GENERAL PROVISIONS

NMSA 1978 ch. 55, art. 2A, pt. 1

in effect

NMSA 1978, § 55-2A-101 Short title

55-2A-101. Short title This article shall be known and may be cited as the Uniform Commercial Code - Leases. Rationale for Codification: There are several reasons for codifying the law with respect to leases of goods. An analysis of the case law as it applies to leases of goods suggests at least three significant issues to be resolved by codification. First, what is a lease? It is necessary to define lease to determine whether a transaction creates a lease or a security interest disguised as a lease. If the transaction creates a security interest disguised as a lease, the lessor will be required to file a financing statement or take other action to perfect its interest in the goods against third parties. There is no such requirement with respect to leases. Yet the distinction between a lease and a security interest disguised as a lease is not clear. Second, will the lessor be deemed to have made warranties to the lessee? If the transaction is a sale the express and implied warranties of Article 2 of the Uniform Commercial Code apply. However, the warranty law with respect to leases is uncertain. Third, what remedies are available to the lessor upon the lessee's default? If the transaction is a security interest disguised as a lease, the answer is stated in Part 5 of the Article on Secured Transactions (Article 9). There is no clear answer with respect to leases. There are reasons to codify the law with respect to leases of goods in addition to those suggested by a review of the reported cases. The answer to this important question should not be limited to the issues raised in these cases. Is it not also proper to determine the remedies available to the lessee upon the lessor's default? It is, but that issue is not reached through a review of the reported cases. This is only one of the many issues presented in structuring, negotiating and documenting a lease of goods. Statutory Analogue: - After it was decided to proceed with the codification project, the drafting committee of the National Conference of Commissioners on Uniform State Laws looked for a statutory analogue, gradually narrowing the focus to the Article on Sales (Article 2) and the Article on Secured Transactions (Article 9). A review of the literature with respect to the sale of goods reveals that Article 2 is predicated upon certain assumptions: Parties to the sales transaction frequently are without counsel; the agreement of the parties often is oral or evidenced by scant writings; obligations between the parties are bilateral; applicable law is influenced by the need to preserve freedom of contract. A review of the literature with respect to personal property security law reveals that Article 9 is predicated upon very different assumptions: Parties to a secured transaction regularly are represented by counsel; the agreement of the parties frequently is reduced to a writing, extensive in scope; the obligations between the parties are essentially unilateral; and applicable law seriously limits freedom of contract. The lease is closer in spirit and form to the sale of goods than to the creation of a security interest. While parties to a lease are sometimes represented by counsel and their agreement is often reduced to a writing, the obligations of the parties are bilateral and the common law of leasing is dominated by the need to preserve freedom of contract. Thus the drafting committee concluded that Article 2 was the appropriate statutory analogue. Issues: - The drafting committee then identified and resolved several issues critical to codification: Scope: - The scope of the Article was limited to leases (Section 2A-102) [55-2A-102 NMSA 1978]. There was no need to include leases intended as security, i.e., security interests disguised as leases, as they are adequately treated in Article 9. Further, even if leases intended as security were included, the need to preserve the distinction would remain, as policy suggests treatment significantly different from that accorded leases. Definition of Lease: - Lease was defined to exclude leases intended as security (Section 2A-103(1)(j) [55-2A-103 NMSA 1978]). Given the litigation to date a revised definition of security interest was suggested for inclusion in the Act. See pre-2001 Section 1-201(37) [55-1-201 NMSA 1978]. Section 1-203 [55-1-203 NMSA 1978] now sharpens the distinction between leases and security interests disguised as leases. Filing: - The lessor was not required to file a financing statement against the lessee or take any other action to protect the lessor's interest in the goods (Section 2A-301) [55-2A-301 NMSA 1978]. The refined definition of security interest will more clearly signal the need to file to potential lessors of goods. Those lessors who are concerned will file a protective financing statement (Section 9-408) [55-9-408 NMSA 1978]. Warranties: - All of the express and implied warranties of the Article on Sales (Article 2) were included (Sections 2A-210 through 2A-216) [55-2A-210 to 55-2A-216 NMSA 1978], revised to reflect differences in lease transactions. The lease of goods is sufficiently similar to the sale of goods to justify this decision. Further, many courts have reached the same decision. Certificate of Title Laws: - Many leasing transactions involve goods subject to certificate of title statutes. To avoid conflict with those statutes, this Article is subject to them (Section 2A-104(1)(a) [55-2A-104 NMSA 1978]). Consumer Leases: - Many leasing transactions involve parties subject to consumer protection statutes or decisions. To avoid conflict with those laws this Article is subject to them to the extent provided in (Section 2A-104(1)(c) and (2) [55-2A-104 NMSA 1978]). Further, certain consumer protections have been incorporated in the Article. Finance Leases: - Certain leasing transactions substitute the supplier of the goods for the lessor as the party responsible to the lessee with respect to warranties and the like. The definition of finance lease (Section 2A-103(1)(g) [55-2A-104 NMSA 1978]) was developed to describe these transactions. Various sections of the Article implement the substitution of the supplier for the lessor, including Sections 2A-209 [55-2A-209 NMSA 1978] and 2A-407 [55-2A-407 NMSA 1978]. No attempt was made to fashion a special rule where the finance lessor is an affiliate of the supplier of goods; this is to be developed by the courts, case by case. Sale and Leaseback: - Sale and leaseback transactions are becoming increasingly common. A number of state statutes treat transactions where possession is retained by the seller as fraudulent per se or prima facie fraudulent. That position is not in accord with modern practice and thus is changed by the Article "if the buyer bought for value and in good faith" (Section 2A-308(3) [55-2A-308 NMSA 1978]). Remedies: - The Article has not only provided for lessor's remedies upon default by the lessee (Sections 2A-523 through 