Financial Leasing in the Context of Uniform Commercial Code of the Essay

Financial Leasing in the Context of Uniform Commercial Code of the United States - Essay Example nless 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.2 For lessors the essential challenges in financial leasing are the length of time the financial institution’s investment is exposed which is the duration of the financial lease. Since the financial institution only holds the title of ownership of the asset in financial leases they do not ha ve possession of the asset therefore the care, maintenance, state and condition of the asset is not within the control of the financial institution. This exposure is considered a risk by financial institution since in the event of a default or failure of the lessee to satisfy his part of the agreement the state and condition of the asset may not make it marketable or commercially viable for the financial institution or the lessor to recover his investment at the onset. Taking the above into consideration the lessor can exercise his right by virtue of Article 9 of the Uniform Commercial Code of the United States to secure his investment supported by Article 1 203 of the same Code which states that: A transaction in the form of a lease creates a  security interest if the consideration that the... For lessors the essential challenges in financial leasing are the length of time the financial institution’s investment is exposed which is the duration of the financial lease. Since the financial institution only holds the title of ownership of the asset in financial leases they do not have possession of the asset therefore the care, maintenance, state and condition of the asset is not within the control of the financial institution. This exposure is considered a risk by financial institution since in the event of a default or failure of the lessee to satisfy his part of the agreement the state and condition of the asset may not make it marketable or commercially viable for the financial institution or the lessor to recover his investment at the onset. Taking the above into consideration the lessor can exercise his right by virtue of Article 9 of the Uniform Commercial Code of the United States to secure his investment supported by Article 1 203 of the same Code which states that: A transaction in the form of a lease creates a security interest if the consideration that the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease and is not subject to termination by the lessee, and: the original term of the lease is equal to or greater than the remaining economic life of the goods; the lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;