Preservation of Contractual Rights
1. The Right of Revoke (or Cancel) Juristic
Act which prejudicial to the Creditor’s Right
2.The Right of Subrogation
3. Guaranty Contractual Rights and Secured
Transaction
The Accomplishment of the
Creditor’s Right
What is a liability?
– Right, obligation , and liability
A right is a interest awarded, recognized, and protected by law.
A duty or obligation is a burden to do or refrain from doing enforced by law.
A liability is an imputation levied by law when an obligor fails to perform its
obligation.
– Compulsory performance
– Damages
Recovery
Pecuniary damage
Manner to take a liability
– Personal liability
– Property liability
Range of liability
– Liability limited
– Liability without limited
Guarantor
(surety)
Guarantee
X
(Creditor)
Y
(Debtor)
Passively impaired
X’s right
Mortgagor
The right of Revocation
(Cancellation)
The Right of Subrogation
Debtor
of Y
Mortgage
Creditor
of Y
Positively impaired
X’s Right
The Right to Cancel Juristic Act Harming the
Creditor’s Right in PRC Contract Law
Article 74
Obligor
Obligee's Right to Cancel Manifestly Unreasonable Act by
– Where the obligor waived its creditor's right against a third person that was due
or assigned its property without reward, thereby harming the obligee, the obligee
may petition the People's Court for cancellation of the obligor's act. Where the
obligor assigned its property at a low price which is manifestly unreasonable,
thereby harming the obligee, and the assignee was aware of the situation, the
obligee may also petition the People's Court for cancellation of the obligor's act.
The scope of cancellation right is limited to the extent of the obligee's right to
performance. The necessary expenses for the obligee's exercise of its
cancellation right shall be borne by the obligor.
Article 75
Time Limit for Exercising Obligee's Cancellation Right
– The obligee's cancellation right shall be exercised within one year, commencing
on the date when it became, or should have become, aware of the cause for
cancellation. Such cancellation right is extinguished if not exercised within five
years, commencing on the date of occurrence of the obligor's act.
The Right to Revoke Juristic Act Prejudicial
to the Creditor’s Right in ROC Civil Code
Article 244
–
–
–
If a gratuitous act done by the debtor is likely to be prejudicial to the rights of the creditor, the
creditor may apply to the court for the revocation of such act.
If a non-gratuitous act done by the debtor is likely to be prejudicial to the rights of the creditor
and the debtor knew of it at the time of doing that act, the creditor may apply to the court for
the revocation of such act, provided that the party profited by the act (the beneficiary) also
knew of the circumstances on the receipt of the interests.
The provisions of the preceding two paragraphs do not apply to the act done by the debtor, if
the object of which is not on the property or is only prejudicial to the prestation of delivering a
specific thing.
When the creditor applies to the court for the revocation according to the provision of the first
or the second paragraph, he may also apply for ordering the beneficiary or the person who
acquires the object afterwards (the afterwards acquiring person) to restore to the status quo
ante, except the afterwards acquiring person did not know of the ground for revocation at the
time of acquiring.
Article 245
–
The claim for revocation in the provisions of the preceding article shall be extinguished by
prescription if not exercised within one year from the moment when the creditor knew of the
ground for revocation, or shall be extinguished after ten years from the date of doing the act.
The Right to Revoke Juristic Act Harming
the Creditor’s Right in Japan Civil Code
Article 424
Revocation of a Juristic Act Prejudicial to the Obligee
– The obligee may petition the court to revoke the juristic act that is made
by the obligor with a knowledge of the act being prejudicial to the
obligee. However, if the person, who benefits from the act directly or
receives the benefit subsequently, has no knowledge about the fact
being prejudicial to the obligee when the act is made or he receives the
benefit subsequently, the right can not be exercised.
Article 425
Effectiveness of Revocation
– The right of revocation provided in the preceding article is effective for
the interest of all obligees.
