GRP Rainer LLP

Possibility of Withholding Lease Instalments During Claim for Repayment of Purchase Price

If a lessee wishes to provisionally suspend the payment of instalments, this requires in addition to the cancelation of the purchase agreement the enforcement of the claim for repayment of the purchase price against the supplier.


Cologne, NRW -- (SBWIRE) -- 07/26/2013 -- GRP Rainer Lawyers Tax Advisors, Cologne, Berlin, Bonn, Bremen, Düsseldorf, Essen, Frankfurt, Hamburg, Hanover, Munich, Nuremberg, Stuttgart and London explain: In its judgment of June 16, 2010 (Az.: VIII ZR 317/09), the German Federal Court of Justice (BGH) had to decide in what circumstances a lessee is entitled to refuse to pay lease instalments. The lessee should only be entitled to suspend lease instalments if he also judicially enforces the claim for repayment of the purchase price against the supplier. If the supplier does not accept the cancelation of the purchase agreement then this must be settled in court and is only definitive once the judgment in the warranty litigation against the supplier becomes legally effective.

Generally, the lessor fully contracts out of liability for material defects and assigns the warranty rights from the purchase agreement with the supplier to the lessee. For this reason, it is a matter for the lessee to litigate against the supplier. A right to provisionally withhold the lease instalments can – if the supplier does not accept the lessee’s cancelation – only arise if the lessee asserts his claim for repayment of the purchase price by way of an action.

A lease is a type of agreement with respect to which a lessor furnishes and completely finances an item. The lessee is then able to make personal use of the leased item in return for regular payment of a small monthly sum. In this respect, one speaks of a granting of use for consideration.

Difficulties can arise, for example, in the event of material defects in the leased item where a lease agreement is rescinded.

Reason enough to draw on professional support even before the conclusion of the lease agreement to help draft and examine an agreement offered to one.

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GRP Rainer LLP is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Essen, Frankfurt, Hamburg, Hannover, Munich, Stuttgart, Bremen, Nuremberg and London UK.

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