How does leasing a phone work

What are leasing contracts?

Leasing is a form of contract that is not regulated by law

Leasing is understood to mean a paid use of movable and immovable items, for example company vehicles, telephone systems, industrial buildings, etc. for a certain period of time. The leasing contract is not regulated by law as a separate type of contract, so the regulations for other similar contract types (e.g. purchase contract, rental contract) must be used. The Tenancy Law may apply to the transfer of immovable property.

Forms of leasing

When it comes to leasing, a general distinction is made between pure rental or leasing contracts (operating leasing) and finance leasing contracts. Finance leasing includes elements of purchase and rental: the lessee does not become the owner, he only has a right of use. In contrast to a bank loan, the leased item remains the property of the leasing company for the entire duration of the contract. However, the lessee bears the economic risk. The lessee therefore bears the price and material risk. If, for example, repair, insurance or maintenance costs arise during the leasing, the lessee has to pay for them (= property risk). If the leased item is lost by accident, the lessee must continue to pay the leasing installments until the end of the agreed term (= risk of price).

In finance leasing, a distinction can also be made between full amortization contracts and partial amortization contracts. In the case of full amortization contracts (full pay-out model), the agreed useful life is usually the same as the economic life and the sum of the leasing installments corresponds to the total value of the lessor's service (e.g. acquisition, financing costs and lessor's profit). Partial amortization contracts (non-pay-out model or residual value leasing) have a short term. The lessee here either has a purchase option at a purchase price fixed in advance or he is responsible for ensuring that the leased object can be sold at the agreed residual value after the end of the contract.

A distinction is made between direct and indirect leasing, depending on whether the dealer or producer is the lessor himself or whether its own leasing company concludes the leasing transaction with the lessee.

Termination option

An extraordinary termination of leasing contracts is only possible if an event occurs that makes the continuation of the contract unreasonable for the lessee or if there is immorality (e.g. serious breach of contract, loss of trust in the person of the contracting party or serious changes in circumstances). However, this can only be answered after a comprehensive assessment of all for and against circumstances of the individual case.

An early termination of leasing contracts is therefore usually only possible by mutual agreement in entrepreneurial transactions. In practice, when it comes to car leasing, a distinction is often made between residual value leasing contracts (also called right to tender) and operating leasing. A residual value leasing contract can normally be terminated in writing at any time. The difference between the liquidation value and the used vehicle revenue is then charged to the lessee. In the case of operating leasing (pure rental variant: a vehicle is used for an agreed period of time, put on hold after this time and a new company car is leased again), you can usually only terminate the contract with the lessor's consent during the calculation base period.

Consumers can terminate a leasing contract prematurely at any time on the basis of the Consumer Credit Act. Here, the sum of the outstanding leasing installments and the residual value is determined. However, this can be very costly, especially in the case of a termination in the initial phase. The lessor must inform the consumer both in advance of the contract and in the contract itself about the right of termination and the calculation of the payment obligation for a return case.

What claims does the lessee have if the leased property is defective?

Most leasing contracts exclude the lessee's warranty rights vis-à-vis the lessor. However, the lessee must have the rights of a buyer in a finance lease. A complete exclusion of warranty in the leasing contract is therefore only possible if the lessor assigns the warranty rights to which he is entitled to his supplier to the lessee or authorizes him to assert the rights of the lessor as his representative. If there is such an assignment clause for warranty and guarantee claims in the contract, this does not automatically include the assignment of claims for damages instead of warranty.