2A-531 [55-2A-523 to 55-2A-531 NMSA 1978]), but also for lessee's remedies upon default by the lessor (Sections 2A-508 through 2A-522 [55-2A-508 to 55-2A-522 NMSA 1978]). This is a significant departure from Article 9, which provides remedies only for the secured party upon default by the debtor. This difference is compelled by the bilateral nature of the obligations between the parties to a lease. Damages: - Many leasing transactions are predicated on the parties' ability to stipulate an appropriate measure of damages in the event of default. The rule with respect to sales of goods (Section 2-718) [55-2-718 NMSA 1978] is not sufficiently flexible to accommodate this practice. Consistent with the common law emphasis upon freedom to contract, the Article has created a revised rule that allows greater flexibility with respect to leases of goods (Section 2A-504(1) [55-2A-504 NMSA 1978]). History: - This Article is a revision of the Uniform Personal Property Leasing Act, which was approved by the National Conference of Commissioners on Uniform State Laws in August, 1985. However, it was believed that the subject matter of the Uniform Personal Property Leasing Act would be better treated as an article of this Act. Thus, although the Conference promulgated the Uniform Personal Property Leasing Act as a Uniform Law, activity was held in abeyance to allow time to restate the Uniform Personal Property Leasing Act as Article 2A. In August, 1986 the Conference approved and recommended this Article (including conforming amendments to Article 1 and Article 9) for promulgation as an amendment to this Act. In December, 1986 the Council of the American Law Institute approved and recommended this Article (including conforming amendments to Article 1 and Article 9), with official comments, for promulgation as an amendment to this Act. In March, 1987 the Permanent Editorial Board for the Uniform Commercial Code approved and recommended this Article (including conforming amendments to Article 1 and Article 9), with official comments, for promulgation as an amendment to this Act. In May, 1987 the American Law Institute approved and recommended this Article (including conforming amendments to Article 1 and Article 9), with official comments, for promulgation as an amendment to this Act. In August, 1987 the Conference confirmed its approval of the final text of this Article. Upon its initial promulgation, Article 2A was rapidly enacted in several states, was introduced in a number of other states, and underwent bar association, law revision commission and legislative study in still further states. In that process debate emerged, principally sparked by the study of Article 2A by the California Bar Association, California's non-uniform amendments to Article 2A, and articles appearing in a symposium on Article 2A published after its promulgation in the Alabama Law Review. The debate chiefly centered on whether Article 2A had struck the proper balance or was clear enough concerning the ability of a lessor to grant a security interest in its leasehold interest and in the residual, priority between a secured party and the lessee, and the lessor's remedy structure under Article 2A. This debate over issues on which reasonable minds could and did differ began to affect the enactment effort for Article 2A in a deleterious manner. Consequently, the Standby Committee for Article 2A, composed predominantly of the former members of the drafting committee, reviewed the legislative actions and studies in the various states, and opened a dialogue with the principal proponents of the non-uniform amendments. Negotiations were conducted in conjunction with, and were facilitated by, a study of the uniform Article and the non-uniform Amendments by the New York Law Revision Commission. Ultimately, a consensus was reached, which has been approved by the membership of the Conference, the Permanent Editorial Board, and the Council of the Institute. Rapid and uniform enactment of Article 2A is expected as a result of the completed amendments. The Article 2A experience reaffirms the essential viability of the procedures of the Conference and the Institute for creating and updating uniform state law in the commercial law area. Relationship of Article 2A to Other Articles: - The Article on Sales provided a useful point of reference for codifying the law of leases. Many of the provisions of that Article were carried over, changed to reflect differences in style, leasing terminology or leasing practices. Thus, the official comments to those sections of Article 2 whose provisions were carried over are incorporated by reference in Article 2A, as well; further, any case law interpreting those provisions should be viewed as persuasive but not binding on a court when deciding a similar issue with respect to leases. Any change in the sequence that has been made when carrying over a provision from Article 2 should be viewed as a matter of style, not substance. This is not to suggest that in other instances Article 2A did not also incorporate substantially revised provisions of Article 2, Article 9 or otherwise where the revision was driven by a concern over the substance; but for the lack of a mandate, the drafting committee might well have made the same or a similar change in the statutory analogue. Those sections in Article 2A include Sections 2A-104, 2A-105, 2A-106, 2A-108(2) and (4), 2A-109(2), 2A-208, 2A-214(2) and (3)(a), 2A-216, 2A-303, 2A-306, 2A-503, 2A-504(3)(b), 2A-506(2), and 2A-515 [55-2A-104, 55-2A-105, 55-2A-106, 55-2A-108, 55-2A-109, 55-2A-208, 55-2A-214, 55-2A-216, 55-2A-303, 55-2A-306, 55-2A-503, 55-2A-504, 55-2A-506 and 55-2A-515, respectively.] For lack of relevance or significance not all of the provisions of Article 2 were incorporated in Article 2A. This codification was greatly influenced by the fundamental tenet of the common law as it has developed with respect to leases of goods: freedom of the parties to contract. Note that, like all other Articles of this Act, the principles of construction and interpretation contained in Article 1 are applicable throughout Article 2A (Section 2A-103(4) [55-2A-103 NMSA 1978]). These principles include the ability of the parties to vary the effect of the provisions of Article 2A, subject to certain limitations including those that relate to the obligations of good faith, diligence, reasonableness and care (Section 1-102(3) [55-1-102 NMSA 1978]). Consistent with those principles no negative inference is to be drawn by the episodic use of the phrase "unless otherwise agreed" in certain provisions of Article 2A. Section 1-102(4) [55-1-102 NMSA 1978]. Indeed, the contrary is true, as the general rule in the Act, including this Article, is that the effect of the Act's provisions may be varied by agreement. Section 1-102(3) [55-1-102 NMSA 1978]. This conclusion follows even where the statutory analogue contains the phrase and the correlative provision in Article 2A does not. 1978 Comp., § 55-2A-101, enacted by Laws 1992, ch. 114, § 8.

