INTRODUCTION
Boating is an expression of freedom. The pleasure craft embodies this freedom.
Once conceived as a working asset or a leisure activity reserved for a privileged few, the vessel has over the years become a consumer good. Recreational boating has become widely democratized. Acquiring a pleasure craft represents the realization of a dream for all those who love the sea.
The pleasure craft has the particularity of having a dual quality: it is both a consumer good and a tangible movable asset subject to a specific legal regime.
To encourage the development of the recreational boating industry, the legislator had put in place a tax incentive system encouraging the financing of vessels through leasing. Indeed, the purchase of the vessel is taxed according to common law at the current VAT rate, but the lease payments (including the first, the down payment) benefit from a derogating regime.
Article 172 of Annex II of the General Tax Code allows for a 50% reduction on the VAT rate for lease payments.
BOI N° 15 of JANUARY 24, 2005 [BOI 3A-1-05] states: “The assessment of time spent outside community territorial waters (when the lessor is established in France) or outside French territorial waters (when the lessor is established in a third country) relative to the total lease time of the pleasure craft must be made by the taxable person under their responsibility and subject to the service’s right of control. This assessment, which may result notably from the terms of the lease contract, must be corroborated by all means of proof.
However, it is accepted that lessors who experience difficulties in making this assessment may determine the time spent outside community or French territorial waters on a flat-rate basis by applying a 50% reduction to the total lease time, regardless of the category of pleasure craft concerned.”
In practice, for the lessee, this amounts to buying the boat with a 50% reduced VAT, since the standard VAT on the purchase is paid by the bank and the VAT paid by the lessee through lease payments is reduced by 50%.
The advantage of this arrangement is to benefit from a reduced VAT on lease payments, which amounts to 10% instead of 20%. The lessee pays the cost of their credit and a reduced VAT. Rather than buying their vessel outright, with 20% VAT, the lease-purchase option offered the advantage of smoothing out lease payments over time with a preferential VAT rate.
Due to this tax advantage, the vast majority of the French pleasure craft fleet is financed through lease-purchase. In a lease-purchase arrangement, the vessel belongs to the leasing organization. The lessee therefore does not include it in their assets, which is always useful, especially for individuals subject to the ISF (wealth tax).
Lease-purchase has become an essential financing method for pleasure craft.
This tax advantage now appears to be challenged at the initiative of the European Commission.
The flat-rate VAT reduction that applies to navigation outside the territorial waters of the European Union is being questioned.
This measure was implemented more than 20 years ago in France as a way to support the nautical sector through an arrangement that is completely clear with the tax authorities: rather than subsidizing shipyards, it consisted of supporting vessel acquisition.
Every renowned shipyard benefits from a privileged partnership with a financing organization. To name just one, the JEANNEAU BENETEAU group partners with Société Générale’s subsidiary SGB FINANCE for the financing of its vessels. This financing organization alone finances approximately 3,000 pleasure craft each year.
Leasing is intended to finance the acquisition of the vessel, by opening an option to the lessee at the end of the contract term. Lease-purchase is traditionally presented as a three-party operation in which a financing contract, a lease contract, and a sales contract are intertwined. It is a combination of, on the one hand, a lease of goods, and on the other hand, a promise of sale made by the lessor to the lessee.
At the end of the term fixed in the leasing proposal, the lessee can either purchase the asset for its residual value, request its renewal with a lower rent, or terminate the leasing operation by returning the asset.
Legally, the lease-purchase contract replicates the legal rules applicable to the leasing contract.
However, leasing corresponds to a precise definition given by the Monetary and Financial Code. Conversely, all operations that do not exactly match said definition are subject to a specific regime. This is the case when the operation involves a pleasure craft.
In this case, the lease will be subject to the provisions of the Consumer Code relating to consumer credit. Article L.311-2 of the Consumer Code thus subjects lease-purchase operations to the consumer credit regime. Lease-purchase proves to be a very protective financial instrument for the “consumer boater”.
The scope of application is necessarily restricted, and these texts only concern natural persons and goods under 75,000 EUROS with no relation to a professional activity.
Such an operation also presents an interest for the lessor. Indeed, leasing remains attractive as it is a credit operation agreed upon at favorable rates. Furthermore, lease-purchase offers the advantage of providing risk coverage for the financial institution, which has a first-rank, or even off-rank, guarantee: the vessel whose ownership it retains.
