Subject to section 554.13404 on substituted performance, the following rules apply: 1. Delay in delivery or nondelivery in whole or in part by a lessor or a supplier who complies with subsections 2 and 3 is not a default under the lease contract ifperformance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the lease contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order, whether or not the regulation or order later proves to be invalid. 2. Ifthe causes mentioned in subsection 1 affect only part of the lessor’s or the supplier’s capacity to perform, the lessor or supplier shall allocate production and deliveries among the lessor’s or supplier’s customers but at the lessor’s or supplier’s option may include regular customers not then under contract for sale or lease as well as the lessor’s or supplier’s own requirements for further manufacture. The lessor or supplier may so allocate in any manner that is fair and reasonable. 3. The lessor seasonably shall notify the lessee and in the case of a finance lease the supplier seasonably shall notify the lessor and the lessee, ifknown, that there will be delay or nondelivery and, ifallocation is required under subsection 2, of the estimated quota thus made available for the lessee.
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