Anatomy of the
Equipment Leasing Act 2015
24th November 2015
Theophilus Emuwa
Legal Practitioners & Arbitrators
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Legal framework prior to 2015
 English common law
 Hire Purchase Act 1965
o
Hire Purchase Regulations 1968
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Implied terms under common law

Delivery of the equipment & redelivery

Good title to the equipment

Description of the equipment

Quality and fitness for purpose

Quiet possession

Payment of installments

Maintenance of equipment – reasonable care
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Implied terms under the Hire Purchase Act
• Similar to those at common law
▫ The Act only applies to motor vehicles and small assets
<N2,000 in 1965 - now very small, but perhaps equivalent
to N10million today!
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Challenges existing prior to the Act
 Repossession of leased equipment
 Inadequate fiscal incentives – finance leases
 Notice to third parties/registration of lessor’s interest
 Lessee could not sue manufacturer/supplier directly
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Overview of the Equipment Leasing Act
 Establishment of the Equipment Leasing Authority
 Restriction on operation of equipment leasing business
 Requirement of registration of equipment leasing
agreement
 Classification of equipment leases
 Implied term of legal ownership
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Overview of the Act (Contd.)
 Implied rights and obligations of lessees
 Procedure for termination of lease
 Repossession of leased equipment
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Anatomy
• Applies to all equipment leases - s.1, s.3
▫ Finance lease
▫ Operating lease
▫ Syndicated lease
▫ Sale and lease back
▫ Cross border lease
▫ Leveraged lease
▫ Any others
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Anatomy (contd.)
• Agreement must be in writing – s.2, s.4
▫ If a finance lease, to indicate:
 Estimated price
 That manufacturer/supplier has knowledge of lessor’s intention to
lease
 That lessee has selected equipment with/without relying on lessor
 Lessee’s acknowledgement that lease is “full pay-out non-cancellable”
 That upon termination lessee shall redeliver equipment to lessor
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Anatomy (contd.)
• All lessors must be registered – s.6
• Equipment lease agreements may/must be
registered? – ss.12 & 13
• Minister may determine stamp duty payable? – s.11
(Stamp Duties Act??)
• Registration constitutes notice to third parties – s.16
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Anatomy (contd.)
• Non-registration of “registrable lease agreement”
renders it invalid – s.17
▫ Between the parties but not against third party who has no notice
(but see s.21 – lessor does not prevail against purchaser under
non-registered lease!!)
• Registration protects lessor against third parties –
ss.19, 20, 21
▫ Lessor’s title shall prevail against all even where agreement says
otherwise; any sale, sub-lease, pledge, charge, mortgage, loan,
assignment, etc. by lessee not effective; lessor prevails over
creditor
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Anatomy (contd.)
• Lessor to inscribe or affix name on equipment – s.18
▫ No consequence for default?
• Rights/obligations of lessee, similar to common law
– ss.22(1), 24
• Lessee can sue manufacturer/supplier directly –
s.22(2)
▫ Finance lease only? See s.2(2)
▫ Privity of contract??
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Anatomy (contd.)
• Where lessee relies on “skill, knowledge & expertise”
of lessor in selecting equipment lessor is liable for
defect or non-fitness – s.33
▫ Also, manufacturer/supplier liable to lessee – s.34
• Capital allowance available only to lessor in
operating lease?? – s.36(3)
▫ Only owner can claim capital allowance – Companies Income Tax
Act, Second Schedule, paragraphs 6 & 7
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Anatomy (contd.)
• Lessor entitled to have information on
equipment & to inspect it – ss.26, 27
▫ Location, condition, etc of leased equipment
• Repossession by ex parte application – s.39
▫ Pre-emptive court action by lessee??
• Leased equipment not to be exported without
lessor’s consent – s.42
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Conclusion
• Some progress, but s.36(3) worrisome
• Also, may be helpful to link equipment lease
register with
▫ CAC’s charges register &
▫ CBN’s collateral registry
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