LAW OF OBLIGATION ACT, PART 3, CHAPTER 17

Chapter 17

LEASING CONTRACT

  • 361. Definition of leasing contract

By a leasing contract, the lessor undertakes to acquire a certain object (the object of leasing) from a seller determined by the lessee and to grant use of the object to the lessee, and the lessee is required to pay a fee for use of the object of leasing.

  • 362. Obligations of lessor

(1) The lessor is required to ensure transfer of the possession of the object of leasing to the lessee and not to hinder the lessee upon possession or use of the object of leasing.

(2) The lessee may withdraw from the contract if the object of leasing is not delivered to the lessee within the term prescribed in the contract or, in the absence of such an agreement, within a reasonable period of time, and if the delay is caused by circumstances dependant on the lessor.

(3) The lessor is not liable to the lessee if the object of leasing does not conform to the contract unless:

1) the object of leasing or the seller thereof was selected by the lessor;

2) the lessee is a natural person and damage arising from reasonable belief in the professionalism of the lessor is caused to the lessee, particularly if the lessor specialises in leasing certain objects.

  • 363. Obligations of lessee

A lessee is required to:

1) use the object of leasing with prudence and according to the intended purpose thereof which was the basis for entry into the leasing contract or, in the absence of such an agreement, according to its ordinary purpose;

2) maintain the object of leasing in the condition in which it is delivered to the lessee, except for changes resulting from the use of the object of leasing for its intended purpose;

3) return, upon termination of the contract, the object of leasing to the lessor in the condition specified in clause 2) of this section, unless the lessee exercises the contractual right thereof to acquire the object of leasing.

  • 364. Transfer of risk of accidental loss or damage

The risk of accidental loss of or damage to an object of leasing transfers to the lessee upon delivery of the object of leasing to the lessee.

  • 365. Liability of seller

(1) A lessee may make a claim of a lessor as a purchaser directly against the seller if the claim arises from violation of the contract of sale entered into with the lessor. Upon filing such claim, the lessee has all the rights and obligations of the purchaser, except the obligation to pay for the object and the right to demand the transfer of the ownership of the object.

(2) A lessee has the right to exercise the right of a lessor to withdraw from a contract of sale entered into with a seller only with the consent of the lessor.

  • 366. Cancellation in event of defects or destruction of object of leasing

If the object of leasing is destroyed or becomes unusable or if the lessee exercises the right, arising from the contract of sale entered into with the seller instead of the lessor, to withdraw from the contract, the lessor and the lessee may both cancel the leasing contract without advance notice.

  • 367. Consequences of cancellation

(1) Upon cancellation of a leasing contract, the lessee shall reimburse all expenses borne by the lessor in connection with the object of leasing to the lessor, particularly the purchase price of the object of leasing and the costs of financing the purchase price to the extent to which these are not covered by the leasing payments already paid.

(2) Determination of the expenses specified in subsection (1) of this section shall be based on the amount of the leasing payments to be paid by the lessee after cancellation, from which interest arising from the contract and other amounts which are not related to the expenses incurred for acquisition of the object of leasing shall be deducted.

(3) If the object of leasing remains in the ownership of the lessor after the cancellation of the leasing contract, the value of the object of leasing at the time of return of the object to the lessor shall be taken in account upon determining the amount of the claim for reimbursement of expenses provided for in subsection (1) of this section.

(4) A lessee shall reimburse any additional expenses caused by cancellation to the lessor, unless the cancellation is caused by circumstances dependant on the lessor.

[RT I 2003, 78, 523 – entry into force 27.12.2003]

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