The financing of a vessel through lease-purchase is thus constrained by the application of rules that derogate from common law. On the one hand, the singular rules of maritime law, and on the other hand, the mandatory provisions of the Consumer Code. The financial institution acquires a vessel from a shipyard to then lease it to the actual user. The acquisition of the vessel thus finds its cause in the lease-purchase offer that will be granted to the actual user of the vessel. In practice, the lessor’s role is limited to paying the supplier the purchase price of the vessel. It is the user, the lessee, who exercises the main prerogatives vested in the owner of the vessel.
This financing instrument, widely acclaimed by the French nautical industry, raises various legal questions. “Following the law of July 11, 1986, known as the ‘Pons’ law, numerous vessel leasing contracts were concluded. After a period of euphoria, it is now time for accountability and perhaps also litigation.”
Indeed, the practice of this financial instrument used in the maritime sphere for a tangible movable asset as particular as a vessel undeniably raises numerous legal issues. The entire peculiarity of this financial arrangement lies in the dissociation of ownership and ship management.
Like the bareboat charter contract referred to in Article L.5423-8 of the Transport Code, the vessel leasing contract entails a transfer of the use of the thing. As previously recalled, it is the lessee of the vessel who is its exclusive user. In an article published in French maritime law, Professor Gaël PIETTE, Professor at the University of Bordeaux, thus compared leasing to a bareboat charter contract. The duality between owner and user characterizes these two types of contracts.
Leasing thus constitutes a situation in which the shipowner is not the owner. According to the provisions of Article L.5411-2, paragraph 1 of the Transport Code, the owner of a vessel is presumed to be the shipowner. However, for a vessel financed by leasing, the financial organization has the quality of registered owner. The lessee assumes the quality of shipowner.
Leasing shares similarities with bareboat charter contracts. Indeed, LOA contracts generally cover a long period, between 3 and 12 years, the charterer and the lessee are required to pay rent to their co-contractor, and the status of shipowner is transferred to them by virtue of the contract.
Similar in their effects, it is the purpose of the operation that allows for nuance between leasing and bareboat charter.
Indeed, lease-purchase is intended to finance the acquisition of a vessel. At the end of the operation, the lessee has the option to exercise the option and repurchase the vessel at its residual value, request the renewal of the lease with a lower rent, or finally terminate the operation and return the vessel.
The similarities are so striking that some authors did not hesitate to qualify a bareboat charter with a promise of sale as an alternative to a leasing contract. Indeed, they emphasized that the financial institution’s sole function is to finance the vessel. The lessor does not participate in the vessel’s operation.
The “financial institution, uninterested in the vessel’s management, is primarily concerned with the payment of rents by the lessee. A” study of the contracts practiced by the main French banks shows that the standard contracts are “inspired by the standard model of” preliminary offer for lease with promise of sale in the annex of decree n°78-509 of March 24, 1978, issued for the application of articles 5 and 12 of law n° 78-22 of January 10, 1978, relating to consumer information and protection in the field of certain credit operations.
However, this contract is intended for financing by lease-purchase of all consumer goods (car, motorcycle, etc.). Although it meets this definition, a vessel is a particular asset. A vessel is not subject to any legal definition. Yet all maritime law practitioners agree to give it a singular legal nature, as do the rules attached to it.
In any event, a lease-purchase contract for a land motor vehicle will not encounter the same difficulties as one for a pleasure craft.
The study of various lease-purchase contracts reveals the disparity that exists between different LOA contracts. It is certainly regrettable that some financial institutions use standard contracts that are not adapted to vessel financing.
The common feature of the absence of contracts is the total disinterest of the financing organization in the management of the vessel.
Thus, at the preliminary stage of vessel selection, standard lease-purchase contracts stipulate: “the lessee acknowledges having freely chosen, under their responsibility, the seller and the asset whose technical characteristics and delivery time they have defined, without the participation of the lessor”.
Lease-purchase thus leads to a dissociation of ownership and ship management. This is the entire legal issue of this financing method.
The dualism of applicable rules is found in the effects of lease-purchase between the parties (Title 1). The particularity of the lease-purchase contract concerning a vessel is also found in the effects of said contract with regard to third parties (Title 2).
Title 1: the Effects of Lease-Purchase between the Parties
The LOA contract is constrained by singular and restrictive rules. The particularity of the vessel and the rules attached to it require compliance with new obligations from the formation of the contract (Chapter 1) and in the obligations between the parties (Chapter 2).
