Lease or loan in disguise
Leases of goods are governed in New York by the state's version of the Uniform Commercial Code, which has a separate article for them. Whether a document is a true lease or really a secured financing depends on its economic substance rather than its title, for example whether the business can keep the equipment for a nominal payment at the end. The answer changes how the arrangement is treated if the business enters bankruptcy and whether the lessor needed to file a financing statement to protect its position. Many agreements also include a clause making payments due regardless of what happens to the equipment, which surprises lessees when a machine fails or a supplier disappears.
Terms that cause most of the friction
End-of-term provisions deserve close reading: some leases renew automatically unless notice is sent within a narrow window, and the renewal can run for a substantial period. Personal guaranties from owners are common and can survive the business closing. Check who maintains and insures the equipment, who bears the loss if it is damaged, and whether the supplier's warranty passes through to you, since the lessor may disclaim warranties of its own. Keep the signed agreement, any schedules or addenda, delivery and acceptance certificates, and the payment history together in one place.
Responding to a dispute or default
If payments have stopped or the equipment has failed, we look at the agreement's default and repossession terms, any acceleration clause, and whether the amounts claimed match the contract. Some agreements name a forum or governing law outside New York, and that affects where a dispute is heard. We also consider whether a negotiated return, a buyout, or a restructured schedule is realistic before anyone files. For lessors, the same review covers how to recover the equipment and the balance without inviting counterclaims. Where a supplier misrepresented what it was selling, a claim may lie against the supplier even while payments to the lessor remain owed, and the two relationships usually have to be sorted out separately.
