1. (1) In this article unless the context otherwise requires:
2. (a) “Buyer in ordinary course of business” means a person who in good faith and without knowledge that the sale to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. “Buying” may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
3. (b) “Cancellation” occurs when either party puts an end to the lease contract for default by the other party.
4. (c) “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole.
5. (d) “Conforming” goods or performance under a lease contract means goods or performance that are in accordance with the obligations under the lease contract.
6. (e) “Consumer lease” means a lease that a lessor regularly engaged in the business of leasing or selling makes to a lessee who is an individual and who takes under the lease primarily for a personal, family, or household purpose, if the total payments to be made under the lease contract, excluding payments for options to renew or buy, do not exceed one hundred thousand dollars ($100,000).
7. (f) “Fault” means wrongful act, omission, breach, or default.

8. (g) “Finance lease” means a lease with respect to which:

   1. (i) the lessor does not select, manufacture, or supply the goods;
   2. (ii) the lessor acquires the goods or the right to possession and use of the goods in connection with the lease; and

   3. (iii) one of the following occurs:

      1. (A) the lessee receives a copy of the contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract;
      2. (B) the lessee’s approval of the contract by which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract;
      3. (C) the lease contract or a separate accurate and complete statement delivered to the lessee discloses in writing (a) all express warranties and other rights provided to the lessee by the lessor and the supplier in connection with the lease contract (b) that there are no other express warranties or rights provided to the lessee by the lessor or the supplier in connection with the lease contract, and (c) in a consumer lease, any waiver, disclaimer, or other negation of express or implied warranties and any limitation or modification of remedy or liquidation of damages for breach of those warranties or other rights of the lessee in a manner as provided in this article or in Article 2, as applicable; or
      4. (D) the lessor, before the lessee signs the lease contract, informs the lessee in writing (a) of the identity of the supplier, unless the lessee has selected the supplier and directed the lessor to purchase the goods from the supplier, (b) that the lessee is entitled under this article to all warranties and other rights provided to the lessee by the supplier in connection with the lease contract, and (c) to contact the supplier to receive an accurate and complete statement from the supplier of any such express warranties and other rights and any disclaimers or limitations of them or of remedies.

9. (h) “Goods” means all things that are movable at the time of identification to the lease contract, or are fixtures (Section 7-2A-309), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals.

   (h.1) “Hybrid lease” means a single transaction involving a lease of goods and:

10. (i) the provision of services;
11. (ii) a sale of other goods; or
12. (iii) a sale, lease, or license of property other than goods.
13. (i) “Installment lease contract” means a lease contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause “each delivery is a separate lease” or its equivalent.
14. (j) “Lease” means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. Unless the context clearly indicates otherwise, the term includes a sublease.
15. (k) “Lease agreement” means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this article. Unless the context clearly indicates otherwise, the term includes a sublease agreement.
16. (l) “Lease contract” means the total legal obligation that results from the lease agreement as affected by this article and any other applicable rules of law. Unless the context clearly indicates otherwise, the term includes a sublease contract.
17. (m) “Leasehold interest” means the interest of the lessor or the lessee under a lease contract.
18. (n) “Lessee” means a person who acquires the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.
19. (o) “Lessee in ordinary course of business” means a person who in good faith and without knowledge that the lease to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods leases in ordinary course from a person in the business of selling or leasing goods of that kind but does not include a pawnbroker. “Leasing” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a preexisting lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
20. (p) “Lessor” means a person who transfers the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.
21. (q) “Lessor’s residual interest” means the lessor’s interest in the goods after expiration, termination, or cancellation of the lease contract.
22. (r) “Lien” means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest.
23. (s) “Lot” means a parcel or a single article that is the subject matter of a separate lease or delivery, whether or not it is sufficient to perform the lease contract.
24. (t) “Merchant lessee” means a lessee that is a merchant with respect to goods of the kind subject to the lease.
25. (u) “Present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by the court as a matter of law as a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.
26. (v) “Purchase” includes taking by sale, lease, mortgage, security interest, pledge, gift, or any other voluntary transaction creating an interest in goods.
27. (w) “Sublease” means a lease of goods the right to possession and use of which was acquired by the lessor as a lessee under an existing lease.
28. (x) “Supplier” means a person from whom a lessor buys or leases goods to be leased under a finance lease.
29. (y) “Supply contract” means a contract under which a lessor buys or leases goods to be leased.
30. (z) “Termination” occurs when either party pursuant to a power created by agreement or law puts an end to the lease contract otherwise than for default.

31. (2) Other definitions applying to this article and the sections in which they appear are:

    “Accessions.” Section 7-2A-310(1).

    “Construction mortgage.” Section 7-2A-309(1)(d).

    “Encumbrance.” Section 7-2A-309(1)(e).

    “Fixtures.” Section 7-2A-309(1)(a).

    “Fixture filing.” Section 7-2A-309(1)(b).

    “Purchase money lease.” Section 7-2A-309(1)(c).

32. (3) The following definitions in sections of the Code of Alabama 1975, apply to this article:

    “Account.” Section 7-9A-102(a)(2).

    “Between merchants.” Section 7-2-104(3).

    “Buyer.” Section 7-2-103(1)(a).

    “Chattel paper.” Section 7-9A-102(a)(11).

    “Consumer goods.” Section 7-9A-102(a)(23).

    “Document.” Section 7-9A-102(a)(30).

    “Entrusting.” Section 7-2-403(3).

    “General intangible.” Section 7-9A-102(a)(42).

    “Good faith.” Section 7-2-103(1)(b).

    “Instrument.” Section 7-9A-102(a)(47).

    “Merchant.” Section 7-2-104(1).

    “Mortgage.” Section 7-9A-102(a)(55).

    “Pursuant to commitment.” Section 7-9A-102(a)(69).

    “Receipt.” Section 7-2-103(1)(c).

    “Sale.” Section 7-2-106(1).

    “Sale on approval.” Section 7-2-326.

    “Sale or return.” Section 7-2-326.

    “Seller.” Section 7-2-103(1)(d).

33. (4) In addition, Section 7-1-201 contains general definitions and principles of construction and interpretation applicable throughout this article.

(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §103; Act 2001-481, p. 647, §2; Act 2004-315, p. 464, §2; Act 2023-492, §1.)