Chapter 1: Formalism in the Leasing Contract
The formation of the LOA contract is subject to obligations arising from maritime law (1.1.) and consumer law (1.2.).
1.1. The Requirement of a Bill of Sale between the Shipyard and the Financial Institution.
The leasing operation intended to finance a vessel must be understood as a group of interdependent contracts.
A vessel construction-sale contract is concluded between the “financial institution and the shipyard, and a lease-purchase contract is concluded between the” financial institution and the boater.
Indeed, the lessor must not forget their dual capacity: financing organization and vessel owner.
The transfer of ownership of a vessel is subject to the control of the customs administration through the francisation procedure. Article 2 of the law of January 3, 1967, defined francisation as the formality that grants a vessel the right to fly the flag of the French Republic with the associated rights.
The act of francisation for a vessel financed under a lease-purchase agreement designates the lessor as the owner. With regard to the customs and maritime affairs administration, all requests for francisation and registration must be made by the lessor.
In practice, the lessor grants powers to the lessee to carry out the francisation and registration formalities on their behalf.
The customs offices responsible for carrying out francisation will require, when francising a vessel acquired under an LOA, the original financing contract as well as a power of attorney from the financing organization to proceed with the vessel’s registration.
Case law considers that “in the absence of a francisation act on board, the lessee of the vessel cannot operate or use it. The seller has the obligation to complete the transfer formalities. Failing this, the seller is deemed to remain the owner with respect to third parties against whom the sale is unenforceable.”
The High Judicial Court, in this ruling, reiterates the obligation for a vessel wishing to fly “the flag of the French Republic” to be in possession of a francisation act. The Rouen Court of Appeal had noted in the reported judgment that the transfer of ownership had occurred between the seller and the leasing company. Consequently, the lessor had the obligation to provide the lessee with the vessel’s francisation act.
Case law penalizes this failure to provide the francisation act by terminating the lease contract. Furthermore, pursuant to Article 1184 of the Civil Code, the material non-performance by the lessor is sanctioned by damages.
This constitutes a loss of enjoyment, as the vessel could not be operated without a francisation act. The quantum is then calculated by comparison to the rental prices of a similar vessel.
Standard lease-purchase contracts stipulate: “The act of francisation and the navigation title, as well as the vessel’s registration, are established in the name of the lessor. The lessee undertakes to send, under penalty of contract termination, copies of said documents to the relevant maritime affairs office within one month of receiving the vessel, and to communicate the registration number to the lessor.”
It is also for this reason that the act of francisation expressly designates the lessee of the vessel and the owner.
In any case, as the owner of the vessel, the lessor must be able to justify ownership of the vessel.
The lessor must, on the one hand, provide the lessee with all documents relating to the vessel’s navigation. The lessor remains subject to this obligation in their capacity as owner.
It is also because of this quality that he must justify ownership of the ship by producing a written document in accordance with the requirements of Article L.5114-1 of the Transport Code. Article L.5114-1 of the Transport Code, reproducing in extenso Article 10 of the law of January 3, 1967, states: “Any act establishing, transferring, or extinguishing ownership or any other real right over a French-flagged ship must, under penalty of nullity, be recorded in writing. The act must include the details necessary for the identification of the interested parties and the ship.”
The said written document must also comply with the formalities imposed by Article 231 of the Customs Code and contain the name and designation of the ship, the date and number of the act of francisation, and a full copy of the extracts of the said act relating to the home port, registration, tonnage, identity, construction, and age of the ship.
Case law has thus declared the absolute nullity of a leasing operation concerning a pleasure boat if the lessor was unable to produce a written contract justifying its right of ownership in accordance with the requirements of Article 10 of the law of January 3, 1967 (Article L. L5114-1 of the Transport Code).
The lessor is the owner of the ship. All of its guarantees and the right of enjoyment granted to the lessee are based on the ownership of the asset forming the object and cause of the operation.
Consequently, the financial institution must justify a right of ownership and thus produce the required written document.
Case law is not very strict and considers that a purchase order may be sufficient to justify ownership of the ship.
However, as soon as the Bank is unable to justify such a written document, the lease-purchase agreement is null and void, including the return of the ship to the lessor and the return of the rents paid.
This solution seemed justified insofar as the construction contract was considered separately as falling under Article 5 of the 1967 law which, according to Professor RODIERE, only requires a written document for evidentiary purposes.
However, a ship construction contract entails a transfer of ownership and should therefore comply with the rules set out in Article 10 of the 1967 law.
