Leasing is a term we often use in everyday speech. There are two types of leasing: financial and operating, and they have different legal treatments. Although the basic differences between financial and operating leasing contracts are clearly defined, in practice, there is often confusion. 

Whether a person chooses financial or operating leasing depends on personal preferences and financial factors, i.e., whether the ultimate goal of leasing is financing the purchase or using the leasing subject. 

In short, financial leasing means that after the contract expires, the lessee becomes the owner of the leased item if so specified in the contract. The lessee bears all costs related to the leased item, such as registration, insurance, and maintenance costs. 

Operating leasing represents a short-term rental agreement. After the rental agreement expires, which is shorter than the economic life of the rented item, the item is returned to the lessor. The lessor of an operating lease usually pays the maintenance and servicing costs of the item. Legal entities more often choose operating leasing. 

Financial leasing is regulated by the Financial Leasing Act, while operating leasing is regulated by the Obligations Act, specifically articles 567 to 599 related to the rental agreement. Financial leasing falls under the jurisdiction of the National Bank of Serbia (NBS), and all financial leasing contracts are recorded in the Leasing Register. 

Financial leasing contract 

In a financial leasing contract, there are two parties – the lessor and the lessee. The lessor retains ownership rights over the leased item and transfers to the lessee, for a specified period, the right to possess and use the leased item, with all benefits and risks inherent to ownership rights, for which the lessee pays a leasing fee. 

The leased item is a movable, non-consumable item; when we talk about leasing, we often think of vehicle leasing. The leasing fee refers to the amount the lessee pays to the lessor and is determined based on the amount the lessor paid to acquire ownership of the leased item, increased by interest and other costs. The term “other costs” is specified in the Act and explained in judicial practice. 

For a transaction to be considered financial leasing, at least one of the conditions prescribed by the Act must be met, such as the ownership right over the leased item being transferred to the lessee upon expiration and payment; the lessee having the right to purchase the item; the leased item being selected by the lessee, and others. 

The supplier of the leased item is also mentioned as a subject in financial leasing transactions. 

Therefore, a leasing contract is concluded between the lessor and the lessee. The main obligation of the lessor is to transfer the rights to possess and use the item to the lessee for a specified period, during which the lessee enjoys all benefits and bears all risks related to ownership. The main obligation of the lessee is to pay the agreed leasing fee in the terms specified in the contract. 

What must a financial leasing contract contain? 

According to the Act, a financial leasing contract must include the acquisition value of the leased item, the total amount of the leasing fee, the amount of individual installments of the leasing fee and their structure, the number of installments and payment schedule, the term of the contract, the method and conditions for transferring ownership of the leased item, the method and conditions for extending the contract, and the place, term, method, and conditions of delivery of the item to the lessee. It must be concluded in writing. 

If a contract is not named as a leasing contract but has the characteristics of a leasing contract under the Financial Leasing Act or stipulates rights and obligations inherent to a leasing contract, it will be considered a simulated contract. 

A simulated or apparent contract, according to article 66 of the Obligations Act, has no effect between the contracting parties. If it conceals another contract, that other contract will be valid if the conditions for its legal validity are met. 

To find out more about financial leasing agreements, check out this article: ‘Financial lease agreement’. 

What is a supply contract? 

A supply contract is concluded between the supplier of the leased item and the lessor. The lessor acquires ownership rights over the leased item specified by the lessee to give it to the lessee in financial leasing. The supplier is chosen by the lessee, but it is not excluded that the lessor can also choose it. 

This contract must precisely define the subject of the supply, price, place, method, and delivery term, an announcement that the item is being acquired to execute the financial leasing contract, and the designation of the lessee. It must be concluded in writing, and the lessee should approve the supply contract in specific parts. 

Questions & Answers

Is the lessor obligated to inform the lessee about all criteria and parameters for calculating costs?

According to the decision of the Commercial Appellate Court Pž 1190/22, the lessor has the right to calculate costs when processing a leasing request and that no provision of the Act, special law, or by-law prescribes the obligation of the lessor to instruct the lessee about all parameters and criteria for calculating those costs. 

