The Termination of Lease Financing Contract upon its Expiry: Subsequent Implications

Abstract

The termination of a finance lease contract marks a pivotal moment in the relationship between the lessor and the lessee, representing a significant stage in their contractual relationship. This entails the expiration of the contract upon the end of the specified period, necessitating an evaluation of the implications for the parties involved.  The primary impact of this event is either the transfer of ownership of the leased assets to the lessee, granting them full ownership rights, or requiring the lessee to make wise decisions regarding the contract's future based on its expiration, such as renewing the contract or returning the leased properties. Legally, lessee must commit to delivering the properties in good condition, taking into account normal consumption, requiring understanding between the parties to ensure the smooth progress of the contractual process to complete the relevant legal procedures upon contract termination.

The study aimed to understand the implications for both the lessee and the lessor upon the termination of a finance lease contract by exploring the available options for the lessee once the contract period ends, whether through purchasing the leased assets, renewing the contract, or taking other steps related to the investment future of the properties.

This study adopted the descriptive-analytical method in presenting the legal texts regarding the implications of the termination of a finance lease contract upon its expiry and the resulting options. It concluded that the finance lease contract is one of the regulated contracts, as the legislator has governed its provisions according to the law regarding finance leasing in Palestine.