10501-10507

COMMERCIAL CODE
SECTION 10501-10507




10501.  (a) Whether the lessor or the lessee is in default under a
lease contract is determined by the lease agreement and this
division.
   (b) If the lessor or the lessee is in default under the lease
contract, the party seeking enforcement has rights and remedies as
provided in this division and, except as limited by this division, as
provided in the lease agreement.
   (c) If the lessor or the lessee is in default under the lease
contract, the party seeking enforcement may reduce the party's claim
to judgment, or otherwise enforce the lease contract by self-help or
any available judicial procedure or nonjudicial procedure, including
administrative proceeding, arbitration, or the like, in accordance
with this division.
   (d) Except as otherwise provided in subdivision (a) of Section
1305 or this division or the lease agreement, the rights and remedies
referred to in subdivisions (b) and (c) are cumulative.
   (e) If the lease agreement covers both real property and goods,
the party seeking enforcement may proceed under this chapter as to
the goods, or under other applicable law as to both the real property
and the goods in accordance with that party's rights and remedies in
respect of the real property, in which case this chapter does not
apply.


10502.  Except as otherwise provided in this division or the lease
agreement, the lessor or lessee in default under the lease contract
is not entitled to notice of default or notice of enforcement from
the other party to the lease agreement.



10503.  (a) Except as otherwise provided in this division, the lease
agreement may include rights and remedies for default in addition to
or in substitution for those provided in this division and may limit
or alter the measure of damages recoverable under this division.
   (b) Resort to a remedy provided under this division or in the
lease agreement is optional unless the remedy is expressly agreed to
be exclusive. If circumstances cause an exclusive or limited remedy
to fail of its essential purpose, or provision for an exclusive
remedy is unconscionable, remedy may be had as provided in this
division.
   (c) Consequential damages may be liquidated under Section 10504,
or may otherwise be limited, altered, or excluded unless the
limitation, alteration, or exclusion is unconscionable. Limitation,
alteration, or exclusion of consequential damages for injury to the
person in the case of consumer goods is prima facie unconscionable
but limitation, alteration, or exclusion of damages where the loss is
commercial is not prima facie unconscionable.
   (d) Rights and remedies on default by the lessor or the lessee
with respect to any obligation or promise collateral or ancillary to
the lease contract are not impaired by this division.



10504.  (a) Damages payable by either party for default, or any
other act or omission, including indemnity for loss or diminution of
anticipated tax benefits or loss or damage to the lessor's residual
interest, may be liquidated in the lease agreement subject to and in
compliance with Section 1671 of the Civil Code.
   (b) If the lease agreement provides for liquidation of damages,
and such provision does not comply with subdivision (a), remedy may
be had as provided in this division.
   (c) If the lessor justifiably withholds or stops delivery of goods
because of the lessee's default or insolvency (Section 10525 or
10526), the lessee is entitled to restitution of any amount by which
the sum of his or her payments exceeds:
   (1) The amount to which the lessor is entitled by virtue of terms
liquidating the lessor's damages in accordance with subdivision (a);
or
   (2) In the absence of those terms, 20 percent of the then present
value of the total rent the lessee was obligated to pay for the
balance of the lease term, or, in the case of a consumer lease, the
lesser of such amount or five hundred dollars ($500).
   (d) A lessee's right to restitution under subdivision (c) is
subject to offset to the extent the lessor establishes:
   (1) A right to recover damages under the provisions of this
division other than subdivision (a); and
   (2) The amount or value of any benefits received by the lessee
directly or indirectly by reason of the lease contract.



10505.  (a) On cancellation of the lease contract, all obligations
that are still executory on both sides are discharged, but any right
based on prior default or performance survives, and the canceling
party also retains any remedy for default of the whole lease contract
or any unperformed balance.
   (b) On termination of the lease contract, all obligations that are
still executory on both sides are discharged but any right based on
prior default or performance survives.
   (c) Unless the contrary intention clearly appears, expressions of
"cancellation," "rescission," or the like of the lease contract may
not be construed as a renunciation or discharge of any claim in
damages for an antecedent default.
   (d) Rights and remedies for material misrepresentation or fraud
include all rights and remedies available under this division for
default.
   (e) Neither rescission nor a claim for rescission of the lease
contract nor rejection or return of the goods may bar or be deemed
inconsistent with a claim for damages or other right or remedy.




10506.  (a) An action for default under a lease contract, including
breach of warranty or indemnity, must be commenced within four years
after the cause of action accrued. In a lease contract that is not a
consumer lease, by the original lease contract the parties may reduce
the period of limitation to not less than one year.
   (b) A cause of action for default accrues when the act or omission
on which the default or breach of warranty is based is or should
have been discovered by the aggrieved party, or when the default
occurs, whichever is later. A cause of action for indemnity accrues
when the act or omission on which the claim for indemnity is based is
or should have been discovered by the indemnified party, whichever
is later.
   (c) If an action commenced within the time limited by subdivision
(a) is so terminated as to leave available a remedy by another action
for the same default or breach of warranty or indemnity, the other
action may be commenced after the expiration of the time limited and
within six months after the termination of the first action unless
the termination resulted from voluntary discontinuance or from
dismissal for failure or neglect to prosecute.
   (d) This section does not alter the law on tolling of the statute
of limitations nor does it apply to causes of action that have
accrued before the operative date of this division.



10507.  (a) Damages based on market rent (Section 10519 or 10528)
are determined according to the rent for the use of the goods
concerned for a lease term identical to the remaining lease term of
the original lease agreement and prevailing at the times specified in
Sections 10519 and 10528.
   (b) If evidence of rent for the use of the goods concerned for a
lease term identical to the remaining lease term of the original
lease agreement and prevailing at the times or places described in
this division is not readily available, the rent prevailing within
any reasonable time before or after the time described or at any
other place or for a different lease term which in commercial
judgment or under usage of trade would serve as a reasonable
substitute for the one described may be used, making any proper
allowance for the difference, including the cost of transporting the
goods to or from the other place.
   (c) Evidence of a relevant rent prevailing at a time or place or
for a lease term other than the one described in this division
offered by one party is not admissible unless and until he or she has
given the other party notice the court finds sufficient to prevent
unfair surprise.
   (d) If the prevailing rent or value of any goods regularly leased
in any established market is in issue, reports in official
publications or trade journals or in newspapers or periodicals of
general circulation published as the reports of that market are
admissible in evidence. The circumstances of the preparation of the
report may be shown to affect its weight but not its admissibility.