KRS 355.2A-303: Alienability of party's interest under lease contract or of lessor's

residual interest in goods -- Delegation of performance -- Transfer of rights.

(1) As used in this section, "creation of a security interest" includes the sale of a lease

contract that is subject to Article 9, Secured Transactions, by reason of KRS 355.9 -

109(1)(c).

(2) Except as provided in subsection (3) of this section and KRS 355.9-407, a provision

in a lease agreement which:

(a) Prohibits the voluntary or involuntary transfer, including a transfer by sale,

sublease, creation, or enforcement of a security interest, or attachment, levy,

or other judicial process, of an interest of a party under the lease contract or of

the lessor's residual interest in the goods; or

(b) Makes such a transfer an event of default,

gives rise to the rights and remedies provided in subsection (4) of this section, but a

transfer that is prohibited or is an event of default under the lease agreement is

otherwise effective.

(3) A provision in a lease agreement which:

(a) Prohibits a transfer of a right to damages for default with respect to the whole

lease contract or of a right to payment arising out of the transferor's due

performance of the transferor's entire obligation; or

(b) Makes such a transfer an event of default,

is not enforceable, and such a transfer is not a transfer that materially impairs the

prospect of obtaining return performance by, materially changes the duty of, or

materially increases the burden or risk imposed on, the other party t o the lease

contract within the purview of subsection (5).

(4) Subject to subsection (3) of this section and KRS 355.9-407:

(a) If a transfer is made which is made an event of default under a lease

agreement, the party to the lease contract not making the transfer, unless that

party waives the default or otherwise agrees, has the rights and remedies

described in KRS 355.2A-501(2);

(b) If paragraph (a) is not applicable and if a transfer is made that:

1. Is prohibited under a lease agreement; or

2. Materially impairs the prospect of obtaining return performance by,

materially changes the duty of, or materially increases the burden or risk

imposed on, the other party to the lease contract, unless the party not

making the transfer agrees at any time to the transfer in the lease

contract or otherwise,

then, except as limited by contract:

3. The transferor is liable to the party not making the transfer for damages

caused by the transfer to the extent that the damages could not

reasonably be prevented by the party not making the transfer; and

4. A court having jurisdiction may grant other appropriate relief, including

cancellation of the lease contract or an injunction against the transfer.

(5) A transfer of "the lease" or of "all my rights under the lease ", or a transfer in similar

general terms, is a transfer of rights and, unless the language or the circumstances,

as in a transfer for security, indicate the contrary, the transfer is a delegation of

duties by the transferor to the transferee. Acceptance b y the transferee constitutes a

promise by the transferee to perform those duties. The promise is enforceable by

either the transferor or the other party to the lease contract.

(6) Unless otherwise agreed by the lessor and the lessee, a delegation of perfor mance

does not relieve the transferor as against the other party of any duty to perform or of

any liability for default.

(7) In a consumer lease, to prohibit the transfer of an interest of a party under the lease

contract or to make a transfer an event of default, the language must be specific, by

a writing, and conspicuous.