TITLE 11 COMMERCIAL CODE

2A. Leases, 11-2A-101 through 11-2A-532.

ARTICLE 2A LEASES

11-2A-527. Lessor's rights to dispose of goods.

After a default by a lessee under the lease contract of the type described in Code Section 11-2A-523(1) or 11-2A-523(3)(a) or after the lessor refuses to deliver or takes possession of goods (Code Section 11-2A-525 or 11-2A-526), or, if agreed, after other default by a lessee, the lessor may dispose of the goods concerned or the undelivered balance thereof by lease, sale, or otherwise.
Except as otherwise provided with respect to damages liquidated in the lease agreement (Code Section 11-2A-504) or otherwise determined pursuant to agreement of the parties (Code Sections 11-1-302 and 11-2A-503), if the disposition is by lease agreement substantially similar to the original lease agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, the lessor may recover from the lessee as damages (i) accrued and unpaid rent as of the date of the commencement of the term of the new lease agreement, (ii) the present value, as of the same date, of the total rent for the then remaining lease term of the original lease agreement minus the present value, as of the same date, of the rent under the new lease agreement applicable to that period of the new lease term which is comparable to the then remaining term of the original lease agreement, and (iii) any incidental damages allowed under Code Section 11-2A-530, less expenses saved in consequence of the lessee's default.
If the lessor's disposition is by lease agreement that for any reason does not qualify for treatment under subsection (2), or is by sale or otherwise, the lessor may recover from the lessee as if the lessor had elected not to dispose of the goods and Code Section 11-2A-528 governs.
A subsequent buyer or lessee who buys or leases from the lessor in good faith for value as a result of a disposition under this section takes the goods free of the original lease contract and any rights of the original lessee even though the lessor fails to comply with one or more of the requirements of this article.
The lessor is not accountable to the lessee for any profit made on any disposition.A lessee who has rightfully rejected or justifiably revoked acceptance shall account to the lessor for any excess over the amount of the lessee's security interest (Code Section 11-2A-508(5)).

(Code 1981, §11-2A-527, enacted by Ga. L. 1993, p. 633, § 1; Ga. L. 2015, p. 996, § 3B-9/SB 65.)

The 2015 amendment, effective January 1, 2016, substituted "(Code Sections 11-1-302" for "(Code Sections 11-1-102(3)" near the middle of subsection (2).

Editor's notes.

- Ga. L. 2015, p. 996, § 1-1/SB 65, not codified by the General Assembly, provides: "(a) This Act shall be known and may be cited as the 'Debtor-Creditor Uniform Law Modernization Act of 2015.'

"(b) To promote consistency among the states, it is the intent of the General Assembly to modernize certain existing uniform laws promulgated by the Uniform Law Commission affecting debtor and creditor rights, responsibilities, and relationships and other federally recognized laws affecting such rights, responsibilities, and relationships."

JUDICIAL DECISIONS

Where a lease agreement provided for liquidated damages and set forth a formula to calculate such damages, O.C.G.A. §§ 11-2A-527 and11-2A-528 did not apply; rather, the more general directives of O.C.G.A. § 11-2A-504, regarding liquidation of damages, were controlling. Carter v. Tokai Fin. Servs., Inc., 231 Ga. App. 755, 500 S.E.2d 638 (1998).

Damages liquidated in agreement.

- Where a lease financing agreement specifically set forth a formula to calculate damages, O.C.G.A. §§ 11-2A-527 and11-2A-528 were not applicable in an action on a deficiency claim arising out of the sale of collateral. Jamsky v. HPSC, Inc., 238 Ga. App. 447, 519 S.E.2d 246 (1999).

Erroneous finding or interpretation.

- Because the trial court did not find any material miscalculation of figures in an arbitrator's award, mistake in the award's descriptions, or imperfection in the form of the award, but refused to apply O.C.G.A. § 11-2A-529(1)(b), opting instead to apply O.C.G.A. § 11-2A-528(1)(ii), it substituted its judgment for that of the arbitrator, in violation of 9 U.S.C. § 11, as to whether a lessor had shown an inability to reasonably dispose of the leased equipment, and it penalized the lessor for not relitigating the issue at the trial court level, which amounted to reversible error. Lanier Worldwide, Inc. v. BridgeCenters at Park Meadows, LLC, 279 Ga. App. 879, 633 S.E.2d 49 (2006).

Cited in Summerhill Neighborhood Dev. Corp. v. Telerent Leasing Corp., 242 Ga. App. 142, 528 S.E.2d 889 (2000).

RESEARCH REFERENCES

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2A-527.