Leasing law
Leasing law is modern contract law: in the period of development of the Civil Code around 1900, leasing transactions were still unknown. There is still today unfortunately no leasing code consolidating all relevant rules.
The regulations governing leasing are scattered throughout the Civil Code, in the Act on the Regulation of the Law of General Terms and Conditions, in the Consumer Credit Law, in the Law Regarding Revocation of Door-to-Door and Similar Dealings, in the Product Liability Act, in the Insolvency Regulations, in the Commercial Code, in the Tax Code, in the Local Business Tax Act and in the Income Tax Act and the Law on Corporation Taxation. There are also federal and state decrees such as the decree on partial pay-out and the decree on full pay-out for movable equipment which relate to leasing transactions. Furthermore, judicial decisions have also played a role in structuring the areas of civil law and tax law in leasing.
But that is not all. There is another important player with great influence on the regulations for leasing transactions: the European Union.
As of 1 January 2002, the implementation in particular of the Law on the Sale of Goods by the European Union led to far-reaching reforms in the German law of contract. Special provisions for conclusion and termination apply to leasing agreements with consumers e.g. the right of revocation and the qualified reminder as condition of termination. Leasing essentially follows the rules of tenancy law which was fundamentally reformed by the Law to Reform Leasehold Interest which came into force on 01.09.2001. The Law on the Modernisation of the Law of Contract then introduced the "Reform of the Law of Contract" as of January 2002. On 01.08.2002, the Second Law on the Amendment of Provisions of the Law of Damages also came into force which reformed the law on damages.
There is to date no legal definition of leasing. The term leasing is relatively well defined only through judicial decisions. The notion generally prevails that leasing is a special form of rental with certain specific terms. There is frequently a difference in legal practice between operating leasing, leasing with open residual values and leasing with residual values.
Full pay-out
Here, the acquisition costs for the leased economic asset are not settled in full during the term of the leasing agreement - the instalments therefore pay back only part of the total acquisition costs of the leasing object; a residual value remains
Partial pay-out
A leasing agreement is a typical mixed agreement and often includes elements of rent, purchase and consumer credit law. Classification in terms of a purchase agreement (purchase of goods, legal purchase and hire purchase) does not apply to leasing as the lessor and not the lessee becomes the economic owner. According to judicial decisions, primarily the regulations on tenancy law in the Civil Code as already mentioned for leasing agreements are decisive (Sections 535 et seq.) unless specific leasing terms apply.