Property And Function Of Leasehold Ownership In Financial Leasing

The Civil Code incorporates part of the functionalist view of security while maintaining the formalist view of security.The functionalist view of security breaks away from the "legal title" rule and accepts the new model of security arising from commercial activities,but requires publicity for the security right to be effective against it.The design of the security system of the Civil Code retains some traditions of the formalist security theory while incorporating some elements of the functionalist security theory,forming a new security system that is different from the previous one.The validity of the financial lease contract exists in several cases,such as completion of contract performance,invalidation,cancellation and termination of contract,but the Civil Code only provides for the ownership of the leased property in the cases of completion of financial lease contract performance and invalidation of financial lease contract through Articles 757 and 760.The omission of the Civil Code has caused the problem of difficulty in determining the ownership of the leased property in the case of cancellation and termination of the financial lease contract.The first one is that the cause of invalidity is attributable to the lessee and the lessor does not require the lessee to return the leased property or the nature of the leased property itself is not suitable for return,then the leased property belongs to the lessee.The second one is that the financial lease contract is invalid for reasons other than the lessee,then the leased property belongs to the lessor.The attribution of the leased property upon the cancellation of the financial lease contract shall be based on the concept of full respect for the party’s autonomy,and the attribution of the leased property shall be dealt with in the following order: first,the agreement on the attribution of the leased property upon the cancellation of the financial lease contract shall be followed;second,if there is no agreement in the financial lease contract,the parties shall be allowed to negotiate after the cancellation of the contract;third,if the negotiation fails and the contract is cancelled Thirdly,if the parties cannot negotiate and the cause of the termination of the contract cannot be attributed to both parties,the principle of giving full play to the effectiveness of the leased property shall be upheld to determine the final ownership of the leased property;Fourthly,if the parties cannot negotiate and the cause of the termination of the financial lease contract can be attributed to one party,the other party shall enjoy the right to choose.The provisions of Article 760 of the Civil Code cannot be applied in a general way to the ownership of the leased property when the financial lease contract is canceled,but should be applied only when the lessee’s behavior is so bad as to render the contract null and void,taking into full consideration whether there is bad faith on the part of the lessee.After the implementation of the Civil Code,a lessor may realize its rent claim either by reference to the path of realization of a security right or by reference to the path of realization of a contractual right.First,in the route of realization by reference to a security right,the lessor may choose either litigation or non-litigation,and may get back the leased property directly or receive priority payment for the change in value of the leased property,but the lessor’s right is not effective against third parties without registration.Secondly,through the contractual right realization route,the precondition of "termination of contract" should be canceled;at the same time,in order to improve the efficiency of the exercise of the right to retrieve should allow the lessor to retrieve privately.