Article 426 Extinctive Prescription
– The right of revocation provided in article 424 shall be extinguished if it
is not exercised within two years from the moment when the obligee
knew of the ground for revocation, or shall be extinguished after twenty
years from the date of doing the act.
The Right to Revoke (Cancel) a Juristic Act
Definition
– The right of revocation can be defined as a right of petition to the court
to invalidate the obligor’s juristic act which is positively prejudicial to the
obligee’s benefit to accomplish its creditor’s right.
Gratuitous Act
– Elements
The juristic act is done by the debtor, the juristic act is a gratuitous act, and
the juristic act is likely to be prejudicial to the rights of the creditor. (ROC)
Where the obligor waived its creditor's right against a third person that was
due or assigned its property without reward, thereby harming the obligee,
the obligee may petition the People's Court for cancellation of the obligor's
act. (PRC)
– Effect
The creditor may apply to the court for the revocation of such act.
When the creditor petitions to the court for the revocation, he may also apply
for ordering the beneficiary or the person who acquires the object afterwards
(the afterwards acquiring person) to restore to the status quo ante, except
the afterwards acquiring person did not know of the ground for revocation at
the time of acquiring. (ROC)
The Right to Revoke (Cancel) a Juristic Act
A Non-gratuitous Act
– Elements
the juristic act is done by the debtor, the juristic act is a nongratuitous act, the juristic act is likely to be prejudicial to the
rights of the creditor, the debtor knew of it at the time of doing
that act, and the party profited by the act (the beneficiary)
also knew of the circumstances on the receipt of the interests.
(ROC)
Where the obligor assigned its property at a low price which
is manifestly unreasonable, thereby harming the obligee, and
the assignee was aware of the situation. (PRC)
The juristic act is made by the obligor with a knowledge of
the act being prejudicial to the obligee. (Japan)
The Right to Revoke (Cancel) a Juristic Act
– Effect
The creditor may apply to the court for the revocation of such
act.
When the creditor applies to the court for the revocation, he
may also apply for ordering the beneficiary or the person who
acquires the object afterwards (the afterwards acquiring
person) to restore to the status quo ante, except the
afterwards acquiring person did not know of the ground for
revocation at the time of acquiring. (ROC)
The right of revocation provided in the preceding article is
effective for the interest of all obligees. (Japan)
The Right to Revoke (Cancel) a Juristic Act
Limitation
– Do not apply to the act done by the debtor, if
the object of juristic act is not to transfer a property or
the act is only prejudicial to the prestation of delivering a specific
thing. (ROC)
– The provisions of the preceding two paragraphs do not apply to
the act done by the debtor, if the object of which is not on the
property or is only prejudicial to the prestation of delivering a
specific thing. (PRC)
– However, if the person, who benefits from the act directly or
receives the benefit subsequently, has no knowledge about the
fact being prejudicial to the obligee when the act is made or he
receives the benefit subsequently, the right can not be exercised.
(Japan)
The Right to Revoke (Cancel) a Juristic Act
– Time Period
The claim for revocation in the provisions of the preceding
article shall be extinguished if not exercised within one year
from the moment when the creditor knew of the ground for
revocation, or shall be extinguished after ten years from the
date of doing the act. (ROC)
The right of revocation provided in article 424 shall be
extinguished if it is not exercised within two years from the
moment when the obligee knew of the ground for revocation,
or shall be extinguished after twenty years from the date of
doing the act. (Japan)
The obligee's cancellation right shall be exercised within one
year, commencing on the date when it became, or should
have become, aware of the cause for cancellation. Such
cancellation right is extinguished if not exercised within five
years, commencing on the date of occurrence of the obligor's
act. (PRC)
The Right of Subrogation
Definition
– The Right of subrogation can be defined as a right awarded the
obligee a legal status to exercise the rights of obligor where the
obligor delayed in exercising its right against a third person that
was due, thereby harming the obligee.
Elements
– The obligor owns a creditor’s right against a third person.
– The obligor neglects to exercise its creditor’s right.
– The obligor’s delay in exercising its creditor's right harms the
obligee’s right.