The lease agreement concluded in this case between Loxxia Bail and Onyx escapes the provisions of Article 10 insofar as it is only intended to transfer ownership to the user at the end of the operation.
In this contractual operation, the transfer of ownership is only a possibility. The lessee is free to exercise or not to exercise the option that will make him the owner.
The lessee holds a personal right against the promisor without being able to claim any real right over the ship.
In any event, the contract linking the manufacturer and the lessor undeniably complies with Article 10. “The lessor is an owner; his guarantees are based on the ownership of the asset forming the object of the operation: he must therefore justify a right of ownership and thus produce the required written document.”
If the lessor is unable to justify ownership of the ship, the operation would be null and void. Curiously, the Court of Cassation declares the absolute nullity of the lease-purchase agreement without questioning the contracts related to the LOA. Indeed, the nullity of the LOA contract deprived all other contracts of their cause, namely, the mandate entrusted to the lessee to choose the ship and the suretyship contract. The lessee then remained obliged to return the ship. The said restitution also remained covered by the suretyship contract.
The ship’s sales invoice issued by the shipyard must be addressed to the lessor. Case law thus recalls that it is the owner who must order the ship and obtain a bill of sale from the shipyard.
However, lease-purchase agreements stipulate:
“The lessee acknowledges having freely chosen, under his responsibility, the seller and the asset whose technical characteristics and delivery time he has defined, without the participation of the lessor15” (Appendix 3 – Lease-purchase agreement Atlantique bail). “The lessee chooses, under his sole responsibility, the ship designated in its characteristics and under the specific conditions, from the supplier of his choice and determines with this supplier the price, delivery, and payment conditions. Unless otherwise stipulated, he places an order for it, subject to the lessor’s acceptance of the file. The delivery of the ship occurs at the lessee’s expense and risk”.
In any event, it is according to the legal technique of mandate that the lessee makes the choice of his ship. Indeed, the lessor gives a mandate to the lessee to place an order for a ship on his behalf and for his account, meeting criteria defined by the lessee. The contract models used by Capitole Finance bank perfectly illustrate the role of the lessor and the lessee in the choice of the ship.
“The lessee chooses the brand, type, and specific specifications of the leased boat. After signing the contract and obtaining any associated guarantees, Capitole Finance will order the boat from the Supplier designated by the lessee”.
The wording of this clause is perfectly consistent with the position of case law. The purchase order and the ship’s invoice must be made out in the name of the lessor.
In addition to complying with these rules derived from maritime law and the specific legal nature of ships, the formation of a lease-purchase agreement also remains subject to the mandatory provisions of consumer law.
At the formation stage, ship lease-purchase agreements are surrounded by derogating legal rules, maritime law on the one hand and consumer law on the other.
1.2. Compliance with the Formalities of the Consumer Code
As soon as the lease agreement is concluded between a financial institution and an individual, the operation is subject to the mandatory provisions of the Consumer Code. According to the expression coined by Robert REZENTHEL, “the practice of recreational boating is an expression of freedom which, to be effective, must be protected”. Consumer law contributes to this protection.
The application of consumer law may thus be excluded when the lease-purchase agreement is concluded with a legal entity, when the amount of the operation exceeds 75,000 EUROS, or when the ship is used for professional purposes.
In the latter case, the lease-purchase offer stipulates:
“In application of articles L.311-1 et seq. of the Consumer Code, BANQUE POPULAIRE ATLANTIQUE offers a lease-purchase option for the acquisition of a specific boat. If the boat is intended for professional use or if the amount exceeds 75,000 EUROS, specific conditions will apply”.
The price of most pleasure boats exceeds the 75,000 EUROS threshold. Lease-purchase agreements then stipulate specific conditions.
In this scenario, the lessee will not have the 14-day right of withdrawal, and the amount of compensation that may be demanded by the Lessor in the event of default by the Lessee will be modified.
The jurisdictional competence for disputes between the lessee and the lessor will also be modified.
Notwithstanding this exception, the protection mechanism for the “consumer boater” is materialized by a reinforced pre-contractual information obligation. The lessor bears this information obligation and must attach to its lease-purchase offer a body of necessary documents providing the lessee with information on the contemplated operation. Consumer credit is heavily regulated by a constraining legal framework for financial institutions. In all lease-purchase offers, the lessor must mandatorily mention the following information:
- The identity of the lender;
- The nature, purpose, and duration of the proposed operation;
- The total cost of the credit as well as the global effective rate, if applicable. In this case, lease-purchase agreements do not include a TEG. This mention is therefore not required under penalty of nullity;
- The amount of repayments per installment;
- The number of installments.
