(1) A lessee may revoke acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the lessee if the lessee has accepted it:

(a) except in the case of a finance lease, on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or

(b) without discovery of the nonconformity if the lessee's acceptance was reasonably induced either by the lessor's assurances or, except in the case of a finance lease, by the difficulty of discovery before acceptance.

(2) Except in the case of a finance lease that is not a consumer lease, a lessee may revoke acceptance of a lot or commercial unit if the lessor defaults under the lease contract and the default substantially impairs the value of that lot or commercial unit to the lessee.

(3) If the lease agreement so provides, the lessee may revoke acceptance of a lot or commercial unit because of other defaults by the lessor.

(4) Revocation of acceptance must occur within a reasonable time after the lessee discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by the nonconformity. Revocation is not effective until the lessee notifies the lessor.

(5) A lessee who so revokes has the same rights and duties with regard to the goods involved as if the lessee had rejected them.

History: 1978 Comp., § 55-2A-517, enacted by Laws 1992, ch. 114, § 72.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

Uniform Statutory Source: — Section 2-608 [55-2-608 NMSA 1978].

Changes: — Revised to reflect leasing practices and terminology. Note that in the case of a finance lease the lessee retains a limited right to revoke acceptance. Sections 2A-517(1)(b) and 2A-516 [55-2A-517 and 55-2A-516 NMSA 1978, respectively] official comment. New Subsections (2) and (3) added.

1. The section states the situations under which the lessee may return the goods to the lessor and cancel the lease. Subsection (2) recognizes that the lessor may have continuing obligations under the lease and that a default as to those obligations may be sufficiently material to justify revocation of acceptance of the leased items and cancellation of the lease by the lessee. For example, a failure by the lessor to fulfill its obligation to maintain leased equipment or to supply other goods which are necessary for the operation of the leased equipment may justify revocation of acceptance and cancellation of the lease.

2. Subsection (3) specifically provides that the lease agreement may provide that the lessee can revoke acceptance for defaults by the lessor which in the absence of such an agreement might not be considered sufficiently serious to justify revocation. That is, the parties are free to contract on the question of what defaults are so material that the lessee can cancel the lease.

Cross References: — Section 2A-516 [55-2A-516 NMSA 1978] official comment.

"Commercial unit". Section 2A-103(1)(c) [55-2A-103 NMSA 1978].

"Conforming". Section 2A-103(1)(d) [55-2A-103 NMSA 1978].

"Discover". Section 1-201(25) [55-1-201 NMSA 1978].

"Finance lease". Section 2A-103(1)(g) [55-2A-103 NMSA 1978].

"Goods". Section 2A-103(1)(h) [55-2A-103 NMSA 1978].

"Lessee". Section 2A-103(1)(n) [55-2A-103 NMSA 1978].

"Lessor". Section 2A-103(1)(p) [55-2A-103 NMSA 1978].

"Lot". Section 2A-103(1)(s) [55-2A-103 NMSA 1978].

"Notifies". Section 1-201(26) [55-1-201 NMSA 1978].

"Reasonable time". Section 1-204(1) and (2) [55-1-204 NMSA 1978].

"Rights". Section 1-201(36) [55-1-201 NMSA 1978].

"Seasonably". Section 1-204(3) [55-1-204 NMSA 1978].

"Value". Section 1-201(44) [55-1-201 NMSA 1978].

Effective dates. — Laws 1992, ch. 114, § 238 made Laws 1992, ch. 114, § 72 effective July 1, 1992.