KRS 355.2A-103: Definitions and index of definitions.

(1) In this article, unless the context otherwise requires:

(a) 1. "Buyer in ordinary course of business" means a person who, in good

faith and without knowledge that the sale to the person is in violation of

the ownership rights or security interest or leaseh old interest of a third

party in the goods, buys in ordinary course from a person in the business

of selling goods of that kind but does not include a pawnbroker.

2. "Buying" may be for cash or by exchange of other property or on

secured or unsecured credi t and includes receiving goods or documents

of title under a pre -existing contract for sale but does not include a

transfer in bulk or as security for or in total or partial satisfaction of a

money debt;

(b) "Cancellation" occurs when either party puts an end to the lease contract for

default by the other party;

(c) 1. "Commercial unit" means such a unit of goods as by commercial usage

is a single whole for purposes of lease and division of which materially

impairs its character or value on the market or in use.

2. A commercial unit may be a single article, as a machine, or a set of

articles, as a suite of furniture or a line of machinery, or a quantity, as a

gross or carload, or any other unit treated in use or in the relevant

market as a single whole;

(d) "Conforming" goods or performance under a lease contract means goods or

performance that are in accordance with the obligations under the lease

contract;

(e) "Consumer lease" means a lease that a lessor regularly engaged in the

business of leasing or selling makes to a lessee who is an individual and who

takes under the lease primarily for a personal, family, or household purpose;

(f) "Fault" means wrongful act, omission, breach, or default;

(g) "Finance lease" means a lease with respect to which:

1. The lessor does not select, manufacture, or supply the goods;

2. The lessor acquires the goods or the right to possession and use of the

goods in connection with the lease; and

3. One (1) of the following occurs:

a. The lessee receives a copy of the contract by which the lessor

acquired the goods or the right to possession and use of the goods

before signing the lease contract;

b. The lessee's approval of the contrac t by which the lessor acquired

the goods or the right to possession and use of the goods is a

condition to effectiveness of the lease contract;

c. The lessee, before signing the lease contract, receives an accurate

and complete statement designating the pr omises and warranties,

and any disclaimers of warranties, limitations, or modifications of

remedies, or liquidated damages, including those of a third party,

such as the manufacturer of the goods, provided to the lessor by

the person supplying the goods in connection with or as part of the

contract by which the lessor acquired the goods or the right to

possession and use of the goods; or

d. If the lease is not a consumer lease, the lessor, before the lessee

signs the lease contract, informs the lessee in writing:

i. Of the identity of the person supplying the goods to the

lessor, unless the lessee has selected that person and directed

the lessor to acquire the goods or the right to possession and

use of the goods from that person;

ii. That the lessee is enti tled under this article to the promises

and warranties, including those of any third party, provided

to the lessor by the person supplying the goods in connection

with or as part of the contract by which the lessor acquired

the goods or the right to possession and use of the goods; and

iii. That the lessee may communicate with the person supplying

the goods to the lessor and receive an accurate and complete

statement of those promises and warranties, including any

disclaimers and limitations of them or of remedies;

(h) 1. "Goods" means all things that are movable at the time of identification

to the lease contract, or are fixtures (KRS 355.2A -309), but the term

does not include money, documents, instruments, accounts, chattel

paper, general intangibles, or m inerals or the like, including oil and gas,

before extraction.

2. The term also includes the unborn young of animals;

(i) "Hybrid lease" means a single transaction involving a lease of goods and:

1. The provision of services;

2. A sale of other goods; or

3. A sale, lease, or license of property other than goods;

(j) "Installment lease contract" means a lease contract that authorizes or requires

the delivery of goods in separate lots to be separately accepted, even though

the lease contract contains a clause "each delivery is a separate lease" or its

equivalent;

(k) 1. "Lease" means a transfer of the right to possession and use of goods for

a term in return for consideration, but a sale, including a sale on

approval or a sale or return, or retention or creati on of a security interest

is not a lease.

2. Unless the context clearly indicates otherwise, the term includes a

sublease;

(l) 1. "Lease agreement" means the bargain, with respect to the lease, of the

lessor and the lessee in fact as found in their languag e or by implication

from other circumstances including course of dealing or usage of trade

or course of performance as provided in this article.