– The obligor’s delay in exercising its creditor's right causes a
hazard of extinction of the obligor’s right.
The Right of Subrogation
Manner to exercise the right of subrogation
– The obligee may petition the People's Court for subrogation (PRC)
– The obligee may exercise the right of subrogation without a ratification
of court. (ROC).
– Before the creditor’s right is due, the obligee cannot exercise the right
provided in the preceding paragraph except exercising it through a
litigation except an act of preservation.(Japan)
Limitations
– except rights which are exclusively belonged to the debtor. (ROC Civil
Code Article 242); except where such creditor's right is exclusively
personal to the obligor.(PRC)
– The scope of subrogation is limited to the extent of the obligee's right to
performance. (PRC Contract Law Article 73)
– So long as the debtor is not in default, the creditor shall not exercise the
right specified in the preceding article, except those rights which are
exclusively for the preservation of the rights of the said debtor.
(ROC Civil Code Article 243)
The Right of Subrogation in PRC
Contract Law
Article 73
Subrogation; Limitation
– Where the obligor delayed in exercising its creditor's
right against a third person that was due, thereby
harming the obligee, the obligee may petition the
People's Court for subrogation, except where such
creditor's right is exclusively personal to the obligor.
– The scope of subrogation is limited to the extent of
the obligee's right to performance. The necessary
expenses for subrogation by the obligee shall be
borne by the obligor.
The Right of Subrogation in ROC
Civil Code
Article 242
– The creditor may, in order to preserve his prestation,
exercise in his the name of himself any right of the
debtor which the debtor neglects to exercise, except
rights which are exclusively belonged to the debtor.
Article 243
– So long as the debtor is not in default, the creditor
shall not exercise the right specified in the preceding
article, except those rights which are exclusively for
the preservation of the rights of the said debtor.
The Right of Subrogation in Japan
Civil Code
Article 423
– The obligee may, in order to preserve his
creditor’s right, exercise any right of the
debtor except rights which are exclusively
belonged to the debtor.
– Before the creditor’s right is due, the obligee
cannot exercise the right provided in the
preceding paragraph except exercising it
through a litigation except an act of
preservation.
Guaranty of Contractual Rights
Mortgage
– In realty
ROC Civil Code Article 860: a mortgage is the right to receive performance of an
obligation from the price of sale of the real property which has been treated as security
for the obligation by the debtor or by the third party, without transferring its possession.
PRC Guarantee Law Article 33 The mortgage prescribed in this Law, means a
guarantee that a debtor or a third party does not transfer the possession of the property
listed in.
Japan Civil Code Articles 369~398-22
– In rights
ROC Civil Code Article 883: The provisions of the present chapter concerning mortgage
shall apply mutatis mutandis to the mortgage specified in the preceding article and to
statutory mortgage.
Japan Civil Code Articles 369II
PRC Guarantee Law Article 34
– In chattels
ROC Secured Transaction Act.
PRC Guarantee Law Article 34
Japan Manufactory Place Mortgage Law
Guaranty of Contractual Rights
PRC Guarantee Law Article 34
– The following properties may be mortgaged:
1. the house and other land fixtures owned by the mortgagor;
2. the machine, transportation means and other property owned by
the mortgagor;
3. the state-owned right to the use of land, house and other land
fixtures which the mortgagor is entitled to dispose of pursuant to the
law;
4. the state-owned machine, transportation means and other
property which the mortgagor is entitled to dispose of pursuant to
the law;
5. the right to the use of land on the unreclaimed land such as
unreclaimed mountains, unreclaimed valleys, unclaimed hills or
unreclaimed beaches which is contracted for management by the
mortgagor in accordance with law and is agreed to mortgage by the
contractee; or
6. other property which may be mortgaged in accordance with the
law.
Guaranty of Contractual Rights
PRC Guarantee Law Article 35
– The obligatory right guaranteed by the mortgagor shall not exceed the
value of the gage.
