The following excerpt is taken from The ABCs of the UCC:

Amended Article 2A: Leases by Amelia H. Boss and Stephen T.

Whelan. Copyright 2005 by the American Bar Association.
Reprinted here with permission. The material contained herein
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Introduction
A.
History of Article 2A
Examples of leasing transactions can be traced back to Roman times, but it has
only been within recent years, since the original enactment of the Uniform
Commercial Code, that leasing as an industry has grown and flourished. Fed by
such benefits as favorable tax and accounting treatment, leasing began to grow
tremendously during the 1950s and 1960s, soon coming into its own as a distinct
industry.
Despite its ancient origins, the law applicable to leasing transactions was
far from clear. Efforts were made to draw principles from the ancient law of
bailments; sales law was often used by analogy; and the law of conditional sales,
secured transactions, licensing, and real estate leasing law were frequently
invoked. The uncertain nature of the law of leasing led, in the early 1980s, to
efforts to codify the law of leasing. Although originally proposed and formulated
as a free-standing, independent, and uniform law, when this new codification
finally emerged in 1987 it was presented as the first new addition to the Uniform
Commercial Code, Article 2A on leases.
The choice of the article number was a reflection of the fact that this new
body of leasing law was based primarily on the sales law found in Article 2 of the
Code. Oklahoma, in 1988, was the first state to enact Article 2A, followed by
South Dakota, California, and several other states. From the very beginning,
however, Article 2A was subjected to nonuniform amendments which undercut its
status as a uniform law. Academic critique began, and several states, including
New York and California, raised serious questions about specific provisions of
Article 2A. As a result of these criticisms, questions, and other input, Official
Amendments to Article 2A were proposed and adopted in 1990, leading to the
1990 Official Text.
Subsequently, however, efforts began to revise both the sales and leasing
articles of the Code; these culminated in 2003 with the final adoption of the 2003
Amendments to Articles 2 and 2A. The amendments were much more limited in
scope than had been originally anticipated when the revision process began. The
focus of this revision attempt was primarily on the sales provisions of the Code,

The ABCs of the UCC: Amended Article 2A: Leases

and Article 2A was amended only to conform (in most situations) to the limited
revisions to Article 2. As of this writing (2004), amended Article 2A has not been
adopted in any state. As a result, this book will discuss primarily the 1990 Official
Text and, where appropriate, the 2003 Amendments as well. Citations are to the
2003 Official Text, and (where different) references to the 1990 Official Text or
its language appear in brackets. Additionally, Article 1 was revised (and
renumbered) in 2001; all citations to Article 1 that follow are to the 2001
revisions with the pre-revision citation following in brackets.
B. Basic Principles and Interpretation of Article 2A
One of the basic tenets on which the entire Uniform Commercial Code is based is
the notion that the parties to a transaction should be able to agree to the rules
applicable to them, and set forth those terms under which they intend to do
business. 1-302(a) [ 1-102(3)]. This concept of freedom of contract runs
throughout Article 2A. 2A-101, Official Comment. The latitude extended to
lessors and lessees includes the ability to contractually alter the obligations
imposed on them by Article 2A. Id. The only limitation is that the obligations of
good faith, diligence, reasonableness, and care imposed by the Code may not be
disclaimed, although the parties may set forth the standards by which such
obligations are to be measured. 1-302(b) [ 1-102(3)]. Thus, in many fully
negotiated lease deals, Article 2A will function as a backdrop against which the
terms of the transaction are negotiated. In non-negotiated deals, or where the
agreement entered into by the parties is found unenforceable, the Code provides a
comprehensive set of rules governing the transaction and providing its terms.
There are, of course, limitations on the parties ability to agree. For
example, in Danka Funding Co. v. Sky City Casino, 747 A.2d 837 (N.J. Super. Ct.
Law Div. 1999) the court upheld an Indian Tribes sovereign immunity from civil
suit despite the existence of a forum selection clause in an equipment lease.
Furthermore, as discussed below, a court has the ability to refuse to enforce the
lease agreement, or any part of it, should it find the agreement or its terms to be
unconscionable. 2A-108(1). The obligation of good faith in the performance or
enforcement of any lease contract is likewise imposed by the Code and Article 2A
and is not disclaimable. 2A-103(1)(m), 1-304, 1-302(b) [1-203, 1-102(3)].
Moreover, as will be discussed below, in the case of consumer leases, the
consumer receives special protection that may override the terms of the lease
agreement.
Article 2A is, nonetheless, based on a model of freedom of contract, and
contains relatively few mandatory provisions. There is no general requirement
that a lessor file a financing statement or similar document to protect its interest in
the leased goods. Nonetheless, lessors should proceed cautiously. First, prudent
lessors will continue to file protective financing statements under 9-505, thereby
guarding against the possibility that the lease will be found, not to create a
lease, but to create a security interest under 1-201(35) and 1-203 [ 1201(37)], potentially leading to the defeat of the lessors interest under the rules
found in Article 9. Second, where the lessor anticipates that the leased goods will
become attached to real estate, the lessor should make a fixture filing. 2A-309.
Copyright 2005 by the American Bar Association

The ABCs of the UCC: Amended Article 2A: Leases

Last, certificate of title statutes in many jurisdictions may require that lessors note
their interest in such items as automobiles, trailers, mobile homes, boats, and farm
tractors on the certificate of title covering the leased item in order to assert those
interests against third parties. 2A-104.
Leasing law found in Article 2A continues to be supplemented by other
law, such as the law of estoppel, fraud, and mistake. 1-103(b) [ 1-103]. In
addition, an applicable rule of law that establishes a different rule for consumers
will continue to apply and will not be preempted by Article 2As provisions.
2A-104. Thus, in B & S Marketing Enterprises, LLC v. Consumer Protection
Division, 153 Md.App. 130, 835 A.2d 215 (Md. Ct. Spec. App. 2003), the court
applied Maryland Consumer Loan Law rather than the UCC in determining
whether a purported sale-leaseback was in reality a loan which violated usury
laws. Similarly, in LaChapelle v. Toyota Motor Credit Corp., 102 Cal.App.4th
977, 126 Cal.Rptr.2d 32 (Cal. Ct. App. 2002), a controversy involving whether
truth-in-lending wording was required in the contract, the court noted that
although it concluded that the outcome of the case would be the same under
Californias Article 2A or under Californias Vehicle Leasing Act or Consumer
Legal Remedies Act, in the event of a conflict, Article 2A would give way to the
consumer law.
As Article 2A is a relatively recent addition to the Uniform Commercial
Code, courts will undoubtedly be called upon to interpret its provisions in cases of
first impression. These courts will not, however, be writing on a completely clean
slate. To the extent that Article 2As provisions are based upon comparable
provisions of Article 2 on sales, with only minor changes to reflect changes in
leasing terminology, decisions under Article 2 should be viewed as persuasive
but not binding in determining the meaning of parallel Article 2A provisions.
2A-101, Official Comment. Similarly, the Official Comments to the sales
provisions may be of guidance in interpreting the parallel leasing provisions. In
instances where the leasing provision is drawn from Article 9 on secured
transactions, as is the case with respect to the right to repossession, it is
reasonable to expect that the decisions under the Article 9 counterpart section on
such issues as what constitutes breach of the peace will be relevant.
Care should be taken, however, to distinguish those situations where the
drafters of Article 2A affirmatively rejected Article 2s provisions as a model.
Where legitimate differences between the articles exist, blind adherence to
parallelism would be unwarranted. As the Official Comments to the 2003
Amendments remind us: Leasing is distinctive.

Copyright 2005 by the American Bar Association