The lease-purchase offer is thus accompanied by a voluntary insurance membership form, a withdrawal form, a payment schedule, and a standardized European pre-contractual information sheet for consumer credit (Appendix 6).
The contract is validly formed when the said lease-purchase offer is returned to the lessor duly completed and signed.
In accordance with the provisions of Article L.311-2 of the Consumer Code, the lessee has the right to withdraw within 14 calendar days from the day of acceptance. In the event of multiple lessees, the withdrawal of one automatically cancels the contract for the others.
When the lessee demands immediate delivery of the ship, the withdrawal period expires on the actual delivery date of the asset, without exceeding 14 days or being less than 3 days from the acceptance of the lease-purchase offer.
The question quickly raised in case law concerned the extension of the information obligation to the joint and several guarantors of the lessee. Indeed, despite having an “off-rank” guarantee, namely the ownership of the ship, lessors sometimes require additional guarantees, among which is the joint and several guarantee contract. In a judgment of January 28, 201422, the Court of Cassation ruled that the information obligation weighing on the lessor does not extend to the joint and several guarantors.
In this case, a lease-purchase agreement for a ship had been concluded between a bank and a company. The partners became joint and several guarantors of the company’s commitments, which sold the ship to a third party. Following unpaid rents, the bank formally requested the company and the guarantors to honor their commitments, then terminated the contract. The proceeds of the sale having been dissipated and the company liquidated, the bank sued two of the guarantors for payment, who, in a counterclaim, sought to hold the bank liable.
The guarantors, who reproached the bank for not having complied with its annual information obligation set out in Article L. 313-22 of the Monetary and Financial Code, were dismissed by the Court of Appeal in their liability action against the bank and jointly and severally ordered to pay it a certain sum.
The Commercial Chamber of the Court of Cassation rejected their appeal, stating that “the provisions of Article L. 313-22 of the Monetary and Financial Code are not applicable to the guarantor of the lessee with a purchase option, who pays rents”.
Chapter 2 – the Obligations of the Parties in a Lease-Purchase Agreement
The user of the ship holds the dual capacity of shipowner (2.1.) and lessee (2.2.), thus incurring obligations towards the owner-lessor.
2.1. Obligations of the Lessee as Shipowner
It is settled case law that the lessee is considered the shipowner. A reading of lease-purchase agreements also confirms this. Symptomatic of the transfer of the shipowner status from the registered owner to the lessee, LOA contracts stipulate an insurance obligation that falls on the lessee.
It is the lessee who must protect himself against sea risks. Standard contracts stipulate:
“As of the date of signing the delivery-acceptance report, the Lessee is required to subscribe to and maintain, for the entire duration of the lease, with a notoriously solvent insurance company approved by the Lessor, an insurance policy covering his unlimited civil liability and all damages suffered and risks incurred by the asset up to its market value. For the uncovered portion of the risks, the Lessee is considered to be his own insurer with regard to the Lessor. The insurance policy must explicitly mention the Lessor’s ownership status and indicate that all indemnities will be paid to him as the exclusive beneficiary. The lessee will send an insurance certificate before the ship is put into circulation or service.”
It is regrettable to note that some financial institutions merely reproduce in extenso the standard lease-purchase agreement from Decree No. 78-509 without considering the specificities of maritime law.
Article 1 of the law of January 3, 1969, defines the shipowner as “the one who operates the ship in his own name, whether or not he owns it”. In light of this definition, the lessee can indeed assume the status of shipowner.
In a judgment dated July 3, 201424, the Paris Court of Appeal ruled on the determination of the shipowner in a ship lease-purchase agreement.
The facts of the case can be summarized as follows. A lease-purchase agreement had been concluded for the ship “The One”.
The lessee had decided to entrust the technical management of the ship to a third-party company, which had notably signed the employment contracts for the crew and captain. The lessee had ordered various equipment installed on the ship from the defendant company for an amount of 190,661.34 euros.
The lessee had paid two down payments, but a balance remained unpaid. The equipment supplier then initiated a request for a precautionary seizure of the ship. The said seizure was authorized by the President of the Commercial Court of Nice and the Court of First Instance of Monaco.