NMSA 1978, § 55-2A-102 Scope

55-2A-102. Scope (1) This article applies to any transaction, regardless of form, that creates a lease and, in the case of a hybrid lease, it applies to the extent provided in Subsection (2) of this section. (2) In a hybrid lease: (a) if the lease-of-goods aspects do not predominate: (i) only the provisions of this article that relate primarily to the lease-of-goods aspects of the transaction apply, and the provisions that relate primarily to the transaction as a whole do not apply; (ii) Section 55-2A-209 NMSA 1978 applies if the lease is a finance lease; and (iii) Section 55-2A-407 NMSA 1978 applies to the promises of the lessee in a finance lease to the extent that the promises are consideration for the right to possession and use of the leased goods; and (b) if the lease-of-goods aspects predominate, this article applies to the transaction, but does not preclude application in appropriate circumstances of other law to aspects of the lease that do not relate to the lease of goods. 1978 Comp., § 55-2A-102, enacted by Laws 1992, ch. 114, § 9; 2023, ch. 142, § 12. Cross references. - Sections 1-102(3), 1-201(37), Article 2, esp. Section 2-106(1), and Sections 2A-103(1)(h), 2A-103(1)(j) and 2A-103(4) [55-1-102, 55-1-201, 55-1-106 and 55-2A-103 NMSA 1978, respectively].