The court in this case determined that article 7 of the Financial Leasing Act implies the lessor’s right to calculate other costs concerning the services provided and that by applying the principle of autonomy of will, parties can agree on the right of the lessor to calculate costs when processing a leasing request. 

Adjustment of leasing rate and change of nominal interest rate?

When the financial leasing contract or general terms do not stipulate the marginal unit up to which the leasing rate will be adjusted, the lessor is obliged to adjust the rate in the case of any change in EURIBOR, not only when it requires an increase in the leasing rate. This was established by the decision of the Commercial Appellate Court Pž 1024/24. The provisions of the contract and the general terms of the lessor, if not clear enough, should be interpreted using article 100 of the Obligations Act. This means that in contracts concluded by pre-printed content or contracts prepared by one contracting party, unclear provisions should be interpreted in favor of the other contracting party. 

In this particular case, since the lessor adjusted only when the value of EURIBOR increased, not when it decreased, the lessee was charged a higher leasing rate than would have been charged had the provision of the financial leasing contract been applied. In this case, the plaintiff was entitled to a refund of part of the paid funds because during the contract term, EURIBOR decreased, and the defendant lessor did not reduce the rate. 

A similar conclusion was reached in an earlier decision of the Commercial Appellate Court in case Pž 3724/18, which established that the leasing rate adjustment is performed both in case of an increase in LIBOR and in case of a decrease, as the leasing rate can be lower or higher depending on the decrease or increase in the value of LIBOR. In this case, the court upheld the plaintiff’s claim, establishing that the defendant unjustly enriched itself. 

Who is responsible for material defects of leasing objects? 

Responsibility for material defects is regulated by the Obligations Act, and Article 16 of the Financial Leasing Act states that the supplier is responsible for material defects of the leasing object to the lessee, unless otherwise agreed. 

According to the decision of the Commercial Appellate Court Pž 10069/13, in the case of material defects on a vehicle, the lessee can terminate the financial leasing contract and claim a refund from the lessor (leasing company) in a reasonable amount, while the lessee can claim damages from the supplier of the leasing object for the material defects. 

Operating leasing 

The legal basis for operating leasing is found in the provisions on lease in the Obligations Act. It functions as a short-term lease with additional specifics agreed upon by the contracting parties in accordance with the basic principles of obligation law. 

A lease agreement obliges the lessor to give a specific item for use to the lessee, and the lessee agrees to pay a certain fee for it. The subject of the contract must be clearly defined, as well as the fee for using the leased item, which is paid in the manner provided by the contract. 

Therefore, in operating leasing, there is no transfer of ownership, and in practice, it is often agreed that the lessor bears the costs of regular maintenance and registration. Operating leasing is contracted for a shorter term than financial leasing and can be renewed. 

Leasing is a term we often use in everyday speech. There are two types of leasing: financial and operating, and they have different legal treatments. Although the basic differences between financial and operating leasing contracts are clearly defined, in practice, there is often confusion. 

Whether a person chooses financial or operating leasing depends on personal preferences and financial factors, i.e., whether the ultimate goal of leasing is financing the purchase or using the leasing subject. 

In short, financial leasing means that after the contract expires, the lessee becomes the owner of the leased item if so specified in the contract. The lessee bears all costs related to the leased item, such as registration, insurance, and maintenance costs. 

Operating leasing represents a short-term rental agreement. After the rental agreement expires, which is shorter than the economic life of the rented item, the item is returned to the lessor. The lessor of an operating lease usually pays the maintenance and servicing costs of the item. Legal entities more often choose operating leasing. 

Financial leasing is regulated by the Financial Leasing Act, while operating leasing is regulated by the Obligations Act, specifically articles 567 to 599 related to the rental agreement. Financial leasing falls under the jurisdiction of the National Bank of Serbia (NBS), and all financial leasing contracts are recorded in the Leasing Register. 

Financial leasing contract 

In a financial leasing contract, there are two parties – the lessor and the lessee. The lessor retains ownership rights over the leased item and transfers to the lessee, for a specified period, the right to possess and use the leased item, with all benefits and risks inherent to ownership rights, for which the lessee pays a leasing fee. 

