Mississippi Code

Miss. Code Ann. § 75-1-203 (2026)

Lease distinguished from security interest

✓ current as of July 2026

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(a) Whether a transaction in the form of a lease creates a lease or security interest is determined by the facts of each case.

(b) A transaction in the form of a lease creates a security interest if the consideration that the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease and is not subject to termination by the lessee, and:
- (1) The original term of the lease is equal to or greater than the remaining economic life of the goods;
- (2) The lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;
- (3) The lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or for nominal additional consideration upon compliance with the lease agreement; or
- (4) The lessee has an option to become the owner of the goods for no additional consideration or for nominal additional consideration upon compliance with the lease agreement.

(c) A transaction in the form of a lease does not create a security interest merely because:
- (1) The present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or is greater than the fair market value of the goods at the time the lease is entered into;
- (2) The lessee assumes risk of loss of the goods;
- (3) The lessee agrees to pay, with respect to the goods, taxes, insurance, filing, recording, or registration fees, or service or maintenance costs;
- (4) The lessee has an option to renew the lease or to become the owner of the goods;
- (5) The lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed; or
- (6) The lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.

(d) Additional consideration is nominal if it is less than the lessee's reasonably predictable cost of performing under the lease agreement if the option is not exercised. Additional consideration is not nominal if:
- (1) When the option to renew the lease is granted to the lessee, the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed; or
- (2) When the option to become the owner of the goods is granted to the lessee, the price is stated to be the fair market value of the goods determined at the time the option is to be performed.

(e) The "remaining economic life of the goods" and "reasonably predictable" fair market rent, fair market value, or cost of performing under the lease agreement must be determined with reference to the facts and circumstances at the time the transaction is entered into.

Former § 75-1-203 [Codes, 1942, 41A:1-203; Laws, 1966, ch. 316, § 1-203, eff. 3/31/1968; repealed by Laws, 2010, ch. 506, § 44, eff. 7/1/2010] is now found in comparable provisions at § 75-1-304 enacted by Laws, 2010, ch. 506, § 3, eff. 7/1/2010; Present § 75-1-203 is derived from former § 75-1-201(37)[Codes, 1942, § 41A:1-201; Laws, 1966, ch. 316, § 1-201; Laws, 1977, ch. 452, § 2; Laws, 1990, ch. 384, § 45; Laws, 1992, ch. 420, § 69; Laws, 1994, ch. 445, § 3; Laws, 2001, ch. 495, § 5; Laws, 2006, ch. 527, § 41; Laws, 2007, ch. 355, § 34; Laws, 2007, ch. 381, § 34, eff. 3/15/2007; repealed by Laws, 2010, ch. 506, § 44, eff. 7/1/2010] and was enacted by Laws, 2010, ch. 506, § 3, eff. 7/1/2010.

Notes of Decisions

Cited in 15 cases, 1987–2014 · leading case: Uhs-qualicare, Inc. v. Gulf Coast Com. Hosp., Inc., 525 So. 2d 746 (Miss. 1987).

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Uhs-qualicare, Inc. v. Gulf Coast Com. Hosp., Inc., 525 So. 2d 746 (Miss. 1987). “Miss. Code Ann. § 75-1-203 (1972) (imposing general duty of good faith); but see Griffin v.”

Baker Donelson Bearman & Caldwell, PC v. Muirhead, 920 So. 2d 440 (Miss. 2006). “That is not to say an insurance company can ignore its duty to defend where it has agreed to defend its insureds for covered claims, and *451 the allegations of a complaint reasonably bring a claim within the coverage of its policy.”

In Re Hb Logistics, LLC, 460 B.R. 291 (Bankr. N.D. Ala. 2011). · cites it 3× “26 Although BEF has not argued that Mississippi has passed a TRAC neutral statute similar to that of Alabama’s, the Court finds that the purported lease agreements are clearly true leases under Miss.Code § 75-1-203. Although the leases are not subject to termination, the debt-…”

S. Healthcare Servs., Inc. v. Lloyd's of London, 110 So. 3d 735 (Miss. 2013). “That is not to say an insurance company can ignore its duty to defend where it has agreed to defend its insureds for covered claims, and the allegations of a complaint reasonably bring a claim within the coverage of its policy.”

Hartford Acc. & Indem. Co. v. Foster, 528 So. 2d 255 (Miss. 1988). “Miss. Code Ann. § 75-1-203 (1972) (imposing general duty of good faith); but see Griffin v.”

Minnesota Life Ins. Co. v. Columbia Cas. Co., 164 So. 3d 954 (Miss. 2014). “That is not to say an insurance company can ignore its duty to defend where it has agreed to defend its insureds for covered claims, and the allegations of a complaint reasonably bring a claim within the coverage of its policy.”

Hartle v. Packard Elec., 626 So. 2d 106 (Miss. 1993). “According to Hartle, Miss. Code Ann. § 75-1-203 (1972) imposes a "good faith" obligation on an employer when enforcing an employment contract.”

Lippincott v. Miss. Bureau of Narcotics, 856 So. 2d 465 (Miss. Ct. App. 2003). “Central to this issue is the question of whether any implied terms to this apparently complete agreement exist.”

Braidfoot v. William Carey Coll., 793 So. 2d 642 (Miss. Ct. App. 2000). “1992) (quoting Miss.Code Ann. § 75-1-203 (1972)). The Mississippi Supreme Court, relying on the RESTATEMENT (SECOND) OR CONTRACTS, has stated: Good faith is the faithfulness of an agreed purpose between two parties, a purpose which is consistent with justified expectations of…”

Williamson v. Elf Aquitaine, Inc., 925 F. Supp. 1163 (N.D. Miss. 1996). “14 Miss.Code Ann. § 75-1-203. In construing this language, and in particular the Mississippi Supreme Court’s holding in Continental Oil v.”

Illinois Cent. R.R. v. Harried, 681 F. Supp. 2d 772 (S.D. Miss. 2009). “1992); Miss.Code Ann. § 75-1-203 (1972)). The Mississippi Supreme Court stated: Good faith is the faithfulness of an agreed purpose between two parties, a purpose which is consistent with justified expectations of the other party.”

Unity Commc'ns, Inc. v. AT & T MOBILITY, LLC, 643 F. Supp. 2d 829 (S.D. Miss. 2009). “A leading contracts treatise describes the duty of good faith and fair dealing as follows: In recent years, courts have often supplied a term requiring both parties to a contract to exercise what is called ‘good faith’ or sometimes ‘good faith and fair dealing.”

Show all 15 citing cases →

— Miss. Code Ann. § 75-1-203(19) — 1 case

Mississippi Comm'n on Env't Quality v. Desai, 868 So. 2d 381 (Miss. Ct. App. 2004).

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