1. (a) General rule.— Subject to the provisions of section 2A303 (relating to alienability of party's interest under lease contract or of lessor's residual interest in goods; delegation of performance; transfer of rights), a buyer or sublessee from the lessee of goods under an existing lease contract obtains, to the extent of the interest transferred, the leasehold interest in the goods that the lessee had or had power to transfer, and except as provided in subsection (b) and section 2A511(d) (relating to merchant lessee's duties as to rightfully rejected goods), takes subject to the existing lease contract. A lessee with a voidable leasehold interest has power to transfer a good leasehold interest to a good faith buyer for value or a good faith sublessee for value, but only to the extent set forth in the preceding sentence. When goods have been delivered under a transaction of lease, the lessee has that power even though:

   1. (1) the lessor was deceived as to the identity of the lessee;
   2. (2) the delivery was in exchange for a check which is later dishonored; or
   3. (3) the delivery was procured through fraud punishable as larcenous under the criminal law.
2. (b) Merchants regularly dealing in goods.— A buyer in the ordinary course of business or a sublessee in the ordinary course of business from a lessee who is a merchant dealing in goods of that kind to whom the goods were entrusted by the lessor obtains, to the extent of the interest transferred, all of the lessor's and lessee's rights to the goods, and takes free of the existing lease contract.
3. (c) Goods covered by certificate of title.— A buyer or sublessee from the lessee of goods that are subject to an existing lease contract and are covered by a certificate of title issued under a statute of this Commonwealth or of another jurisdiction takes no greater rights than those provided both by this section and by the certificate of title statute.

Cross References. Section 2A305 is referred to in sections 2A104, 2A105, 7209, 7503 of this title.