– After the property is mortgaged, the surplus part that the said property is
more than the obligatory right guaranteed, may be mortgaged once
more, but shall not exceed the surplus part.
PRC Guarantee Law Article 36
– If the house upon the state-owned land obtained according to the law is
to be mortgaged, the right to the use of the state-owned land within the
scope the house occupies shall be mortgaged at the same time.
– If the right to the use of state-owned land obtained by way of transfer
according to the law, when mortgaged the house upon the said stateowned land shall be mortgaged at the same time.
– The right to the use of land of enterprises of a township (town) or village
shall not be mortgaged separately. If the buildings of enterprises of
township (town) or village such as a plant is to be mortgaged, the right
to the use of the land within the scope it occupies shall be mortgaged at
the same time.
Guaranty of Contractual Rights
PRC Guarantee Law Article 37
– The following properties shall not be mortgaged:
1. the ownership of land;
2. the ownership of the lands owned by collectives such as
cultivated land, house sites, private plots of cropland and hilly land
shall not be mortgaged, except that prescribed in item 5 of Article 34,
paragraph 3 of Article 36 of this Law;
3. the facilities for education, the facilities for public health and
medicine and other facilities for social benefit of the institutions or
social units for purpose of public interest such as schools,
kindergartens or hospitals;
4. the properties whose ownership or right to use is uncertain or in
dispute;
5. the properties sealed up, distrained or regulated; or
6. other properties which shall not be mortgaged pursuant to law.
Guaranty of Contractual Rights
Pledge
– In chattels or Movables
Article 884:
– pledge of personal property is the right to take possession of the
personal property delivered by the debtor or a third party as security for
a claim of prestation, may receive performance of the said prestation
from the prices of sale of such personal property.
PRC Guarantee Law Article 63:
– The pledge of movables described in this Law, means that the debtor or
the party delivers his movables to the creditor for possession, and
takes the said movables as the guarantee of the obligatory right. When
the debtor does not perform the debt, the creditor shall be entitled to
have right to keep the said movables to offset or have priority
insatisfying in the claim out of proceeds from the value amount of the
auction or sale of the said movables.
– The debtor or the third party prescribed in the proceeding paragraph
shall be a pledgor, the creditor shall be a pledgee, the movables
delivered shall be the pledgings.
Japan Civil Code §§352~355
Guaranty of Contractual Rights
– In realty
Japan Civil Code §§356~361
– In rights
ROC Civil Code Article 900
– A transferable claim of prestation and other rights may be the object of
a lien.
PRC Guarantee Law Article 75
– The following rights may be pledged:
1. a bill of exchange, check, promissory note, bond, deposit
receipt, bill of lading or warehouse receipt;
2. the share or share paper which may be assigned according to
the law;
3. the property right of the exclusive right to use trademark, patent
right, copyright which may be assigned according to the law; or
4. other rights which may be pledged according to the law.
Japan Civil Code §§362~368
Guaranty of Contractual Rights
Right of Retention
– ROC Civil Code Article 928
The creditor, who is in possession of a personal property belonging to his
debtor, may retain the same on the fulfillment of all the following conditions
before debtor's prestation has not been preformed:
– (1) When the claim of prestation is matured.
– (2) If there is a nexus between the creation of the claim of prestation and the
personal property, and
– (3) If the possession of the personal property did not originate from a tort.
– PRC Guarantee Law Article 82
The lien prescribed in this Law means that, according to the provisions of
Article 84 in this Law, the creditor possess the property of the debtor
according to the agreement of the contract, if the debtor does not perform
the debt pursuant to the time limitation agreed in the contract, the creditor
shall be entitled to have right to have a lien on the said property according to
this Law, to keep the said property to offset or have priority in satisfying for
the claim out of proceeds from the value amount of the auction, sale of the
said property.