2. Unless the context clearly indicates otherwise, the term includes a

sublease agreement;

(m) 1. "Lease contra ct" means the total legal obligation that results from the

lease agreement as affected by this article and any other applicable rules

of law.

2. Unless the context clearly indicates otherwise, the term includes a

sublease contract;

(n) "Leasehold interest" means the interest of the lessor or the lessee under a lease

contract;

(o) 1. "Lessee" means a person who acquires the right to possession and u se of

goods under a lease.

2. Unless the context clearly indicates otherwise, the term includes a

sublessee;

(p) 1. "Lessee in ordinary course of business" means a person who, in good

faith and without knowledge that the lease to the person is in violation

of the ownership rights or security interest or leasehold interest of a third

party in the goods, leases in ordinary course from a person in the

business of selling or leasing goods of that kind but does not include a

pawnbroker.

2. "Leasing" may be for c ash or by exchange of other property or on

secured or unsecured credit and includes receiving goods or documents

of title under a pre-existing lease contract but does not include a transfer

in bulk or as security for or in total or partial satisfaction of a money

debt;

(q) 1. "Lessor" means a person who transfers the right to possession and use of

goods under a lease.

2. Unless the context clearly indicates otherwise, the term includes a

sublessor;

(r) "Lessor's residual interest" means the lessor's interes t in the goods after

expiration, termination, or cancellation of the lease contract;

(s) "Lien" means a charge against or interest in goods to secure payment of a debt

or performance of an obligation, but the term does not include a security

interest;

(t) "Lot" means a parcel or a single article that is the subject matter of a separate

lease or delivery, whether or not it is sufficient to perform the lease contract;

(u) "Merchant lessee" means a lessee that is a merchant with respect to goods of

the kind subject to the lease;

(v) 1. "Present value" means the amount as of a date certain of one (1) or more

sums payable in the future, discounted to the date certain.

2. The discount is determined by the interest rate specified by the parties if

the rate was not manifestly unreasonable at the time the transaction was

entered into; otherwise, the discount is determined by a commercially

reasonable rate that takes into account the facts and circumstances of

each case at the time the transaction was entered into;

(w) "Purchase" includes taking by sale, lease, mortgage, security interest, pledge,

gift, or any other voluntary transaction creating an interest in goods;

(x) "Sublease" means a lease of goods the right to possession and use of which

was acquired by the lessor as a lessee under an existing lease;

(y) "Supplier" means a person from whom a lessor buys or leases goods to be

leased under a finance lease;

(z) "Supply contract" means a contract under which a lessor buys or leases goods

to be leased; and

(aa) "Termination" occurs when either party pursuant to a power created by

agreement or law puts an end to the lease contract otherwise than for default.

(2) The following definitions in this article apply to this article:

(a) "Accessions." KRS 355.2A-310(1);

(b) "Construction mortgage." KRS 355.2A-309(1);

(c) "Encumbrance." KRS 355.2A-309(1);

(d) "Fixtures." KRS 355.2A-309(1);

(e) "Fixture filing." KRS 355.2A-309(1); and

(f) "Purchase money lease." KRS 355.2A-309(1).

(3) The following definitions in other articles apply to this article:

(a) "Account." KRS 355.9-102;

(b) "Between merchants." KRS 355.2-104;

(c) "Buyer." KRS 355.2-103(1);

(d) "Chattel paper." KRS 355.9-102;

(e) "Consumer goods." KRS 355.9-102;

(f) "Document." KRS 355.9-102;

(g) "Entrusting." KRS 355.2-403(3);

(h) "General intangible." KRS 355.9-102;

(i) "Instrument." KRS 355.9-102;

(j) "Merchant." KRS 355.2-104;

(k) "Mortgage." KRS 355.9-102;

(l) "Pursuant to commitment." KRS 355.9-102;

(m) "Receipt." KRS 355.2-103;

(n) "Sale." KRS 355.2-106(1);

(o) "Sale on approval." KRS 355.2-326;

(p) "Sale or return." KRS 355.2-326; and

(q) "Seller." KRS 355.2-103.

(4) In addition, Article 1 of this chapter contains general definitions and principles of

construction and interpretation applicable throughout this article.