The creditor company then sued the ship’s lessor for payment of the remaining sums due. The Commercial Court of Nice granted this request. By two judgments, dated September 21, 2006, and May 24, 2007, the consular judges ordered the lessor to pay. The judgment also upheld the prescription of the supplier’s action against the lessee.
These judgments having been confirmed by two rulings of the Aix-en-Provence Court of Appeal, the lessor filed an appeal in cassation.
The judgment rendered on referral by the Paris Court therefore rules on the status of shipowner in the presence of a lease-purchase agreement.
The Paris Court of Appeal rules, on the one hand, on the determination of the shipowner status and, on the other hand, on the enforceability of this status.
The Court affirms that “if only the specific conditions of the lease-purchase agreement are produced and not the agreement in its entirety, these, even if they do not qualify the company ATR (i.e., the lessee) as shipowner, expressly refer to its status as user; it follows that the two parties have indeed agreed that the status of shipowner, i.e., operator of the ship, was transferred to the company ATR”.
The lessee should be considered the shipowner. The conclusion of a lease-purchase agreement therefore entails a transfer of the shipowner status.
In this capacity, the Lessee remains responsible for the maintenance of the ship. Lease-purchase agreements therefore stipulate clauses to this effect.
“The lessee remains the sole custodian responsible for all risks arising from the use of the boat, in accordance with the terms of Article 1384 of the Civil Code. In no case can the Lessor’s liability be substituted for that of the Lessee, nor can it be sought. The lessee must maintain the property in perfect working order in accordance with the technical requirements set by the manufacturer.”
The use of a vessel financed by a lease-purchase agreement undoubtedly raises the question of ownership of equipment incorporated into the vessel during the contract. This issue is generally resolved by contracts stipulating clauses such as:
“All replaced parts or equipment incorporated into the boat become the full property of the lessor, who shall therefore owe no restitution, compensation, or indemnity to the lessee. The addition of any parts or elements must in no way harm the characteristics, particularly the technical ones, of the boat, and these must be able to be uninstalled upon return of the boat, if the lessor deems it appropriate. The lessee may, at their own expense, take back any additions and improvements made to the boat, in the event that the purchase option is not exercised, provided that this does not affect the condition of the boat to be returned to the lessor”;
The legal question of ownership of the vessel’s accessories arises upon termination of the lease-purchase agreement during the sale of the vessel, its rigging, gear, and accessories. In a judgment dated March 8, 2005, the Court of Cassation ruled on the validity of clauses attributing ownership of accessories to the lessor.
The lessee then recalled that they had themselves become the owner of these accessories and initiated a liability action against the lessor for having seized the property of others.
The Court of Cassation then considered, in light of the contractual stipulations, that the accessories become the property of the lessor, immediately, by right, and without compensation. Consequently, the sale initiated by the lessor following the termination of the lease-purchase agreement is perfectly legitimate and cannot give rise to any liability. The accession clause for ownership of vessel accessories was drafted in the following terms:
“All parts, fittings, navigation instruments, radio-electronic aids, safety equipment, and accessories incorporated into the boat during the lease become, unless expressly authorized by the lessor, immediately and by right the property of the lessor, without any reimbursement or indemnity being claimed from them”.
Mr. Philippe DELEBECQUE observed that the said clause was held valid in extenso. Indeed, this clause operated an immediate transfer of ownership and not at the time of the vessel’s return. This transfer occurs by right without any particular formality and without reiteration of consent. Finally, the transfer of ownership of the vessel’s accessories did not give rise to any financial consideration.
It should be noted that the Court ruled on the validity of these clauses within the framework of a lease-purchase agreement intended to finance a commercial vessel (professional asset). The solution would certainly have been different in the context of a lease-purchase agreement concluded with a pleasure boater for their personal and family needs.
These clauses are designed solely in the interest of the lessor and would be likely to create a significant imbalance between the rights and obligations of the parties within the meaning of Article L.132-1 of the Consumer Code.
Philippe DELEBECQUE remarked in this regard “by the sole magic of the contract, the lessor becomes the owner of everything incorporated into the leased property: the right of ownership, which is already for him a primary source of enrichment, even beyond rank, becomes a source of enrichment”.
The author highlighted the reasoning of the High Court, which reasoned only in contractual terms. He pointed out that the lessor was in an even more advantageous situation than the lessor of a building. In real estate matters, the lessor can invoke an accession clause, but the latter takes effect at the end of the lease.
