Breach of Contractual Ancillary Obligations in Leasing Law

The lessor is possibly subject to fulfilling the contractual obligation to make best possible use of its a leased asset if a lessee is responsible for the calculated residual value of the leased asset according to the contract of lease.


Cologne, NRW -- (SBWire) -- 08/15/2013 --GRP Rainer Attorneys and Tax Advisors in Cologne, Berlin, Bonn, Bremen, Dusseldorf, Essen, Frankfurt, Hamburg, Hanover, Munich, Nuremberg and Stuttgart explain: The Higher Regional Court (OLG) Oldenburg ruled in its judgment from March 6, 2013 (file 13 U 4/11) that a lessor must utilize the leased asset, if the lessee is responsible for the calculated residual value of the lease according to the terms of the lease agreement. The ancillary obligation to recover the best possible utilization of the leased asset pertains to the lessor (leasing company). A breach of this obligation shall exist if the lessor and the supplier of the lease vehicle concluded a repurchase agreement and the lessor had not confirmed whether or not, at the end of the leasing term, making recourse to this repurchase agreement was also favorable for the lessee.

In leasing, the lessor procures an item or asset and finances it completely. The leasing object shall then, in turn, be made available to the lessee for independent use in exchange for payment of a small monthly sum. Legally, this is considered a non-gratuitous transfer of use. Therefore, parallels between the law of tenancy and the lease agreement are apparent.

Usually, there are provisions for the transfer of use, contractually agreed maintenance and servicing costs as well as warranty claims assigned to the lessee as part of leasing arrangements. Such features of leasing arrangements indicate a significant difference between a leasing agreement and a tenancy agreement. A further difference is also the participation of a third party in the lease contract, the manufacturer of the leased object.

Challenges and complexities can occur as part of the transactions leading up to the termination or cancellation of a leasing agreement in the case of defects in leased objects. Particular difficulties may also arise as the lessor (or leasing company) at the end of a leasing period as well as in fulfilling its contractual ancillary obligations of the leasing object – such as the obligation for best possible utilization of the leased object.

Reason enough even before the conclusion of a leasing contract to gain support for lease contract arrangements as well as the review of lease proposal. An attorney practicing in the area of leasing law help to arrange and structure contracts from the outset so that that they can withstand a later judicial review and in particular also clarify what obligations arise respectively under the leasing contract.

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