided if payment had been made by a means complying withthe contract.
If paymentby the originator does not result in discharge under this section, theoriginator is subrogated to the rights of the beneficiary to receive paymentfrom the beneficiarys bank under subsection 1 of
3. For the purpose of determining whether discharge ofan obligation occurs under subsection 2, if the beneficiarys bank accepts apayment order in an amount equal to the amount of the originators paymentorder less charges of one or more receiving banks in the funds transfer,payment to the beneficiary is deemed to be in the amount of the originatorsorder unless upon demand by the beneficiary the originator does not pay thebeneficiary the amount of the deducted charges.
4. Rights of the originator or of the beneficiary of afunds transfer under this section may be varied only by agreement of theoriginator and the beneficiary.
(Added to NRS by 1991, 445)
Part 5
Miscellaneous Provisions
NRS
1. Except as otherwise provided in this article, therights and obligations of a party to a funds transfer may be varied byagreement of the affected party.
2. Funds-transfer system rule means a rule of anassociation of banks governing transmission of payment orders by means of afunds-transfer system of the association or rights and obligations with respectto those orders, or to the extent the rule governs rights and obligationsbetween banks that are parties to a funds transfer in which a Federal Reservebank, acting as an intermediary bank, sends a payment order to thebeneficiarys bank. Except as otherwise provided in this article, a funds-transfersystem rule governing rights and obligations between participating banks usingthe system may be effective even if the rule conflicts with this article andindirectly affects another party to the funds transfer who does not consent tothe rule. A funds-transfer system rule may also govern rights and obligationsof parties other than participating banks using the system to the extent statedin subsection 3 of NRS 104A.4404,subsection 4 of NRS 104A.4405, andsubsection 3 of NRS 104A.4507.
(Added to NRS by 1991, 446)
NRS
1. As used in this section, creditors process meanslevy, attachment, garnishment, notice of lien, sequestration, or similarprocess issued by or on behalf of a creditor or other claimant with respect toan account.
2. If creditors process with respect to an authorizedaccount of the sender of a payment order is served on the receiving bank, andthe receiving bank accepts the payment order, the balance in the authorizedaccount available for satisfaction of the creditors process is deemed to bereduced by the amount of the payment order to the extent the bank did nototherwise receive payment of the order, unless the creditors process is servedat a time and in a manner affording the bank a reasonable opportunity to act onit before the bank accepts the payment order.
3. If a beneficiarys bank has received a paymentorder for payment to the beneficiarys account in the bank, the following rulesapply:
(a) The bank may credit the beneficiarys account. Theamount credited may be set off against an obligation owed by the beneficiary tothe bank or may be applied to satisfy creditors process served on the bankwith respect to the account.
(b) The bank may credit the beneficiarys account andallow withdrawal of the amount credited unless creditors process with respectto the account is served at a time and in a manner affording the bank areasonable opportunity to act to prevent withdrawal.
(c) If creditors process with respect to thebeneficiarys account has been served and the bank has had a reasonableopportunity to act on it, the bank may not reject the payment order except fora reason unrelated to the service of process.
4. Creditors process with respect to a payment by theoriginator to the beneficiary pursuant to a funds transfer may be served onlyon the beneficiarys bank with respect to the debt owed by that bank to thebeneficiary. Any other bank served with the creditors process is not obligedto act with respect to the process.
(Added to NRS by 1991, 446)
NRS
1. For proper cause and in compliance with applicablelaw, a court may restrain:
(a) A person from issuing a payment order to initiate afunds transfer;
(b) An originators bank from executing the paymentorder of the originator; or
(c) The beneficiarys bank from releasing funds to thebeneficiary or the beneficiary from withdrawing the funds.
2. A court may not otherwise restrain a person fromissuing a payment order, paying or receiving payment of a payment order, orotherwise acting with respect to a funds transfer.
(Added to NRS by 1991, 447)
NRS
1. If a receiving bank has received more than onepayment order of the sender or one or more payment orders and other items thatare payable from the senders account, the bank may charge the senders accountwith respect to the various orders and items in any sequence.
2. In determining whether a credit to an account hasbeen withdrawn by the holder of the account or applied to a debt of the holderof the account, credits first made to the account are first withdrawn orapplied.
(Added to NRS by 1991, 447)
NRS
(Added to NRS by 1991, 447)
NRS
1. If, under this article, a receiving bank is obligedto pay interest with respect to a payment order issued to the bank, the amount payablemay be determined:
(a) By agreement of the sender and receiving bank; or
(b) By a funds-transfer system rule if the paymentorder is transmitted through a funds-transfer system.
2. If the amount of interest is not determined by anagreement or rule as stated in subsection 1, the amount is calculated bymultiplying the applicable Federal Funds rate by the amount on which interestis payable, and then multiplying the product by the number of days for whichinterest is payable. The applicable Federal Funds rate is the average of theFederal Funds rates published by the Federal Reserve bank of New York for eachof the days for which interest is payable divided by 360. The Federal Fundsrate for any day on which a published rate is not available is the same as thepublished rate for the next preceding day for which there is a published rate.If a receiving bank that accepted a payment order is required to refund paymentto the sender of the order because the funds transfer was not completed, butthe failure to complete was not due to any fault by the bank, the interestpayable is reduced by a percentage equal to the reserve requirement on depositsof the receiving bank.
(Added to NRS by 1991, 448)
1. The following rules govern choice of law unless theaffected parties otherwise agree or subsection 3 applies:
(a) The rights and obligations between the sender of apayment order and the receiving bank are governed by the law of thejurisdiction in which the receiving bank is located.
(b) The rights and obligations between thebeneficiarys bank and the beneficiary are governed by the law of thejurisdiction in which the beneficiarys bank is located.
(c) The issue of when payment is made pursuant to afunds transfer by the originator to the beneficiary is governed by the law ofthe jurisdiction in which the beneficiarys bank is located.
2. If the parties described in each paragraph ofsubsection 1 have made an agreement selecting the law of a particularjurisdiction to govern rights and obligations between each other, the law ofthat jurisdiction governs those rights and obligations, whether or not thepayment order or the funds transfer bears a reasonable relation to thatjurisdiction.
3. A funds-transfer system rule may select the law ofa particular jurisdiction to govern rights and obligations betweenparticipating banks with respect to payment orders transmitted or processedthrough the system, or the rights and obligations of some or all parties to afunds transfer any part of which is carried out by means of the system. Achoice of law concerning rights and obligations between participating banks isbinding on participating banks. A choice of law concerning rights and obligationsof parties generally is binding on the originator, other sender, or a receivingbank having notice that the funds-transfer system might be used in the fundstransfer and of the choice of law by the system when the originator, othersender, or receiving bank issued or accepted a payment order. The beneficiaryof a funds transfer is bound by the choice of law if, when the funds transferis initiated, the beneficiary has notice that the funds-transfer system mightbe used in the funds transfer and of the choice of law by the system. The law ofa jurisdiction selected pursuant to this subsection may govern, whether or notthat law bears a reasonable relation to the matter in issue.
4. In the event of inconsistency between an agreementunder subsection 2 and a choice-of-law rule under subsection 3, the agreementunder subsection 2 prevails.
5. If a funds transfer is made by use of more than onefunds-transfer system and there is inconsistency between choice-of-law rules ofthe systems, the matter in issue is governed by the law of the selectedjurisdiction that has the most significant relationship to the matter in issue.
(Added to NRS by 1991, 448)
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