– Japan Civil Code §§362~368
Guaranty of Contractual Rights
Lien
– Japan Civil Code §§362~368
Secured Transaction in other special laws
– Secured trust
Customary Law (or Case Law) in Taiwan and
Mainland China
– Trust receipt
Taiwan Secured Transaction Law
– Japan Enterprise Bond Guarantee Law
Guarantee Contract
Korea Credit Guarantee Fund
(Appellee, Plaintiff, Guarantor)
Guarantee
Credit guarantee
agreement
Claimed for
indemnity
Korea Exchange Bank
(the creditor, lender)
Loan for
consumption
Guarantee
Kim Jeong-man
(Appellant, Defendant, Guarantor)
Yoon Jong-wook
(the Debtor, borrower)
Guarantee Contract
Surety or Guarantor
– The term surety is commonly used as a synonym for guarantor,
although at one time the term surety primarily described a
guarantor whose liability arose by deed. [See K. P. McGuinness,
The Law of Guarantee (2nd ed.) (Toronto: Carswell, 1996) at p.
25]
– Under American law, there is a technical distinction between
suretyship and guarantee. In Canada, suretyship is not
considered to be a form of undertaking distinguishable from a
guarantee. However, some early Canadian cases use the word
surety to refer to what is now called an indemnity. (See Campbell
v. McIsaac (1873), 9 N.S.R. 287 (C.A.), per Shaw C.J.)
Throughout this paper, surety and guarantor are used
interchangeably.
http://www.cwilson.com/pubs/comlend/kjm1/guarantee.htm
Guarantee Contract
Co-Sureties (Joint, Several and Joint and Several)
– Several liability arises when two or more persons make separate
promises to another. The promises are cumulative, and payment
or performance by one does not discharge the other, unless
there is total payment or performance.
– Parties are jointly liable when two or more persons promise to do
the same thing. Since there is only one promise, performance or
payment by one discharges the other. Joint and several liability
arises when two or more persons make one promise to do the
same thing and also make separate promises to do the same
thing.
– In most standard forms of guarantees, the obligations of the cosureties are stated to be joint and several. The distinction
between joint and several and joint promises can be significant.
Guarantee Contract
Korea Civil Code Article 448 (Right of
Reimbursement among Co-sureties)
– (1) Where there are several sureties, one of whom has effected
performance in excess of the share incumbent on him, the
provisions of Article 444 shall apply mutatis mutandis.
– (2) Where the principal obligation is indivisible or each surety
has assumed the obligation for which they are jointly and
severally liable to each other or with the principal obligor, and
one of the sureties has effected performance in excess of the
share incumbent on him, the provisions of Articles 425 through
427 shall apply mutatis mutandis.
Guarantee Contract
Korea Civil Code Article 444 (Right of
Reimbursement of Nonfiduciary Surety)
– (1) In a case where a person who has become surety without the
request of the principal obligor, has performed the obligation or
has otherwise, at his own expense, procured the discharge of
the principal obligor, the latter is liable to indemnify the surety to
the extent that he was enriched as of the time of discharge.
– (2) In a case where a person has become surety against the will
of the principal obligor, has performed the obligation or has
otherwise at his own expense procured the discharge of the
principal obligor, the latter is liable to indemnify the surety only to
the extent that the latter is still being enriched.
– (3) If, in the preceding paragraph, the principal obligor claims
that he had, prior to the demand for indemnification, a good
cause for set-off against the obligee, the claim, which would
have been extinguished by such set-off, shall be transferred to
the surety.
Financial Leasing
Transaction
Financial Leasing
Definition of Financial Leasing Contract
–
–
–
A financial leasing contract is a contract whereby
the lessor, upon purchase of the lessee-selected
lease item from a lessee-selected seller, provides
the lease item to the lessee for its use, and the
lessee pays the rent. (PRC Contract Law Article
237)
UNDROIT Convention on International
Financial Leasing
PRC Contract Law, Chapter Fourteen Financial
Leasing Contracts
Definition of Financial Leasing Contract
A financial leasing contract is a contract
whereby the lessor, upon purchase of the
lessee-selected lease item from a lesseeselected seller, provides the lease item to the
lessee for its use, and the lessee pays the rent.
