Article 752
The lessee shall pay the rent as agreed. If the lessee fails to pay the rent within a reasonable period of time after being reminded, the lessor may request payment of the full amount of the rent, or may terminate the contract and take back the leased property.
I. Purpose of this Article
This article is about the lessee's obligation to pay rent and the lessor's rights and remedies in case of refusal to pay.
II. Evolution of the Provisions
Article 248 of the original Contract Law stipulates that "the lessee shall pay the rent in accordance with the agreement. If the lessee fails to pay the rent within a reasonable period of time after being reminded, the lessor may demand payment of the full amount of the rent, or may terminate the contract and take back the leased property. This article of the Civil Code amends the wording of "request" to "request", which improves the relevant provisions of the original Contract Law in terms of legislative technology.
3. Interpretation of Provisions
This article regulates the tenant's obligation to pay rent.
Payment of rent is the main obligation that the lessee of a financial lease contract should perform. The lessee shall pay the rent in accordance with the agreed amount and method of rent, and shall not violate the contract.
If the lessee fails to pay the rent as agreed, the lessor shall demand the lessee and determine a reasonable grace period within which the lessor shall pay the rent. If the lessee still fails to pay after the expiration of the grace period, the measures that can be taken are: (1) request the lessee to pay all the rent due and undue. If the whole rent is paid, if it is agreed that the ownership of the leased thing can be obtained by paying the full rent, the ownership of the subject matter shall be transferred; if it is agreed that the ownership of the leased thing must be paid for the purchase of the leased thing, the lessee shall acquire the ownership of the leased object after making the payment of the price, and if the price is not paid, the ownership shall still belong to the lessor. (2) Terminate the contract and take back the leased property. If the parties have agreed that the leased property shall be owned by the lessee upon the expiration of the lease term, and the lessee has paid most of the rent, but is unable to pay the remaining rent, and the lessor terminates the contract to recover the leased property, the lessee may demand a partial return if the value of the leased property exceeds the rent and other expenses owed by the lessee.
4. Cases
Yongtai Energy Co., Ltd. and State Grid International Financial Leasing Co., Ltd. Financial leasing contract dispute
Facts: On May 22, 2017, the plaintiff State Grid Leasing signed a Financial Lease Contract No. SGIL×××.2017.××× with the defendants Yongtai Company and Huaying Company. After State Grid Leasing paid the purchase price, Yongtai Company and Huaying Company failed to pay the rent as agreed, which constituted a breach of contract. State Grid Leasing has the right to claim that the contract expires at an accelerated rate and require Yongtai Company and Huaying Company to repay all unpaid rent, delay interest and other payments under the contract. State Grid Leasing claimed all the rent from Yongtai Company and Huaying Company by way of litigation, and the copies of the complaint were delivered to Yongtai Company and Huaying Company on August 31 and September 21, 2018 respectively, so the early expiration date was September 21, 2018. Regarding the payment payable by Yongtai Company and Huaying Company, on September 21, 2018, Yongtai Company and Huaying Company should pay the rent of State Grid Lease of 156,041,833.55 yuan (the rent due for the fourth phase is 16,118,417.55 yuan + the rent of the 5th-12th installment is 144923416 yuan - the deposit is 5,000,000 yuan). The contract stipulates that the delay interest is 2.5% per month, which is too high, and the first instance decided to calculate the annual interest rate of 24%, and the delay interest as of September 20, 2018 is 977,850.66 yuan (16,118,417×24% ÷360×91). The interest after early maturity is based on 156,041,833.55 yuan, and is calculated at an annual interest rate of 24% from September 21, 2018 to the date of actual repayment. State Grid Leasing claimed that Yongtai Company and Huaying Company should pay it 1,000 yuan for the equipment purchase price, and the court supported it.
5. Analysis
The financial lease involved in the case was a sale-leaseback model. According to the contract, after State Grid Leasing purchased and paid all the price of the equipment involved in the case from Yongtai Company and Huaying Company to obtain ownership, Yongtai Company and Huaying Company leased back the equipment involved in the case and had the obligation to pay the rent and repurchase the leased property. Pursuant to Article 752 of the Civil Code, in this case, when the lessee failed to pay the rent as agreed, State Grid Leasing, as the lessor, chose to assert its rights by claiming the accelerated expiration of the contract rather than terminating the contract. Therefore, the contract in question is still in a state of continuous performance.