Article 755
If the financial lease contract is terminated due to the termination of the sales contract, is confirmed to be invalid or revoked, and the seller or the leased property is chosen by the lessee, the lessor has the right to request the lessee to compensate for the corresponding losses;
If the lessor's losses have been compensated when the sales contract is terminated, confirmed to be invalid or revoked, the lessee shall no longer be liable for the corresponding compensation.
I. Purpose of this Article
This article is about the legal consequences of the termination of a financial lease contract due to the sale and purchase contract.
II. Evolution of the Provisions
Article 16 of the 2014 Interpretation of Financial Leasing Contracts stipulates that: "If a financial lease contract is terminated due to the termination of the sales contract, confirmation of invalidity or revocation, and the lessor claims that the lessee shall compensate for the corresponding losses on the basis of the provisions of the financial lease contract or on the ground that the seller and the leased object are chosen by the lessee although the financial lease contract is not agreed or the agreement is unclear, the people's court shall uphold it." If the lessor has been compensated for the losses incurred by the sales contract when it is terminated, confirmed to be invalid or revoked, the lessee shall be exempted from the corresponding liability for compensation. "This article is modified on the basis of the above provisions.
3. Interpretation of Provisions
This article is a provision that the lessee shall bear the liability for the lessor's losses, which is not stipulated in the Contract Law, and this article is a new rule established by reference to the provisions of the judicial interpretation.
In the course of the performance of the financial lease contract, if the financial lease contract is terminated due to the dissolution, confirmation of invalidity or revocation of the sales contract, the basic criterion for liability for the losses caused is who chooses the seller and the leased object. In this regard, Article 16 of the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Financial Leasing Contracts stipulates that: "If a financial lease contract is terminated due to the termination of the sales contract, confirmation of invalidity or revocation, and the lessor claims that the lessee shall compensate for the corresponding losses on the basis of the provisions of the financial lease contract, or on the ground that the seller and the leased object are chosen by the lessee although the financial lease contract is not stipulated or the agreement is unclear, the seller and the leased object are chosen by the lessee, the people's court shall uphold it." If the lessor has been compensated for the losses incurred by the sales contract when it is terminated, confirmed to be invalid or revoked, the lessee shall be exempted from the corresponding liability for compensation. This provision solves this problem well.
This article draws on this provision of the judicial interpretation to stipulate who should bear the responsibility of the financial lease contract if it is terminated, confirmed to be invalid or revoked due to the sale contract, and the rules are as follows: First, if the seller and the leased object are selected by the lessee, the lessor has the right to demand compensation from the lessee for the corresponding losses. Second, the seller and the leased property are chosen by the lessor, and the lessor bears the consequences of the loss and cannot claim compensation from the lessee. This is because the sales contract of the financial lease contract is the basis of the lease contract, and whoever chooses the leased object should be responsible for the validity of the sales contract of the leased thing. If the lessee chooses the leased property, and accordingly the lessor and the seller sign a sales contract, conduct a transaction, and obtain the leased property, the lessee will of course be liable for any problems arising from the validity of the lease contract. Therefore, it is stipulated that the lessor has the right to demand compensation from the lessee for the corresponding losses. However, if the sales contract is terminated, confirmed to be invalid or revoked due to reasons attributable to the lessor, the aforesaid rules shall not apply, and the lessor cannot claim the lessee to bear the liability for damages.
In the former case, i.e., if the lessee chooses to lease the property, if the lessor has already received compensation from the seller for its losses when the sales contract is terminated, confirmed invalid or revoked, the lessee shall be exempted from the corresponding part of the liability under the "same source rule".
4. Cases
Guangxi Fangchenggang Ruida Shipping Co., Ltd. et al. v. Huarong Financial Leasing Co., Ltd., a dispute over a ship financial leasing contract
Facts: On June 1, 2007, Hangchang Company and Ruida Company signed a "23800DWT Bulk Carrier Cooperative Construction Agreement". From February 15, 2011 to September 15, 2011, Ruida Company paid the rent according to the rent payment schedule, but from the following month onwards, part of the rent was overdue and has not been paid. The ship involved in the case was basically in a state of suspension during the construction process, and only then did it propose a financial lease to Huarong Company. Based on the clear intention of the three parties to continue to perform the "Financial Leasing Contract", Huarong Company withdrew its claim to deliver the ship to Huarong Company within 10 days after the judgment took effect, and agreed to continue to perform the "Financial Leasing Contract" and work together to continue the construction of the ship. However, the subsequent delivery or continuation of the ships under construction involved in the case could not be resolved through the efforts of various parties due to issues such as social fundraising, and the ships involved in the case have been idle until now. However, Ruida Company failed to perform the financial lease contract as agreed, and the late payment of rent constituted a breach of contract. In addition, the Shipbuilding Contract clearly stipulates that Ruida Company has the obligation to send representatives to the shipyard to supervise the construction, and its representatives know or should know the construction progress of the ships involved in the case, and Huarong Company has misappropriated part of the funds after investing 40 million yuan in the ship on July 29, 2010, and the ships involved in the case are basically in a state of suspension, which has a significant relationship with the ineffective supervision of Ruida Company. Therefore, the ship involved in the case has not yet been completed and is idle, which is caused by the failure of Hangchang Company to build on schedule as agreed, and the failure of Ruida Company to perform its obligation to supervise the construction and its negligence in fulfilling its obligation to continue construction. However, Ruida's fundamental breach of contract for late payment of rent and subsequent long-term delay in performing the financial lease contract on the grounds of economic difficulties was the direct cause of the termination of the financial lease contract. Huarong Company's request to terminate the Financial Lease Contract was legal and reasonable, and was accepted, and the losses caused by Ruida Company should be directly compensated by Ruida Company to Huarong Company, and Hangchang Company and other guarantors should be jointly and severally liable.
5. Analysis
The court ruled that the ship involved in the case had not been completed and had been idle, which was caused by the joint efforts of Hangchang Company and Ruida Company, and was not improper. According to the ascertained facts, Ruida Company failed to pay the rent as agreed, and although Huarong Company demanded it, it had delayed the performance of the financial lease contract for a long time on the grounds of economic difficulties, and its behavior constituted a fundamental breach of contract. Based on this judgment, the court found that Ruida's fundamental breach of contract was the direct cause of the termination of the financial lease contract involved in the case, and that the termination of the financial lease contract from June 10, 2014 was not improper. Therefore, the legal relationship of the Financial Lease Contract in this case was terminated when Huarong Company filed a lawsuit in accordance with the law on June 10, 2014, and Huarong Company had the right to file a claim against Ruida Company and others for claiming the creditor's rights of the financial lease contract and giving up the leased property in accordance with Articles 16 and 22 of the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Financial Leasing Contracts and the provisions of the Financial Lease Contract.