(PRC CL Article 237)
Unidroit Conventions on International
Financial Leasing Article I para. 2
2.The financial leasing transaction referred to in the previous
paragraph is a transaction which includes the following
characteristics:
– (a) the lessee specifies the equipment and selects the supplier without
relying primarily on the skill and judgment of the lessor;
– (b) the equipment is acquired by the lessor in connection with a leasing
agreement which, to the knowledge of the supplier, either has been
made or is to be made between the lessor and the lessee; and
– (c) the rentals payable under the leasing agreement are calculated so
as to take into account in particular the amortization of the whole or a
substantial part of the cost of the equipment.
3. This Convention applies whether or not the lessee has or
subsequently acquires the option to buy the equipment or to hold it
on lease for a further period, and whether or not for a nominal price
or rental.
4. This Convention applies to financial leasing transactions in
relation to all equipment save that which is to be used primarily for
the lessee's personal, family or household purposes.
Loan for Consumption
Lender
Lessor
Purchaser
(Owner of
the Leased Item)
Sale of
the
Leased
Item
Seller
Borrower
Financial Leasing
Pay rental
Delivery
and Conveyance
of Ownership
Lessee
Possessor of
the Leased Item
Attributes of Finance Lease
Type contract
– Lease
– Loan for consumption
– Sale
– Financial Leasing (PRC)
Non-type Contract (ROC & Japan)
Attributes of Finance Lease
The financial leasing enterprise could be defined as an enterprise
which provides funds to purchase a thing and then leases it to an
enterprise who needs to use the thing after it gains the ownership of
the thing leased, rather than directly loans money to the enterprise
which needs funds. Such transaction indeed dose not violate the
mandatory, public policy, or good moral. The transaction dose not
have no any advantage to the industrial and commercial activities in
this country. The purpose of financial leasing transaction is to
finance the lessee and so does the loan for consumption. However,
both juristic acts are tremendously different. In terms of the attributes
of financial leasing , it shall be interpreted as a non-type contract
similar to lease because the allocation of profit and hazard to the
thing leased differs from that in loan for consumption. Taiwan
Supreme Court Civil Decision Tai-shang No. 482 (2004).
Loan for Consumption
Lender
Borrower
Amortization of loans
Mortgage in a chattel
Mortgagor
Purchaser
(Owner and
Possessor)
Mortgagee
Sale of
Goods
Delivery
and Conveyance
of ownership
Seller
Sale of Goods by installment
Seller
(Owner)
Payment of Price
Delivery
Conveyance of ownership subject
to a condition precedent
Purchaser
(Possessor)
Loan for Consumption
Borrower
Lender
Trustee
Secured Trust
(Actual owner of
a real property)
Conveyance of ownership subject
to a conduction subsequent
Can the actual owner
claim the bona fide purchaser
to eradicate the title record
in official register?
(nominal owner)
Sale
Conveyance
of ownership
Bona Fide
Purchaser
Loan for Consumption
Lender
Borrower
The Second Sale of the Machines
Purchaser
Appellee
Owner of
the Machines
Lessor
Payment of Price
Conveyance of Ownership
Lease
Pay rental
The Third Party
Objection
Compulsory
Execution
Appellant
(President Co.)
Obligee
Seller
(Wholesale)
Obligor
Possessor of
the Machines
Lessee
Purchaser
The First
Sale
of the
Machines
Delivery
and Conveyance
of Ownership
Seller
(Hon Ying Co.)
ROC Civil Code Article 761
The transfer of rights in rem of personal property will not
effect until the personal property has been delivered.
However, if the transferee has been in possession of the
personal property, the transfer effects when the parties
agree to such transfer.
In the transfer of a right in rem of personal property,
where the transferor is still in possession of it, a contract
causing the transferee to acquire its indirect possession
may be made between the parties in the place of its
delivery.
ROC Civil Code Article 87
A fictitious expression of intent made by the
expresser in collusion with other party is void,
but the voidance can not be a valid defense
against any bona fide third party.