NMSA 1978, § 55-2A-103 Definitions and index of definitions

55-2A-103. Definitions and index of definitions (1) In this article unless the context otherwise requires: (a) "buyer in ordinary course of business" means a person who, in good faith and without knowledge that the sale to that person is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, buys in ordinary course from a person in the business of selling goods of that kind, but does not include a pawnbroker. "Buying" may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a preexisting contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt; (b) "cancellation" occurs when either party puts an end to the lease contract for default by the other party; (c) "commercial unit" means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole; (d) "conforming" goods or performance under a lease contract means goods or performance that are in accordance with the obligations under the lease contract; (e) "consumer lease" means a lease that a lessor regularly engaged in the business of leasing or selling makes to a lessee who is an individual and who takes under the lease primarily for a personal, family or household purpose; (f) "fault" means wrongful act, omission, breach or default; (g) "finance lease" means a lease with respect to which: (i) the lessor does not select, manufacture or supply the goods; (ii) the lessor acquires the goods or the right to possession and use of the goods in connection with the lease; and (iii) one of the following occurs: (A) the lessee receives a copy of the contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract; (B) the lessee's approval of the contract by which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract; (C) the lessee, before signing the lease contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations or modifications of remedies, or liquidated damages, including those of a third party, such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; or (D) if the lease is not a consumer lease, the lessor, before the lessee signs the lease contract, informs the lessee in writing (a) of the identity of the person supplying the goods to the lessor, unless the lessee has selected that person and directed the lessor to acquire the goods or the right to possession and use of the goods from that person; (b) that the lessee is entitled under this article to the promises and warranties, including those of any third party, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; and (c) that the lessee may communicate with the person supplying the goods to the lessor and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of them or of remedies; (h) "goods" means all things that are movable at the time of identification to the lease contract or are fixtures (Section 55-2A-309 NMSA 1978), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals; (h.1) "hybrid lease" means a single transaction involving a lease of goods and: (i) the provision of services; (ii) a sale of other goods; or (iii) a sale, lease or license of property other than goods; (i) "installment lease contract" means a lease contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause "each delivery is a separate lease" or its equivalent; (j) "lease" means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease; unless the context clearly indicates otherwise, the term includes a sublease; (k) "lease agreement" means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances, including course of dealing or usage or trade or course of performance as provided in this article; unless the context clearly indicates otherwise, the term includes a sublease agreement; (l) "lease contract" means the total legal obligation that results from the lease agreement as affected by this article and any other applicable rules of law; unless the context clearly indicates otherwise, the term includes a sublease contract; (m) "leasehold interest" means the interest of the lessor or the lessee under a lease contract; (n) "lessee" means a person who acquires the right to possession and use of goods under a lease; unless the context clearly indicates otherwise, the term includes a sublessee; (o) "lessee in ordinary course of business" means a person who in good faith and without knowledge that the lease to that person is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, leases in ordinary course from a person in the business of selling or leasing goods of that kind, but does not include a pawnbroker; "leasing" may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a preexisting lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt; (p) "lessor" means a person who transfers the right to possession and use of goods under a lease; unless the context clearly indicates otherwise, the term includes a sublessor; (q) "lessor's residual interest" means the lessor's interest in the goods after expiration, termination or cancellation of the lease contract; (r) "lien" means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest; (s) "lot" means a parcel or a single article that is the subject matter of a separate lease or delivery whether or not it is sufficient to perform the lease contract; (t) "merchant lessee" means a lessee that is a merchant with respect to goods of the kind subject to the lease; (u) "present value" means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into; (v) "purchase" includes taking by sale, lease, mortgage, security interest, pledge, gift or any other voluntary transaction creating an interest in goods; (w) "sublease" means a lease of goods the right to possession and use of which was acquired by the lessor as a lessee under an existing lease; (x) "supplier" means a person from whom a lessor buys or leases goods to be leased under a finance lease; (y) "supply contract" means a contract under which a lessor buys or leases goods to be leased; and (z) "termination" occurs when either party pursuant to a power created by agreement or law puts an end to the lease contract otherwise than for default. (2) Other definitions applying to this article and the sections in which they appear are: "accessions"...........................Section 55-2A-310 NMSA 1978; "construction mortgage".................. Section 55-2A-309 NMSA 1978; "encumbrance"......................... Section 55-2A-309 NMSA 1978; "fixtures".............................. Section 55-2A-309 NMSA 1978; "fixture filing"........................... Section 55-2A-309 NMSA 1978; and "purchase money lease"..................Section 55-2A-309 NMSA 1978. (3) The following definitions in other articles apply to this article: "account"...............................Paragraph (2) of Subsection (a) of Section 55-9-102 NMSA 1978; "between merchants"..................... Subsection (3) of Section 55-2-104 NMSA 1978; "buyer"................................ Paragraph (a) of Subsection (1) of Section 55-2-103 NMSA 1978; "chattel paper"...........................Paragraph (11) of Subsection (a) of Section 55-9-102 NMSA 1978; "consumer goods"........................ Paragraph (23) of Subsection (a) of Section 55-9-102 NMSA 1978; "document"..............................Paragraph (30) of Subsection (a) of Section 55-9-102 NMSA 1978; "entrusting"............................. Subsection (3) of Section 55-2-403 NMSA 1978; "general intangible"....................... Paragraph (42) of Subsection (a) of Section 55-9-102 NMSA 1978; "instrument"............................. Paragraph (47) of Subsection (a) of Section 55-9-102 NMSA 1978; "merchant".............................. Subsection (1) of Section 55-2-104 NMSA 1978; "mortgage".............................. Paragraph (55) of Subsection (a) of Section 55-9-102 NMSA 1978; "pursuant to commitment"...................Paragraph (69) of Subsection (a) of Section 55-9-102 NMSA 1978; "receipt"................................ Paragraph (c) of Subsection (1) of Section 55-2-103 NMSA 1978; "sale"...................................Subsection (1) of Section 55-2-106 NMSA 1978; "sale on approval".........................Section 55-2-326 NMSA 1978; "sale or return"............................Section 55-2-326 NMSA 1978; and "seller".................................. Paragraph (d) of Subsection (1) of Section 55-2-103 NMSA 1978. (4) In addition, Chapter 55, Article 1 NMSA 1978 contains general definitions and principles of construction and interpretation applicable throughout this article. 1978 Comp., § 55-2A-103, enacted by Laws 1992, ch. 114, § 10; 1993, ch. 214, § 3; 2001, ch. 139, § 133; 2005, ch. 144, § 37; 2023, ch. 142, § 13.