The leased item is a movable, non-consumable item; when we talk about leasing, we often think of vehicle leasing. The leasing fee refers to the amount the lessee pays to the lessor and is determined based on the amount the lessor paid to acquire ownership of the leased item, increased by interest and other costs. The term “other costs” is specified in the Act and explained in judicial practice. 

For a transaction to be considered financial leasing, at least one of the conditions prescribed by the Act must be met, such as the ownership right over the leased item being transferred to the lessee upon expiration and payment; the lessee having the right to purchase the item; the leased item being selected by the lessee, and others. 

The supplier of the leased item is also mentioned as a subject in financial leasing transactions. 

Therefore, a leasing contract is concluded between the lessor and the lessee. The main obligation of the lessor is to transfer the rights to possess and use the item to the lessee for a specified period, during which the lessee enjoys all benefits and bears all risks related to ownership. The main obligation of the lessee is to pay the agreed leasing fee in the terms specified in the contract. 

What must a financial leasing contract contain? 

According to the Act, a financial leasing contract must include the acquisition value of the leased item, the total amount of the leasing fee, the amount of individual installments of the leasing fee and their structure, the number of installments and payment schedule, the term of the contract, the method and conditions for transferring ownership of the leased item, the method and conditions for extending the contract, and the place, term, method, and conditions of delivery of the item to the lessee. It must be concluded in writing. 

If a contract is not named as a leasing contract but has the characteristics of a leasing contract under the Financial Leasing Act or stipulates rights and obligations inherent to a leasing contract, it will be considered a simulated contract. 

A simulated or apparent contract, according to article 66 of the Obligations Act, has no effect between the contracting parties. If it conceals another contract, that other contract will be valid if the conditions for its legal validity are met. 

To find out more about financial leasing agreements, check out this article: ‘Financial lease agreement’. 

What is a supply contract? 

A supply contract is concluded between the supplier of the leased item and the lessor. The lessor acquires ownership rights over the leased item specified by the lessee to give it to the lessee in financial leasing. The supplier is chosen by the lessee, but it is not excluded that the lessor can also choose it. 

This contract must precisely define the subject of the supply, price, place, method, and delivery term, an announcement that the item is being acquired to execute the financial leasing contract, and the designation of the lessee. It must be concluded in writing, and the lessee should approve the supply contract in specific parts. 

Questions & Answers

Is the lessor obligated to inform the lessee about all criteria and parameters for calculating costs?

According to the decision of the Commercial Appellate Court Pž 1190/22, the lessor has the right to calculate costs when processing a leasing request and that no provision of the Act, special law, or by-law prescribes the obligation of the lessor to instruct the lessee about all parameters and criteria for calculating those costs. 

The court in this case determined that article 7 of the Financial Leasing Act implies the lessor’s right to calculate other costs concerning the services provided and that by applying the principle of autonomy of will, parties can agree on the right of the lessor to calculate costs when processing a leasing request. 

Adjustment of leasing rate and change of nominal interest rate?

When the financial leasing contract or general terms do not stipulate the marginal unit up to which the leasing rate will be adjusted, the lessor is obliged to adjust the rate in the case of any change in EURIBOR, not only when it requires an increase in the leasing rate. This was established by the decision of the Commercial Appellate Court Pž 1024/24. The provisions of the contract and the general terms of the lessor, if not clear enough, should be interpreted using article 100 of the Obligations Act. This means that in contracts concluded by pre-printed content or contracts prepared by one contracting party, unclear provisions should be interpreted in favor of the other contracting party. 

In this particular case, since the lessor adjusted only when the value of EURIBOR increased, not when it decreased, the lessee was charged a higher leasing rate than would have been charged had the provision of the financial leasing contract been applied. In this case, the plaintiff was entitled to a refund of part of the paid funds because during the contract term, EURIBOR decreased, and the defendant lessor did not reduce the rate. 

