Chapter XIV Contracts for Financial Lease

Article 237 A "contract for financial lease" is a contract whereby the lessor, in accordance with the seller and the leased object chosen by the lessee, purchases the leased object from the seller and provides it for use by the lessee, and the lessee pays the rent therefor.

Article 238 A contract for financial lease shall contain such clauses as the name of the leased object, quantity, specifications, technical performance, inspection method, lease term, composition of rent, the time limit, method and kind of currency for the payment of the rent, and the ownership over the leased object at the expiration of the lease term.

Contracts for financial lease shall be made in written form.

Article 239 Where a lessor concludes a purchase and sale contract in accordance with the seller and the leased object chosen by a lessee, the seller shall deliver the targeted matter to the lessee as contracted, and the lessee shall enjoy the rights of the buyer relating to the targeted matter received.

Article 240 The lessor, the seller and the lessee may stipulate that, if the seller fails to perform the obligations under the purchase and sale contract, the lessee shall exercise the right to claim. If the lessee exercises the right to claim, the lessor shall render assistance.

Article 241 Where the lessor concludes a purchase and sale contract in accordance with the seller and the leased object chosen by the lessee, the lessor may not, without the consent of the lessee, modify the content of the contract related to the lessee.

Article 242 The lessor enjoys the ownership over the leased object. If the lessee goes bankrupt, the leased object shall not fall into the category of bankrupt property.

Article 243 The rent under a contract for financial lease shall, unless the parties stipulate otherwise, be determined according to the major part or the whole of the cost for the purchase of the leased object plus reasonable profits for the lessor.

Article 244 If the leased object fails to comply with the agreed requirements or with the purpose of its use, the lessor shall not bear any liability, except in the event that the lessee is dependent upon the lessor's expertise in deciding the leased object or the lessor intervenes with the selection of the leased object.

Article 245 The lessor shall guarantee the possession and use of the leased object by the lessee.

Article 246 Within the period of possession over the leased object by the lessee, if the leased object causes any personal injury or property loss to a third party, the lessor shall not bear any liability.

Article 247 The lessee shall properly maintain and use the leased object.

The lessee shall perform the obligations for the maintenance of the leased object within the period of its possession.

Article 248 The lessee shall pay the rent as contracted. If the lessee fails to pay the rent within a reasonable period of time after being urged, the lessor may demand the full payment of the rent, or dissolve the contract and take back the leased object.

Article 249 Where the parties stipulate that the lessee shall have the ownership over the leased object after the expiration of the lease term, where the lessee has paid most of the rent but is unable to pay the remaining part, and where the lessor has therefore dissolved the contract and taken back the leased object, the lessee may demand a partial refund if the value of the leased object taken back exceeds the rent in arrears and other expenses.

Article 250 The lessor and the lessee may stipulate the ownership over the leased object at the expiration of the lease term. If the ownership of the leased object is not stipulated or is unclearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the ownership of the leased object shall belong to the lessor.