NMSA 1978, § 55-2A-104 Leases subject to other law

55-2A-104. Leases subject to other law (1) A lease, although subject to this article, is also subject to any applicable: (a) certificate of title statute of this state: Sections 64-4-4, 66-3-1 and 66-12-5.2 NMSA 1978; (b) certificate of the title statute of another jurisdiction (Section 55-2A-105 NMSA 1978); or (c) consumer protection statute of this state, or final consumer protection decision of a court of this state existing on the effective date of this article. (2) In case of conflict between this article, other than Sections 55-2A-105, 55-2A-304 (3) and 55-2A-305 (3) NMSA 1978, and a statute or decision referred to in Subsection (1), the statute or decision controls. (3) Failure to comply with an applicable law has only the effect specified therein. 1978 Comp., § 55-2A-104, enacted by Laws 1992, ch. 114, § 11. Cross references. - Sections 2A-103(1)(e), 2A-106, 2A-108, 2A-109(2) and 2A-525(3) [55-2A-103, 55-2A-106, 55-2A-108, 55-2A-109 and 55-2A-525 NMSA 1978, respectively].

NMSA 1978, § 55-2A-105 Territorial application of article to goods covered by certificate of title

55-2A-105. Territorial application of article to goods covered by certificate of title Subject to the provisions of Sections 55-2A-304 (3) and 55-2A-305 (3) NMSA 1978, with respect to goods covered by a certificate of title issued under a statute of this state or of another jurisdiction, compliance and the effect of compliance or noncompliance with a certificate of title statute are governed by the law (including the conflict of laws rules) of the jurisdiction issuing the certificate until the earlier of (a) surrender of the certificate, or (b) four months after the goods are removed from that jurisdiction and thereafter until a new certificate of title is issued by another jurisdiction. 1978 Comp., § 55-2A-105, enacted by Laws 1992, ch. 114, § 12. Cross references. - Sections 2A-304(3), 2A-305(3), 9-103(2)(b) and 9-103(2)(d) [55-2A-304, 55-2A-305 and 55-9-103 NMSA 1978, respectively].