A similar conclusion was reached in an earlier decision of the Commercial Appellate Court in case Pž 3724/18, which established that the leasing rate adjustment is performed both in case of an increase in LIBOR and in case of a decrease, as the leasing rate can be lower or higher depending on the decrease or increase in the value of LIBOR. In this case, the court upheld the plaintiff’s claim, establishing that the defendant unjustly enriched itself. 

Who is responsible for material defects of leasing objects? 

Responsibility for material defects is regulated by the Obligations Act, and Article 16 of the Financial Leasing Act states that the supplier is responsible for material defects of the leasing object to the lessee, unless otherwise agreed. 

According to the decision of the Commercial Appellate Court Pž 10069/13, in the case of material defects on a vehicle, the lessee can terminate the financial leasing contract and claim a refund from the lessor (leasing company) in a reasonable amount, while the lessee can claim damages from the supplier of the leasing object for the material defects. 

Operating leasing 

The legal basis for operating leasing is found in the provisions on lease in the Obligations Act. It functions as a short-term lease with additional specifics agreed upon by the contracting parties in accordance with the basic principles of obligation law. 

A lease agreement obliges the lessor to give a specific item for use to the lessee, and the lessee agrees to pay a certain fee for it. The subject of the contract must be clearly defined, as well as the fee for using the leased item, which is paid in the manner provided by the contract. 

Therefore, in operating leasing, there is no transfer of ownership, and in practice, it is often agreed that the lessor bears the costs of regular maintenance and registration. Operating leasing is contracted for a shorter term than financial leasing and can be renewed. 

Leasing is a term we often use in everyday speech. There are two types of leasing: financial and operating, and they have different legal treatments. Although the basic differences between financial and operating leasing contracts are clearly defined, in practice, there is often confusion. 

Whether a person chooses financial or operating leasing depends on personal preferences and financial factors, i.e., whether the ultimate goal of leasing is financing the purchase or using the leasing subject. 

In short, financial leasing means that after the contract expires, the lessee becomes the owner of the leased item if so specified in the contract. The lessee bears all costs related to the leased item, such as registration, insurance, and maintenance costs. 

Operating leasing represents a short-term rental agreement. After the rental agreement expires, which is shorter than the economic life of the rented item, the item is returned to the lessor. The lessor of an operating lease usually pays the maintenance and servicing costs of the item. Legal entities more often choose operating leasing. 

Financial leasing is regulated by the Financial Leasing Act, while operating leasing is regulated by the Obligations Act, specifically articles 567 to 599 related to the rental agreement. Financial leasing falls under the jurisdiction of the National Bank of Serbia (NBS), and all financial leasing contracts are recorded in the Leasing Register. 

Financial leasing contract 

In a financial leasing contract, there are two parties – the lessor and the lessee. The lessor retains ownership rights over the leased item and transfers to the lessee, for a specified period, the right to possess and use the leased item, with all benefits and risks inherent to ownership rights, for which the lessee pays a leasing fee. 

The leased item is a movable, non-consumable item; when we talk about leasing, we often think of vehicle leasing. The leasing fee refers to the amount the lessee pays to the lessor and is determined based on the amount the lessor paid to acquire ownership of the leased item, increased by interest and other costs. The term “other costs” is specified in the Act and explained in judicial practice. 

For a transaction to be considered financial leasing, at least one of the conditions prescribed by the Act must be met, such as the ownership right over the leased item being transferred to the lessee upon expiration and payment; the lessee having the right to purchase the item; the leased item being selected by the lessee, and others. 

The supplier of the leased item is also mentioned as a subject in financial leasing transactions. 

Therefore, a leasing contract is concluded between the lessor and the lessee. The main obligation of the lessor is to transfer the rights to possess and use the item to the lessee for a specified period, during which the lessee enjoys all benefits and bears all risks related to ownership. The main obligation of the lessee is to pay the agreed leasing fee in the terms specified in the contract. 

What must a financial leasing contract contain? 

According to the Act, a financial leasing contract must include the acquisition value of the leased item, the total amount of the leasing fee, the amount of individual installments of the leasing fee and their structure, the number of installments and payment schedule, the term of the contract, the method and conditions for transferring ownership of the leased item, the method and conditions for extending the contract, and the place, term, method, and conditions of delivery of the item to the lessee. It must be concluded in writing. 

