                                 CODE OF VIRGINIA

ALIENABILITY OF PARTY&#8217;S INTEREST UNDER LEASE CONTRACT OR OF LESSOR&#8217;S
RESIDUAL INTEREST IN GOODS; DELEGATION OF PERFORMANCE; TRANSFER OF RIGHTS (§
8.2A-303)

1. As used in this section, &#8220;creation of a security interest&#8221;
includes the sale of a lease contract that is subject to Title 8.9A, Secured
Transactions, by reason of subdivision (a) (3) of &#xA7; 8.9A-109.

2. Except as provided in subsection (3) of this section and &#xA7; 8.9A-407, a
provision in a lease agreement which (i) prohibits the voluntary or involuntary
transfer, including a transfer by sale, sublease, creation or enforcement of a
security interest, or attachment, levy, or other judicial process, of an
interest of a party under the lease contract or of the lessor&#8217;s residual
interest in the goods, or (ii) makes such a transfer an event of default, gives
rise to the rights and remedies provided in subsection (4) of this section, but
a transfer that is prohibited or is an event of default under the lease
agreement is otherwise effective.

3. A provision in a lease agreement which (i) prohibits a transfer of a right to
damages for default with respect to the whole lease contract or of a right to
payment arising out of the transferor&#8217;s due performance of the
transferor&#8217;s entire obligation, or (ii) makes such a transfer an event of
default, is not enforceable, and such a transfer is not a transfer that
materially impairs the prospect of obtaining return performance by, materially
changes the duty of, or materially increases the burden or risk imposed on, the
other party to the lease contract within the purview of subsection (4) of this
section.

4. Subject to subsection (3) of this section and § 8.9A-407:

   a. If a transfer is made which is made an event of default under a lease
   agreement, the party to the lease contract not making the transfer, unless
   that party waives the default or otherwise agrees, has the rights and remedies
   described in subsection (2) of &#xA7; 8.2A-501;

   b. Subdivision (a) of this subsection is not applicable and if a transfer is
   made that (i) is prohibited under a lease agreement or (ii) materially impairs
   the prospect of obtaining return performance by, materially changes the duty
   of, or materially increases the burden or risk imposed on, the other party to
   the lease contract, unless the party not making the transfer agrees at any
   time to the transfer in the lease contract or otherwise, then, except as
   limited by contract, (i) the transferor is liable to the party not making the
   transfer for damages caused by the transfer to the extent that the damages
   could not reasonably be prevented by the party not making the transfer and
   (ii) a court having jurisdiction may grant other appropriate relief, including
   cancellation of the lease contract or an injunction against the transfer.

5. A transfer of &#8220;the lease&#8221; or of &#8220;all my rights under the
lease,&#8221; or a transfer in similar general terms, is a transfer of rights
and, unless the language or the circumstances, as in a transfer for security,
indicate the contrary, the transfer is a delegation of duties by the transfer to
the transferee. Acceptance by the transferee constitutes a promise by the
transferee to perform those duties. The promise is enforceable by either the
transfer or the other party to the lease contract.

6. Unless otherwise agreed by the lessor and the lessee, a delegation of
performance does not relieve the transferor as against the other party of any
duty to perform or of any liability for default.

7. In a consumer lease, to prohibit the transfer of an interest of a party under
the lease contract or to make a transfer an event of default, the language shall
be specific, by a writing, and conspicuous.

HISTORY: 1991, c. 536; 2000, c. 1007.