N.Y. Uniform Commercial Code Law § 2-a-305: Sale or Sublease of Goods by Lessee

Section 2-A-305. Sale or Sublease of Goods by Lessee.

(1) Subject to the provisions of Section 2-A-303, a buyer or sublessee

from the lessee of goods under an existing lease contract obtains, to

the extent of the interest transferred, the leasehold interest in the

goods that the lessee had or had power to transfer, and except as

provided in subsection (2) and Section 2-A-511(4), takes subject to the

existing lease contract. A lessee with a voidable leasehold interest has

power to transfer a good leasehold interest to a good faith buyer for

value or a good faith sublessee for value, but only to the extent set

forth in the preceding sentence. When goods have been delivered under a

transaction of lease the lessee has that power even though:

(a) the lessor was deceived as to the identity of the lessee;

(b) the delivery was in exchange for a check which is later

dishonored; or

(c) the delivery was procured through fraud punishable as

larcenous under the criminal law.

(2) A buyer in the ordinary course of business or a sublessee in the

ordinary course of business from a lessee who is a merchant dealing in

goods of that kind to whom the goods were entrusted by the lessor

obtains, to the extent of the interest transferred, all of the lessor's

and lessee's rights to the goods, and takes free of the existing lease

contract.

(3) A buyer or sublessee from the lessee of goods that are subject to

an existing lease contract and are covered by a certificate of title

issued under a statute of this state or of another jurisdiction takes no

greater rights than those provided both by this section and by the

certificate of title statute.