If a contract is not named as a leasing contract but has the characteristics of a leasing contract under the Financial Leasing Act or stipulates rights and obligations inherent to a leasing contract, it will be considered a simulated contract. 

A simulated or apparent contract, according to article 66 of the Obligations Act, has no effect between the contracting parties. If it conceals another contract, that other contract will be valid if the conditions for its legal validity are met. 

To find out more about financial leasing agreements, check out this article: ‘Financial lease agreement’. 

What is a supply contract? 

A supply contract is concluded between the supplier of the leased item and the lessor. The lessor acquires ownership rights over the leased item specified by the lessee to give it to the lessee in financial leasing. The supplier is chosen by the lessee, but it is not excluded that the lessor can also choose it. 

This contract must precisely define the subject of the supply, price, place, method, and delivery term, an announcement that the item is being acquired to execute the financial leasing contract, and the designation of the lessee. It must be concluded in writing, and the lessee should approve the supply contract in specific parts. 

Questions & Answers

Is the lessor obligated to inform the lessee about all criteria and parameters for calculating costs?

According to the decision of the Commercial Appellate Court Pž 1190/22, the lessor has the right to calculate costs when processing a leasing request and that no provision of the Act, special law, or by-law prescribes the obligation of the lessor to instruct the lessee about all parameters and criteria for calculating those costs. 

The court in this case determined that article 7 of the Financial Leasing Act implies the lessor’s right to calculate other costs concerning the services provided and that by applying the principle of autonomy of will, parties can agree on the right of the lessor to calculate costs when processing a leasing request. 

Adjustment of leasing rate and change of nominal interest rate?

When the financial leasing contract or general terms do not stipulate the marginal unit up to which the leasing rate will be adjusted, the lessor is obliged to adjust the rate in the case of any change in EURIBOR, not only when it requires an increase in the leasing rate. This was established by the decision of the Commercial Appellate Court Pž 1024/24. The provisions of the contract and the general terms of the lessor, if not clear enough, should be interpreted using article 100 of the Obligations Act. This means that in contracts concluded by pre-printed content or contracts prepared by one contracting party, unclear provisions should be interpreted in favor of the other contracting party. 

In this particular case, since the lessor adjusted only when the value of EURIBOR increased, not when it decreased, the lessee was charged a higher leasing rate than would have been charged had the provision of the financial leasing contract been applied. In this case, the plaintiff was entitled to a refund of part of the paid funds because during the contract term, EURIBOR decreased, and the defendant lessor did not reduce the rate. 

A similar conclusion was reached in an earlier decision of the Commercial Appellate Court in case Pž 3724/18, which established that the leasing rate adjustment is performed both in case of an increase in LIBOR and in case of a decrease, as the leasing rate can be lower or higher depending on the decrease or increase in the value of LIBOR. In this case, the court upheld the plaintiff’s claim, establishing that the defendant unjustly enriched itself. 

Who is responsible for material defects of leasing objects? 

Responsibility for material defects is regulated by the Obligations Act, and Article 16 of the Financial Leasing Act states that the supplier is responsible for material defects of the leasing object to the lessee, unless otherwise agreed. 

According to the decision of the Commercial Appellate Court Pž 10069/13, in the case of material defects on a vehicle, the lessee can terminate the financial leasing contract and claim a refund from the lessor (leasing company) in a reasonable amount, while the lessee can claim damages from the supplier of the leasing object for the material defects. 

Operating leasing 

The legal basis for operating leasing is found in the provisions on lease in the Obligations Act. It functions as a short-term lease with additional specifics agreed upon by the contracting parties in accordance with the basic principles of obligation law. 

A lease agreement obliges the lessor to give a specific item for use to the lessee, and the lessee agrees to pay a certain fee for it. The subject of the contract must be clearly defined, as well as the fee for using the leased item, which is paid in the manner provided by the contract. 

