Commentary to the articles of Paragraph 4 Leasing of Chapter 29 Property Lease Agreement of the Civil Code of the Republic of Kazakhstan

4.1. Leasing in the global legal system and in the Civil Code. A leasing agreement as a special type of property lease agreement is of great interest to modern entrepreneurs, which was the reason for the inclusion of Section 2 on leasing in Chapter 29 of the Civil Code (Articles 562-572 of the Civil Code).  

Originally originated in the United States in the middle of the last century, this agreement has been widely used in the business practices of firms in Western Europe and Japan since the late 50s, and is currently used in almost all countries of the world.  

For almost 15 years, the International Institute for the Unification of Private International Law (UNIDROIT) has been developing unified standards for international leasing. The need to develop these rules was caused by the increasing use of leasing on an international scale between organizations located in different countries. The result of this work was the Convention on International Financial Leasing, signed on May 28, 1988 in Moscow. Ottawa (Canada) (Ottawa Convention), which reflects the most widespread view of leasing as a triple complex of property relations.  

However, even today, the legal regulation of leasing in different countries is not identical. Moreover, there are directly opposite legislative decisions on certain terms of the lease agreement.  

In developing the section on leasing, the working group focused primarily on the concept of the Ottawa Convention on International Financial Leasing, according to which leasing is considered as a three-pronged complex of property relations in which the leasing company, at the request and direction of the user, purchases equipment from the manufacturer, which is then leased to the user. The complex includes two agreements:  

1) purchase and sale agreement (between the leasing company and the manufacturer for the purchase of equipment, where the manufacturer is the seller and the leasing company is the buyer);  

2) a lease agreement (between the leasing company and the user, by virtue of which the former transfers to the latter for temporary use the equipment purchased from the manufacturer specifically for this purpose).  

4.2. The concept and subject of leasing in the Civil Code. The concept of leasing is contained in Article 565 of the Civil Code, according to which, under a lease agreement, the lessor undertakes to acquire ownership of the property specified by the lessee from the seller and provide the lessee with this property for temporary possession and use for business purposes for a fee. The lease agreement may provide that the choice of the seller and the acquired property is carried out by the lessor. (clauses 1, 2, art.565 of the Civil Code).  

The subject of leasing in the Civil Code is defined more broadly than in the Ottawa Convention on International Financial Leasing, and in addition to the classic financial leasing machines, equipment, etc. includes any other non-consumable items. At the same time, it was established that securities and natural resources cannot be leased (art. 556 of the Civil Code). The existence of a securities clause is due to the fact that prior to the adoption of the Civil Code, attempts were made in practice to conclude leasing agreements, the subject of which were securities, which does not correspond to the legal nature of both the leased object and any other lease agreement.  

4.3. The list of essential terms of the lease agreement, unlike other property lease agreements, is quite broad, and in addition to the general terms of the object of the agreement (property) to be transferred (art. 542 CC), it also includes the name of the seller of the property; the amount and frequency of payments; the term of the agreement; the conditions for the transfer of ownership the lessee, if such a transfer is provided for by the contract (clauses 1-4 of art. 567 of the Civil Code).  

4.4. The Civil Code contains a number of specific conditions regarding leasing. The obligation of the lessor, when acquiring property for the lessee, is established to notify the seller that the property is intended for leasing to a certain person (art. 568 of the Civil Code). At the same time, the direct responsibility of the seller of the leased property is established, not only to the lessor who bought the property from him, but also to the lessee. In relations with the seller, the lessee and the lessor act as joint creditors (Part 2, paragraph 1, Article 572 of the Civil Code). At the same time, the lessee has the rights and obligations stipulated by the Civil Code for the buyer, except for the obligation to pay for the acquired property, as if he were a party to the purchase and sale of the specified property (Part 1, paragraph 1, Article 572 of the Civil Code).  

Unless otherwise provided by the lease agreement, the lessor is not liable to the lessee for the fulfillment by the seller of the requirements arising from the contract of sale, except in cases where the lessor has the right to choose the seller. In the latter case, the lessee has the right, at his discretion, to make claims arising from the contract of sale, both directly to the seller of the property and to the lessor, who are jointly and severally liable (paragraph 2 of Article 572 of the Civil Code).  

The lessee, not being the owner of the property transferred to him, bears the risk of its accidental death or damage. These risks pass to him at the time of transfer of property, unless otherwise provided by the contract (art. 569 CC).

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The commentary was prepared within the framework of the scientific and practical research program of the Scientific Research Center of Private Law of the Kazakh State Law University.  

Head of the working group on the preparation of the draft Civil Code of the Republic of Kazakhstan, Corresponding Member of the Academy of Sciences of the Republic of Kazakhstan, Professor Suleimenov M.K.

Deputy head Professor Basin Yu.G.