If the fictitious expression of intent was intended
to conceal another juridical act, the provisions of
the act with respect to such another juridical act
shall apply.
The lessee’s rights in financial Leasing
Lessee's Assumption of Buyer's Rights
– Under the sales contract concluded by the
lessor according to the lessee's selection of
the seller and the lease item, the seller shall
deliver the subject matter to the lessee in
accordance with the contract, and the lessee
enjoys the rights of the buyer in respect of
taking delivery of the subject matter. (PRC
Contract Law Article 239)
The lessee’s rights in financial Leasing
Lessee's Assumption of Buyer's
Remedies in Case of Seller's Nonperformance
– The lessor, the seller and the lessee may
agree that any claim arising from the seller's
non-performance of its obligations under the
sales contract will be made by the lessee.
Where the lessee makes such a claim, the
lessor shall provide assistance. . (PRC
Contract Law Article 240)
Amendment of Sales Contract
Certain Amendment of Sales Contract
Subject to Consent by Lessee
– Absent consent by the lessee, the lessor
may not amend any lessee-related term in
the sales contract concluded by it according
to the lessee's selection of the seller and the
lease item. . (PRC Contract Law Article
241)
Title to the lease item
Exclusion of Lease Item from Bankruptcy
Assets of Lessee
– Title to the lease item vests in the lessor. In
case the lessee enters into bankruptcy, the
lease item is not part of its bankruptcy assets. .
(PRC Contract Law Article 242)
Rent
Determination of Rental Components
– Unless otherwise agreed by the parties, the
rent under a financial leasing contract shall be
determined based on the major portion of or
full costs of purchasing the lease item and the
lessor's reasonable profit. . (PRC Contract
Law Article 243)
Warranty for fitness
Lessor Not Liable for Non-fitness of Lease
Item; Exceptions
– Where the lease item does not comply with
the contract or is not fit for the intended
purpose, the lessor is not liable, except where
the lessee relied on the skills of the lessor in
selecting the lease item or the lessor
interfered in the selection thereof. . (PRC
Contract Law Article 244)
Warranty by Lessor
The lessor shall give warranty in respect of
the lessee's possession and use of the
lease item. (PRC Contract Law Article
245)
Liability for Injury
Lessor Not Liable for Damage or Injury
– If while in the possession of the lessee, the
lease item caused personal injury or property
damage to any third person, the lessor is not
liable. (PRC Contract Law Article 246)
Maintenance Obligations
Lessee's Obligation of Due Care;
Maintenance Obligations
– The lessee shall keep (or keep it in his
custody) and use the lease item with due care.
– While in possession of the lease item, the
lessee shall perform the obligations of
maintenance and repair thereof. (PRC
Contract Law Article 247)
Lessor' s Remedies
Lessor' s Remedies in Case of Nonpayment by Lessee
– The lessee shall pay the rent in accordance
with the contract. Where the lessee fails to
pay the rent within a reasonable period after
receiving demand for payment from the lessor,
the lessor may require payment of the full rent;
or it may terminate the contract and
repossess the lease item. (PRC Contract Law
Article 248)
Refund
Partial Refund in Case of Termination by Lessor
– Where the parties agreed that title to the lease item
will vest in the lessee at the end of the lease term,
and after paying a major portion of the rent, the
lessee is unable to pay the remaining balance,
resulting in the lessor's termination of the contract and
repossession of the lease item, if the value of the
repossessed lease item exceeds the rent owed by the
lessee and other expenses, the lessee may require
partial refund. (PRC Contract Law Article 249)
Ownership of Lease Item
Ownership of Lease Item at End of Lease Term
– The lessor and the lessee may agree on the
ownership of the lease item at the end of the lease
term.
– Where ownership of the lease item was not
prescribed or clearly prescribed, and cannot be
determined in accordance with Article 61 hereof, title
to the lease item shall vest in the lessor. (PRC
Contract Law Article 250)