It is no secret that business transactions have the potential to be complicated, but you do not necessarily have to draw up a contract entirely from scratch for every sale purchase or lease that you make. The reason for this, as you may know, is that many of the terms that you may want to include in your contract are already statutory law thanks to the Uniform Commercial Code.
Of course, that does not mean that you would be able to simply sit back and ride the UCC to success in every situation. In fact, you may want to include duplicate or reinforcements of some of the terms in the UCC in your contracts. Please read on for a brief example using the often-misunderstood topic of finance leases.
Article 2A of the UCC on leases contains five parts and many independent sections. These differentiate the different types of leases, the obligations of the parties involved, and so on. In the code, finance leases are defined as a three-party agreement in which the lender buys equipment from a supplier and leases it to someone else.
In these leases, the lessee has little recourse but to fulfill the obligations of the lease. He or she also receives the benefits of the warranty from the supplier. Basically, it is a true lease where a third party buys a piece of equipment with the express purpose of leasing it to someone else.
Of course, buying something simply to lease it is a significant amount of risk to take on. If you were engaged in this type of business, you may want to make sure that your lessees would have to fulfill their obligations no matter what happens. That is why you may want to include language in your contact that reinforces explicitly that you expect to be paid — even if it means repeating some of the sections in the UCC.
There is a lot to think about when coming up with any type of contract. Therefore please do not use this as legal advice for your own business. It is only meant as general information.