Therefore, in operating leasing, there is no transfer of ownership, and in practice, it is often agreed that the lessor bears the costs of regular maintenance and registration. Operating leasing is contracted for a shorter term than financial leasing and can be renewed. 

Leasing is a term we often use in everyday speech. There are two types of leasing: financial and operating, and they have different legal treatments. Although the basic differences between financial and operating leasing contracts are clearly defined, in practice, there is often confusion. 

Whether a person chooses financial or operating leasing depends on personal preferences and financial factors, i.e., whether the ultimate goal of leasing is financing the purchase or using the leasing subject. 

In short, financial leasing means that after the contract expires, the lessee becomes the owner of the leased item if so specified in the contract. The lessee bears all costs related to the leased item, such as registration, insurance, and maintenance costs. 

Operating leasing represents a short-term rental agreement. After the rental agreement expires, which is shorter than the economic life of the rented item, the item is returned to the lessor. The lessor of an operating lease usually pays the maintenance and servicing costs of the item. Legal entities more often choose operating leasing. 

Financial leasing is regulated by the Financial Leasing Act, while operating leasing is regulated by the Obligations Act, specifically articles 567 to 599 related to the rental agreement. Financial leasing falls under the jurisdiction of the National Bank of Serbia (NBS), and all financial leasing contracts are recorded in the Leasing Register. 

Financial leasing contract 

In a financial leasing contract, there are two parties – the lessor and the lessee. The lessor retains ownership rights over the leased item and transfers to the lessee, for a specified period, the right to possess and use the leased item, with all benefits and risks inherent to ownership rights, for which the lessee pays a leasing fee. 

The leased item is a movable, non-consumable item; when we talk about leasing, we often think of vehicle leasing. The leasing fee refers to the amount the lessee pays to the lessor and is determined based on the amount the lessor paid to acquire ownership of the leased item, increased by interest and other costs. The term “other costs” is specified in the Act and explained in judicial practice. 

For a transaction to be considered financial leasing, at least one of the conditions prescribed by the Act must be met, such as the ownership right over the leased item being transferred to the lessee upon expiration and payment; the lessee having the right to purchase the item; the leased item being selected by the lessee, and others. 

The supplier of the leased item is also mentioned as a subject in financial leasing transactions. 

Therefore, a leasing contract is concluded between the lessor and the lessee. The main obligation of the lessor is to transfer the rights to possess and use the item to the lessee for a specified period, during which the lessee enjoys all benefits and bears all risks related to ownership. The main obligation of the lessee is to pay the agreed leasing fee in the terms specified in the contract. 

What must a financial leasing contract contain? 

According to the Act, a financial leasing contract must include the acquisition value of the leased item, the total amount of the leasing fee, the amount of individual installments of the leasing fee and their structure, the number of installments and payment schedule, the term of the contract, the method and conditions for transferring ownership of the leased item, the method and conditions for extending the contract, and the place, term, method, and conditions of delivery of the item to the lessee. It must be concluded in writing. 

If a contract is not named as a leasing contract but has the characteristics of a leasing contract under the Financial Leasing Act or stipulates rights and obligations inherent to a leasing contract, it will be considered a simulated contract. 

A simulated or apparent contract, according to article 66 of the Obligations Act, has no effect between the contracting parties. If it conceals another contract, that other contract will be valid if the conditions for its legal validity are met. 

To find out more about financial leasing agreements, check out this article: ‘Financial lease agreement’. 

What is a supply contract? 

A supply contract is concluded between the supplier of the leased item and the lessor. The lessor acquires ownership rights over the leased item specified by the lessee to give it to the lessee in financial leasing. The supplier is chosen by the lessee, but it is not excluded that the lessor can also choose it. 

This contract must precisely define the subject of the supply, price, place, method, and delivery term, an announcement that the item is being acquired to execute the financial leasing contract, and the designation of the lessee. It must be concluded in writing, and the lessee should approve the supply contract in specific parts. 

Questions & Answers

Is the lessor obligated to inform the lessee about all criteria and parameters for calculating costs?