Notwithstanding the legal scope of this rejection judgment, which is not intended for publication in the official bulletin, it demonstrates the full importance of the terms of the lease-purchase agreement.
2.2. The Obligations of the Lessee as Tenant
In accordance with the provisions of Article 1709 of the Civil Code, one of the primary obligations of the lessee consists of paying the rent.
All lease-purchase agreements include a resolutory clause drafted as follows:
“In the event of default by the Lessee in the payment of rents or non-compliance with an essential obligation of the contract, the Lessor may, eight days after a formal notice sent by registered letter with acknowledgment of receipt remains without effect, invoke the forfeiture of the term. This situation entails the immediate obligation to return the boat and the immediate enforceability of the sums due.”
The lessor can then sue the lessee to obtain payment of a termination indemnity in addition to the return of the vessel.
With the agreement of the lessee returning the vessel, the lessor can then arrange for the sale through an auctioneer. Failing this, the lessor will repossess the vessel by way of a request for apprehension in the hands of a third party. In addition to the payment of rents, one of the lessee’s main obligations is to take delivery of the vessel. The lease-purchase agreements practiced by large financial institutions stipulate:
“The Lessor’s obligation to deliver is performed by the seller, under the Lessee’s control. Unless otherwise stipulated in the sales contract, the risks and perils of delivery remain the responsibility of the lessee. Upon delivery of the property, the Lessee undertakes to sign with the seller or their agent a contradictory delivery-receipt report attesting to the conformity of the property to the specifications on the purchase order and those of the lease contract. The Lessee’s attention is particularly drawn to the importance of establishing and signing a delivery receipt report, which has the consequence of confirming the proper execution of the Lessor’s delivery obligation, releasing them from any warranty obligation, and allowing them to pay the price of the property without restriction or reservation.”
The lessee carries out the reception of the vessel as the Lessor’s agent. The lessee must therefore draw up a report of receipt of the item. They must, if necessary, mention the non-conformity of the delivered vessel or any apparent defects and deficiencies of the vessel.
The affixing of the phrase “GOOD FOR PAYMENT” at the top of the signatures orders the payment of the vessel’s price by the lessor to the seller. When drawing up this document, the lessor takes care to mention that the invoice must be issued in the lessor’s name.
When the vessel delivery report is established without any reservations, the vessel is presumed to conform to the purchase order. The lessee who improperly received the vessel cannot subsequently sue the lessor for breach of their delivery obligation under Article 1719 of the Civil Code.
Indeed, the lessee received a mandate to choose the vessel and carry out its reception. In the event of non-conformity of the vessel with the purchase order, the lessee must notify the lessor within the contractually agreed deadlines. The lessor who pays the sale price of the vessel based on a delivery report signed without reservation commits no fault. Consequently, the lessee remains liable for the payment of rents.
The lessee then bears an obligation of result. Case law admits this discharge of the lessee’s responsibility only on the condition that the lease-purchase agreement stipulates the transfer of all warranty actions, particularly the legal warranty against hidden defects, to the benefit of the lessee.
Case law is extremely strict with the lessee who signs the acceptance report without mentioning any reservations. In a judgment dated July 7, 200434, the lessee of a vessel had signed the “certificate of conformity” without reservation, attesting to the boat’s conformity with the order. After signing the said document, he sued the seller for rescission of the sale and the lessor, and the credit provider for retroactive annulment of the lease-purchase agreement.
The Court of Appeal of Lyon “declared his action well-founded, on the grounds that the lessor had not informed him about the classification of the leased boat, the fault thus committed having contributed to the lessee’s error, whose consent was vitiated and who would not have subscribed to the credit in question if he had been better informed. The Court of Cassation overturned the Lyon Court, noting that by ruling thus, while it found that the lessee had signed the conformity report without reservation, the said Court had violated the provisions of Article 1134 of the Civil Code.”
It was the value of the delivery report that was examined in the reported judgment. According to the said case law, the lessee had signed the delivery report without reservation, which subsequently prevented him from invoking any error or non-conformity.
The Court of Cassation thus grants absolute value to the delivery report. This interpretation seems perfectly contradictory with Article L.5113-4 of the Transport Code which states “the manufacturer guarantees against hidden defects of the vessel, despite the vessel’s acceptance without reservation by the Client”.
It is therefore recommended that lessees be assisted by a marine expert during the delivery of the vessel.
