[Key Point of Judgment]
The transaction mode in which the lessee, in orderto realize financing, transfersthe ownership of its self-owned property to the lessor, leases such property from the lessor for its use, and paythe lessor rentalon schedulemayconstitute a financial leasing legalrelationship.
[Basic Facts]
On April 10, 2013, ZHAO, X and BorlandCompany signed “Vehicle Purchase and Sales Contract”, agreeing thatZHAO, Xtransfers the car under his name to Borlandcompany at the price of RMB174,001;BorlandCompany pays the transfer fund in two installments, with the first-installment payment beingRMB174,000 on the same day when the contract was signed andthe payment of second-installmenttransfer fund being RMB1before the expiration of the lease term. On the same day, the aforesaid two parties signed Financial LeaseContract”,agreeing thatZHAO, Xleased back the car it transferred toBorlandCompany at therental ofRMB174,000 for atermof thirty-six (36) months, with the monthly rental of RMB5,452.13 being paid ten (10) days before each month;after the term of lease expires andZHAO, Xpaysthe nominal price of RMB1, the car should beowned by ZHAO, X. Sincethe car is occupied and used by ZHAO, X, ZHAO, Xis not required to deliver the car to BorlandCompany first andthentoget it from the BorlandCompany. Where ZHAO, X failed topay full rental on schedule, BorlandFinancialLeasingCompany shall havethe right to require a lump-sumpayment of the remaining undue rentalpayable by ZHAO, X and collection ofliquidated damages at8% of the remaining outstanding rental.After execution of the contract, BorlandCompany paid RMB174,000 to ZHAO, X.After paying 10-installment rental, ZHAO, X did not pay rental to BorlandCompany. Therefore, BorlandCompany suedZHAO, X for paying the remaining unpaid rentalin the amount of RMB119,946.86 and liquidated damages.
Rulings
This court holds that ZHAO, X soldthe car under his name to BorlandCompany and leased the sametherefrom according to the financiallease contract, which constitutesfinancial leasing legal relationship of after-sales lease-back kind. The contract for vehicle sales and purchaseand vehiclelease contract signed by both parties are expression oftheir trueintention and do not breakany effect prohibitive provisions of lawor administrative regulation.Both parties to the contract shouldfully fulfill their obligations. ZHAO, Xdid not make timely and full payment of the rental and constituteda breach of contract. In this case,BorlandCompany shall havethe right to request ZHAO, X’s payment of the remaining unpaid rental and liquidated damages, with the car belonging to ZHAO, X.
[Typical Significance]
Financial leasing is an opened up industry in the field of the financial services sector in Qianhai Cooperation Zone and Free Trade Zone.Institutional innovation has stimulated the vitality of the market in saidfield, Tillthe end of May 2015324 financial leasing companies have been established in Qianhai Cooperation Zone, accounting for 95% of those established in Shenzhen and 17% of those in thecountry. The financial leasingenterprise’s business includes the traditional direct financialleasing and after-sales lease-back. Compared with direct leasing, after-sales lease-back is not a typical way of financial leasing. After-sales lease-backrefers to a way of financial leasing in which the lessee sells its self-owned propertyto the lessor andsignsa financial leasing contract with the lessor, and then borrowedsaidpropertyfrom the lessor. In this case, the people’s court holds a positive attitude towards non-typical after-sales lease-back .The method of after-sales lease-backallows the equipment manufacturing enterprises or asset owners to acquire fund when retaining the use right of their asset and provides the lessor with investment opportunities. Asset owners reuse this their idle fund in such way and use only a small part of their capitalto pay the rental for use of said fund.
Although the real after-sales lease-back transactions can constitute a means of financial leasing, the parties to certain transactionsexecute a contract in the name of after-sales lease-back, the essence of whichdoes not comply with the relationship of the lessor’s and the lessee’s rights and obligations as provided in Article 237 ofthe Contract Law of the People’s Republic of China but is a disguise used to avoid violation of relevant law provisions and policy in the name of after-sales lease-back. For example, there is no real orspecificleased property,the leased property is of a low value but is purchased at a higher price according to the after-sales lease-back contract, or the leased property is free of encumbrance, so that the lessor is unable to obtain the ownership of the leased property or to realize the guarantee function of the leasedproperty, orthe lessor fails to complete the relevant procedures for gaining the ownership of the leased property. The abovementionedcircumstanceswill have impact on the determination of the financial leasinglegal relationship and the validity of the contract to different extent. Therefore, when the parties enter into the after-sales lease-backfinanciallease contract, they should comprehensively check whether the leasedpropertyexists in reality, whether the value of the leasedpropertyis equivalent to the rental and whether the text of purchase and sales contract is made with respect tothe leasedproperty, in order toavoid the situation wheresuch information fails to be ascertained by the court when a lawsuit is filed against the contract-related dispute.