According to the decision of the Commercial Appellate Court Pž 1190/22, the lessor has the right to calculate costs when processing a leasing request and that no provision of the Act, special law, or by-law prescribes the obligation of the lessor to instruct the lessee about all parameters and criteria for calculating those costs. 

The court in this case determined that article 7 of the Financial Leasing Act implies the lessor’s right to calculate other costs concerning the services provided and that by applying the principle of autonomy of will, parties can agree on the right of the lessor to calculate costs when processing a leasing request. 

Adjustment of leasing rate and change of nominal interest rate?

When the financial leasing contract or general terms do not stipulate the marginal unit up to which the leasing rate will be adjusted, the lessor is obliged to adjust the rate in the case of any change in EURIBOR, not only when it requires an increase in the leasing rate. This was established by the decision of the Commercial Appellate Court Pž 1024/24. The provisions of the contract and the general terms of the lessor, if not clear enough, should be interpreted using article 100 of the Obligations Act. This means that in contracts concluded by pre-printed content or contracts prepared by one contracting party, unclear provisions should be interpreted in favor of the other contracting party. 

In this particular case, since the lessor adjusted only when the value of EURIBOR increased, not when it decreased, the lessee was charged a higher leasing rate than would have been charged had the provision of the financial leasing contract been applied. In this case, the plaintiff was entitled to a refund of part of the paid funds because during the contract term, EURIBOR decreased, and the defendant lessor did not reduce the rate. 

A similar conclusion was reached in an earlier decision of the Commercial Appellate Court in case Pž 3724/18, which established that the leasing rate adjustment is performed both in case of an increase in LIBOR and in case of a decrease, as the leasing rate can be lower or higher depending on the decrease or increase in the value of LIBOR. In this case, the court upheld the plaintiff’s claim, establishing that the defendant unjustly enriched itself. 

Who is responsible for material defects of leasing objects? 

Responsibility for material defects is regulated by the Obligations Act, and Article 16 of the Financial Leasing Act states that the supplier is responsible for material defects of the leasing object to the lessee, unless otherwise agreed. 

According to the decision of the Commercial Appellate Court Pž 10069/13, in the case of material defects on a vehicle, the lessee can terminate the financial leasing contract and claim a refund from the lessor (leasing company) in a reasonable amount, while the lessee can claim damages from the supplier of the leasing object for the material defects. 

Operating leasing 

The legal basis for operating leasing is found in the provisions on lease in the Obligations Act. It functions as a short-term lease with additional specifics agreed upon by the contracting parties in accordance with the basic principles of obligation law. 

A lease agreement obliges the lessor to give a specific item for use to the lessee, and the lessee agrees to pay a certain fee for it. The subject of the contract must be clearly defined, as well as the fee for using the leased item, which is paid in the manner provided by the contract. 

Therefore, in operating leasing, there is no transfer of ownership, and in practice, it is often agreed that the lessor bears the costs of regular maintenance and registration. Operating leasing is contracted for a shorter term than financial leasing and can be renewed. 

Lease agreement as proof of vehicle ownership

According to the decision of the Appellate Court in Belgrade Kž1 br. 763/19, the mere fact that the vehicle is owned by the lessor indicates that it is someone else’s movable property, thus there are legal elements of the crime of embezzlement if the accused, intending to obtain illegal property gain for himself and his company, appropriated the vehicles entrusted to him under the business vehicle lease agreement. 

Use of leased or rented vehicles in traffic

According to the decision of the Misdemeanor Appellate Court in Novi Sad III-309 Prž br. 23296/21, if the lease data of the vehicle are not entered in the vehicle’s registration certificate and the legal entity uses the vehicle by sending the driver on a business trip in public traffic, and the driver is aware of these facts (since he presented the registration certificate, the vehicle usage agreement, the employment contract annex, and the delivery note to the acting police officer), then there is misdemeanor liability of both the legal entity and the driver.  

Financial or operating leasing?

Whether you choose financial or operating leasing depends on your ultimate goals and needs. Regardless of the choice, it is important to study the legal and tax aspects of your decision to make an informed choice. 

Note: This text does not constitute legal advice but is the author’s personal opinion.