Leasing Contract And Contractual Interdependence

Leasing (credit-rent) is a complex, original and stand-alone legal operation as a financing technique for commercial companies. This transaction, as a whole, typically includes two distinct transactions: the leasing company enters into a sale-purchase agreement with a producer (supplier) through which it purchases the assets to be leased out with a unilateral sales promise, then the leasing company (the borrower) concludes a lease with the user (the borrower) to lease the asset for a certain period of time, with the option of ultimately buying it for a residual price. In court practice, the question arises whether the lease should be cancelled or terminated for lack of cause if the sale / purchase contract concluded between the supplier and the leasing company was resolved for non-compliance with the user’s requirements or for hidden vice that does not work for the intended use. The solution adopted in the French case-law was that the two types of contracts are their mutual cause (one with respect to each other) being in the face of contractual interdependence.