## Facts

- Design Engineering, Construction International Inc. (DECI) purchased an aircraft from Outlaw Aircraft Sales Inc. (Outlaw).
- The unpaid balance was financed through a conditional sales contract and a promissory note executed as part of the same transaction.
- The contract authorized assignment and provided that, upon assignment, the buyer’s obligations ran to the assignee and the buyer would pay the assignee “without recoupment, set-off or counterclaim,” and the assigned contract would be “free from any claims” the buyer had against the seller.
- Outlaw assigned the conditional sales contract and endorsed the note to Cessna Finance Corporation (CFC) for value on the day of the sale.
- DECI later defaulted on its payment obligations.
- DECI sued, asserting against CFC breach of implied warranties (merchantability and fitness) and seeking rescission under UCC § 2-609 for alleged failure to provide adequate assurance of warranty performance.
- CFC denied liability and counterclaimed for the unpaid amounts due under the assigned contract and note.

## Issues

1. Whether an assignee finance company could be liable to the buyer for implied warranty breaches arising from the seller’s aircraft sale.
2. Whether the buyer could rescind or avoid payment to the assignee under UCC § 2-609 based on the assignee’s alleged failure to give adequate assurance of warranty performance.
3. Whether the waiver-of-defenses/“free of claims” assignment clause barred the buyer from asserting seller-related claims and defenses to defeat the assignee’s collection on the contract and note.

## Decision

- The Court of Appeals of Georgia affirmed summary judgment for CFC on DECI’s claims and on CFC’s counterclaim.
- CFC, as a financing assignee, was not treated as the aircraft seller and did not assume seller-based implied warranty obligations by taking an assignment.
- UCC § 2-609 did not permit DECI to rescind its obligations to CFC because CFC was not the party responsible for warranty performance under the sale.
- The assignment and waiver-of-defenses language was enforceable against DECI, requiring payment to CFC without offset based on disputes with the seller.
- CFC was entitled to recover the unpaid balance due under the conditional sales contract and promissory note.

## Legal Principles

- In a commercial financing transaction, an assignee of a conditional sales contract and related note generally acquires the right to collect and enforce the payment obligation without becoming a “seller” responsible for implied warranties arising from the underlying sale.
- A clear waiver-of-defenses clause may preclude the buyer from asserting claims against the seller as defenses, setoffs, or counterclaims against the assignee’s enforcement of assigned payment instruments.
- UCC § 2-609 (adequate assurance) applies to insecurity about the other party’s performance of its own obligations; it does not impose warranty-performance duties on a finance assignee or justify rescission of the buyer’s payment duty to the assignee when the assignee is not the warrantor.
- Summary judgment is proper where the record shows no genuine dispute of material fact as to assignee status, controlling contract terms, default, and the absence of a legal basis to shift seller warranty responsibility to the assignee.

## Conclusion

The court held that DECI’s warranty and rescission theories could not be used to defeat CFC’s right, as assignee, to collect on the aircraft financing contract and note, because CFC did not assume seller warranty duties and the contract required payment to the assignee free of seller-related claims and defenses.


Design Eng'g, Constr. Int'l, Inc. v. Cessna Fin. Corp., 164 Ga. App. 159 (1982)