Section § 10501

Explanation

This section outlines the rules for determining if either party is in default under a lease agreement. If someone is in default, the other party can enforce their rights as described in this law and the contract itself. They can go to court, use self-help, or try other methods like arbitration. The available remedies add up unless specifically limited by other parts of the law or the lease. If the lease involves both real estate and goods, enforcement can be based on either type following applicable rules; if dealing with both, real estate rules will guide the enforcement.

(a)CA Commercial Law Code § 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)CA Commercial Law Code § 10501(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)CA Commercial Law Code § 10501(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)CA Commercial Law Code § 10501(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)CA Commercial Law Code § 10501(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.

Section § 10502

Explanation

In general, if either the person who rents (lessee) or the person who rents out (lessor) is not following the lease agreement, the other side doesn't have to give them a heads-up or warning before taking action, unless the lease or other laws say otherwise.

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.

Section § 10503

Explanation

This section says that lease agreements can have their own rules about what happens if someone doesn't follow the terms, in addition to the standard rules. You don't have to use the remedies in the lease unless the lease explicitly says that’s the only option. If the agreed-upon remedy doesn't work or is unfair, other solutions can be used. Damages that arise from breaking the lease can be limited or excluded unless that's unfair—but it’s often seen as unfair if it affects personal injury cases with consumer goods. Also, any separate promises related to the lease are not affected by this division.

(a)CA Commercial Law Code § 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)CA Commercial Law Code § 10503(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)CA Commercial Law Code § 10503(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)CA Commercial Law Code § 10503(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.

Section § 10504

Explanation

This section explains how damages can be settled in a lease agreement if one party fails to meet their obligations, such as a default or other issues. It states that damages may be predetermined in the lease, following certain legal standards. If these terms are not followed, alternative remedies are available. It also covers situations where a lessee, the one renting, may get some money back if the lessor, the one leasing, stops delivering goods due to a default. However, this refund may be reduced by damages the lessor can claim or benefits the lessee received through the lease.

(a)CA Commercial Law Code § 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)CA Commercial Law Code § 10504(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)CA Commercial Law Code § 10504(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)CA Commercial Law Code § 10504(c)(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)CA Commercial Law Code § 10504(c)(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)CA Commercial Law Code § 10504(d) A lessee’s right to restitution under subdivision (c) is subject to offset to the extent the lessor establishes:
(1)CA Commercial Law Code § 10504(d)(1) A right to recover damages under the provisions of this division other than subdivision (a); and
(2)CA Commercial Law Code § 10504(d)(2) The amount or value of any benefits received by the lessee directly or indirectly by reason of the lease contract.

Section § 10505

Explanation

If a lease gets canceled, both parties are freed from their remaining duties, but past issues or actions still matter, and the person canceling can still seek remedies for defaults. If a lease ends, past issues or actions still count, even though future obligations are no longer required. Saying a lease is canceled or rescinded doesn't mean you can't claim damages for past problems. If there was fraud or misrepresentation, all usual remedies for defaults are still available. Trying to annul a lease, or rejecting or returning goods, doesn't stop you from seeking damages or any other remedies.

(a)CA Commercial Law Code § 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)CA Commercial Law Code § 10505(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)CA Commercial Law Code § 10505(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)CA Commercial Law Code § 10505(d) Rights and remedies for material misrepresentation or fraud include all rights and remedies available under this division for default.
(e)CA Commercial Law Code § 10505(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.

Section § 10506

Explanation

This law covers how long you have to start a legal action if there's a default or breach involving a lease contract. Generally, you have four years to take action after you realize there's a problem. For non-consumer leases, the contract can shorten this period to no less than one year. If your first action ends with an option to file another one, you can take this second action within six months, even if the original time period has already passed, as long as the first case wasn't stopped voluntarily or due to inactivity. This section doesn’t change rules about pausing time limits and doesn’t apply to issues that happened before this rule was in place.

(a)CA Commercial Law Code § 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)CA Commercial Law Code § 10506(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)CA Commercial Law Code § 10506(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)CA Commercial Law Code § 10506(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.

Section § 10507

Explanation

This law explains how to determine damages based on the market rent of leased goods when a lease agreement is terminated. It starts with looking at the usual rent for the same type of goods for the same length of time as the original lease. If that exact rent isn't available, you can use rent from a different time, place, or lease length if it's a reasonable substitute. You must notify the other party if you plan to use different rent evidence. Reports from recognized publications about rental markets are allowed as evidence but their credibility can be challenged based on how they were prepared.

(a)CA Commercial Law Code § 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)CA Commercial Law Code § 10507(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)CA Commercial Law Code § 10507(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)CA Commercial Law Code § 10507(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.