Unidroit Convention on International Financial Leasing in the United States

Article 9

1. – The lessee shall take proper care of the equipment, use it in a
reasonable manner and keep it in the condition in which it was delivered,
subject to fair wear and tear and to any modification of the equipment
agreed by the parties.

2. – When the leasing agreement cones to an and the lessee, unless
exercising a right to buy the equipment or to hold the equipment on lease
for a further period, shall return the equipment to the lessor in the
condition specified in the previous paragraph.

Article 10

1. – The duties of the supplier under the supply agreement shall also
be owed to the lessee as if it were a party to that agreement and as if
the equipment were to be supplied directly to the lessee. However, the
supplier shall not be liable to both the lessor and the lessee in respect
of the same damage.

2. – Nothing in this article shall entitle the lessee to terminate or
rescind the supply agreement without the consent of the lessor.

Article 11

The lessee’s rights derived from the supply agreement under this
Convention shall not be affected by a variation of any term of the supply
agreement previously approved by the lessee unless it consented to that
variation.

Article 12

1. – Where the equipment is not delivered or is delivered late or
fails to conform to the supply agreement:

(a) the lessee has the right as against the lessor to reject the
equipment or to terminate the leasing agreement; and

(b) the lessor has the right to remedy its failure to tender
equipment in conformity with the supply agreement,

as if the lessee had agreed to buy the equipment from the lessor under
the same terms as those of the supply agreement.

2. – A right conferred by the previous paragraph shall be exercisable
in the same manner and shall be lost in the same circumstances as if the
lessee had agreed to buy the equipment from the lessor under the same
terms as those of the supply agreement.

3. – The lessee shall be entitled to withhold rentals payable under
the leasing agreement until the lessor has remedied its failure to tender
equipment in conformity with the supply agreement or the lessee has lost
the right to reject the equipment.

4. – Where the lessee has exercised a right to terminate the leasing
agreement, the lessee shall be entitled to recover any rentals and other
sums paid in advance, less a reasonable sum for any benefit the lessee
has derived from the equipment.

5. – The lessee shall have no other claim against the lessor for
non-delivery, delay in delivery or delivery of non-conforming equipment
except to the extent to which this results from the act or omission of
the lessor.

6. – Nothing in this article shall affect the lessee’s rights against
the supplier under Article 10.

Article 13

1. – In the event of default by the lessee, the lessor may recover
accrued unpaid rentals, together with interest and damages.

2. – Where the lessee’s default is substantial, then subject to
paragraph 5 the lessor may also require accelerated payment of the value
of the future rentals, where the leasing agreement so provides, or may
terminate the leasing agreement and after such termination:

(a) recover possession of the equipment; and

(b) recover such damages as will place the lessor in the position in
which it would have been had the lessee performed the leasing agreement
in accordance with its terms.

3. – (a) The leasing agreement may provide for the manner in which
the damages recoverable under paragraph 2 (b) are to be computed.

(b) Such provision shall be enforceable between the parties unless it
would result in damages substantially in excess of those provided for
under paragraph 2 (b). The parties may not derogate from or vary the
effect of the provisions of the present sub-paragraph.

4. – Where the lessor has terminated the leasing agreement, it shall
not be entitled to enforce a term of that agreement providing for
acceleration of payment of future rentals, but the value of such rentals
may be taken into account in computing damages under paragraphs 2(b) and
3. The parties may not derogate from or vary the effect of the provisions
of the present paragraph.

5. – The lessor shall not be entitled to exercise its right of
acceleration or its right of termination under paragraph 2 unless it has
by notice given the lessee a reasonable opportunity of remedying the
default so far as the same may be remedied.

6. – The lessor shall not be entitled to recover damages to the
extent that it has failed to take all reasonable steps to mitigate its
loss.

Article 14

1. – The lessor may transfer or otherwise deal with all or any of its
rights in the equipment or under the leasing agreement. Such a transfer
shall not relieve the lessor of any of its duties under the leasing
agreement or alter either the nature of the leasing agreement or its
legal treatment as provided in this Convention.

2. – The lessee may transfer the right to the use of the equipment or
any other rights under the leasing agreement only with the consent of the
lessor and subject to the rights of third parties.

CHAPTER III – FINAL PROVISIONS

Article 15

1. – This Convention is open for signature at the concluding meeting
of the Diplomatic Conference for the Adoption of the Draft Unidroit
Conventions on International Factoring and International Financial
Leasing and will remain open for signature by all States at Ottawa until
31 December 1990.

2. – This Convention is subject to ratification, acceptance or
approval by States which have signed it.

3. – This Convention is open for accession by all States which are
not signatory States as from the date it is open for signature.

4. – Ratification, acceptance, approval or accession is effected by
the deposit of a formal instrument to that effect with the depositary.

Article 16

1. – This convention enters into force on the first day of the month
following the expiration of six months after the date of deposit of the
third instrument of ratification, acceptance, approval or accession.

2. – For each State that ratifies, accepts, approves, or accedes to
this Convention after the deposit of the third instrument of
ratification, acceptance, approval or accession, this Convention enters
into force in respect of that State on the first day of the month
following the expiration of six months after the date of the deposit of
its instrument of ratification, acceptance, approval or accession.