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Eureka v. Wentworth: Further Erosion of the 'Hell or High Water' Principle
A fundamental tenet of equipment leasing has been the concept of “hell or high water” rental payments. Once the lease is signed and the lessee accepts the goods, then the lessee's promises under the lease become irrevocable, especially the promise to pay rent. The draftsmen of UCC Article 2A recognized this critical element and codified it with respect to a finance lease in UCC '2A-407(1)-(2) (all citations herein refer to Uniform Commercial Code Article 2A pre-2003 revisions). A finance lease is a particular type of “true” equipment lease in which the lessee itself selects the item of equipment it wants and instructs the lessor to acquire it for lease to the lessee. UCC '2A-103(g). A finance lessor is neither the manufacturer nor supplier of the item of equipment; it is merely providing the money. Article 2A of the Uniform Commercial Code (the “Code” or the “UCC”) extends certain benefits to finance lessors, one of the most important of which is that the lessee's promises are not subject to termination, modification or repudiation; in other words, the lessee must comply with them come “hell or high water.” UCC '2A-407(2)(b).
The “hell or high water” protection of the Code is meant to ensure that the rental payments due to a finance lessor will not be held hostage by the lessee because of a defect in the equipment being financed or a claim by the lessee that the lessor breached a provision of the lease or otherwise. Traditionally, courts have viewed a lessor's “hell or high water” protection as inviolate. Under what circumstances, then, could a lessee cancel the lease and cease making rental payments, and are there any exceptions to the “hell or high water” nature of lessee's obligations? A recent case, Eureka Broadband Corporation v. Wentworth Leasing Corporation, 400 F.3d 62 (1st Cir. 2005), suggests that fraud may be such an exception.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs
A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.
Coverage Issues Stemming from Dry Cleaner Contamination Suits
In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.