NMSA 1978, § 55-2A-106 Limitation on power of parties to consumer lease to choose applicable law and forum

55-2A-106. Limitation on power of parties to consumer lease to choose applicable law and forum (1) If the law chosen by the parties to a consumer lease is that of a jurisdiction other than a jurisdiction in which the lessee resides at the time the lease agreement becomes enforceable or within thirty days thereafter or in which the goods are to be used, the choice is not enforceable. (2) If the judicial forum chosen by the parties to a consumer lease is a forum that would not otherwise have jurisdiction over the lessee, the choice is not enforceable. (3) If the forum for an arbitration or mediation hearing chosen by the parties to a consumer lease is in a state or in a similar political subdivision in a foreign country other than the state or the similar subdivision in the foreign country in which the lessee resides at the time the lease agreement becomes enforceable or within thirty days thereafter or in which the goods are to be used, the choice is not enforceable. 1978 Comp., § 55-2A-106, enacted by Laws 1992, ch. 114, § 13; 2007, ch. 252, § 1. Cross references. - Section 9-103(1)(c).

NMSA 1978, § 55-2A-107 Waiver or renunciation of claim or right after default

55-2A-107. Waiver or renunciation of claim or right after default Any claim or right arising out of an alleged default or breach of warranty may be discharged in whole or in part without consideration by a waiver or renunciation in a signed record delivered by the aggrieved party. 1978 Comp., § 55-2A-107, enacted by Laws 1992, ch. 114, § 14; 2023, ch. 142, § 14. Cross References. - Sections 2A-203 and 2A-212 [55-2A-203 and 55-2A-212 NMSA 1978, respectively].

NMSA 1978, § 55-2A-108 Unconscionability

55-2A-108. Unconscionability (1) If the court as a matter of law finds a lease contract or any clause of a lease contract to have been unconscionable at the time it was made the court may refuse to enforce the lease contract, or it may enforce the remainder of the lease contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. (2) With respect to a consumer lease, if the court as a matter of law finds that a lease contract or any clause of a lease contract has been induced by unconscionable conduct or that unconscionable conduct has occurred in the collection of a claim arising from a lease contract, the court may grant appropriate relief. (3) Before making a finding of unconscionability under Subsection (1) or (2), the court, on its own motion or that of a party, shall afford the parties a reasonable opportunity to present evidence as to the setting, purpose, and effect of the lease contract or clause thereof, or of the conduct. (4) In an action in which the lessee claims unconscionability with respect to a consumer lease: (a) If the court finds unconscionability under Subsection (1) or (2), the court shall award reasonable attorney's fees to the lessee. (b) If the court does not find unconscionability and the lessee claiming unconscionability has brought or maintained an action he knew to be groundless, the court shall award reasonable attorney's fees to the party against whom the claim is made. (c) In determining attorney's fees, the amount of the recovery on behalf of the claimant under Subsections (1) and (2) is not controlling. 1978 Comp., § 55-2A-108, enacted by Laws 1992, ch. 114, § 15. Cross References. - Sections 1-106(1), 2-302 and 2A-103(4) [55-1-106, 55-2-302 and 55-2A-103 NMSA 1978, respectively].

NMSA 1978, § 55-2A-109 Option to accelerate at will

55-2A-109. Option to accelerate at will (1) A term providing that one party or his successor in interest may accelerate payment of performance or require collateral or additional collateral "at will" or "when he deems himself insecure" or in words of similar import must be construed to mean that he has power to do so only if he in good faith believes that the prospect of payment or performance is impaired. (2) With respect to a consumer lease, the burden of establishing good faith under Subsection (1) is on the party who exercised the power; otherwise the burden of establishing lack of good faith is on the party against whom the power has been exercised. 1978 Comp., § 55-2A-109, enacted by Laws 1992, ch. 114, § 16. Cross Reference. - Section 1-208 [55-1-208 NMSA 1978].

Source: New Mexico Compilation Commission (nmonesource.com)URL: https://nmonesource.com/nmos/nmsa-unanno/en/item/18558/index.doFetched: 10/20/2026