Research On Legal Problems Of Sale And Lease-back In Financial Leasing

The term'sale and lease-back' refers to such business by which the lessee sells its self-owned articles to the lessor, simultaneously concludes a financial leasing contract with the lessor, and then rents the said articles back from the lessor. In order to enhance the market competitiveness, lessors designed such a transaction mode of financial leasing to meet the needs of the customer (i.e., the lessee) in the face of the increasingly competitive market conditions. Based on the legal problems of sale and lease-back in financial leasing, the paper makes a research on the identification of the legal relation of sale and lease-back, points out the risks that the lessors may encounter and finally suggests the precautionary measures for them.The first part of this paper expounds the history and functions of financial leasing, thus gradually eliciting the concept of sale and lease-back as well as the significance of this research. It has played an essential part in supporting the equipment update of the industrial enterprise, facilitating agricultural economic scale and promoting shipping industry. Besides, it has played a massive and irreplaceable role in solving the financial problems of small micro enterprises. In the second part of this paper, the identified conditions of sale and lease-back are well-explained. They are the essence of the subject matter, the lessee's true ownership and the disposing right of the subject matter, the real transfer of the ownership from the lessor to the lessee and the reasonable rent price. In this paper, the third part lays an emphasis on the nowadays legal restrictions of lessors and the subject matters in the business of sale and lease-back. At the same time, it analyzes why there should not be much limit on the kind of the lessors and the subject matters.The fourth part, from the perspective of the subject matter itself and the lessee, not only states out the risks of the ownership of the lessor but also makes a suggestion of prevention and control measures to safeguard their own interests.In our country, sale and lease-back is the main form of business financial leasing. The research on the legal issues of sale and lease-back makes up for the lack of legislation in our country and might even lead the financial leasing business innovation development.