The use of a professional pleasure craft expert allows the lessee to protect themselves from the lessor’s action in case of inaccuracy of the vessel’s acceptance report. In this scenario, the lessee retains the possibility of engaging the expert’s civil liability. This obligation to deliver is based on a mandate conferred by the lessor to the lessee. As previously explained, the lessor must, in return, transfer to the Lessee the right to enforce legal guarantees against the manufacturer. Not being a party to the construction-sale contract, the lessee should not be able to exercise warranty actions related to the quality of a buyer.
By clauses in the contract, the lessor will transfer to the lessee the right to act directly against the seller, mainly for hidden defects warranty (CA Orléans, May 6, 2010: JurisData n° 2010-025908).
In lease-purchase agreements, the lessee can exercise the option at any time and become the owner of the vessel.
Standard lease-purchase agreements stipulate clauses allowing this option to be exercised:
“The Lessee has the right to interrupt the lease and acquire the property under the following conditions: – The Lessee must have fulfilled their obligations. – The lessee must notify the lessor in writing of their intention sixty days before the next rent due date. – The lessee must pay the lessor, in cash, the amount of the buy-back indemnity including all taxes corresponding to the date of interruption of the Lease. The lessee may present a third-party buyer. The lessor is free to refuse the latter at their discretion. Until the effective collection of the buy-back indemnity including all taxes, all risks remain the responsibility of the Lessee. The boat is sold in its current condition and without any warranty.”
In practice, the lessor concludes a vessel sale agreement complying with the formalities imposed by Article 231 of the Customs Code. The sale of the vessel by the lessor to the lessee terminates the lease-purchase agreement. The lessee regains their full prerogatives as owner-operator.
Title 2: the Effects of the Lease Agreement on Third Parties
In this three-party operation, the question of the lessee’s rights against the seller and/or the shipbuilder arises (Paragraph 1). Once the question of the lessee’s rights against the seller has been addressed, it will be necessary to analyze the consequences of the resolution of the sale on the lease-purchase agreement (Paragraph 2).
Chapter 1. Relations between the Seller and the Lease-Purchase Agreement
1.1. The Transfer of the Right to Act
In all lease-purchase agreements, the lessor grants the lessee a mandate to act against the seller. Thus, lease-purchase agreements contain clauses such as:
“The action aimed at rescinding the sale can only be exercised by the Lessee as the lessor’s agent and on the latter’s behalf”.
This mandate is analyzed as a mandate of common interest, concluded in the interest of both the lessor and the lessee.
The mandate only allows the lessee to act if the request for rescission of the sale is based on a defect or disturbance of enjoyment affecting the use of the property. If the request for rescission is based on the seller’s non-performance of obligations other than those related to the sales contract (for example, a breakdown in relations between the supplier and the lessee), the rescission will be unenforceable against the credit institution.
The mandate granted to the lessee by the lessor for exercising recourse against the supplier is counterbalanced by the lessee’s waiver of the benefit of the lessor’s guarantee. It is therefore subject to the same forfeiture conditions as would have been the right to invoke this guarantee39 (Cass. com., Dec. 15, 1998: JurisData n° 1998-005012).
Legally, this amounts to admitting that the lessee cannot sue the manufacturer of the vessel on the basis of Articles 1641 of the Civil Code and L.5113-4 of the Transport Code, nor the lessor under Article 1719 of the Civil Code.
Case law recognizes the lessee’s right to act against the manufacturer. In a judgment dated June 30, 2010, the Aix-en-Provence Court of Appeal ruled:
“If the owner of the vessel at the time of the substantive summons in late January 2006 was the company CIAL EQUIPEMENT while Mr. M. was only the lessee, the Court notes that under Article V of the general lease-purchase conditions governing these 2 parties, the lessor subrogates the lessee in the rights of call for warranty against the supplier or manufacturer. The lawsuit was therefore validly initiated by Mr. M., who moreover became owner on June 2, 2008, i.e., during the first instance.”
In any event, legal claims directed against the seller must be addressed by the lessee in their capacity as the lessor’s agent.
1.2. Consequences of the Rescission of the Sale on the Lease-Purchase Agreement.
When a vessel is affected by various defects, the lessee has the standing to act under the hidden defects warranty and request the rescission of the sale. The procedure notably consists of initiating an interim injunction action before the President of the territorially competent Commercial Court to obtain, under Article 145 of the Code of Civil Procedure, the appointment of a judicial expert.
This expert will then have to determine the nature of the defects and disorders affecting the vessel. It is not within the scope of the judicial expert’s competence to qualify the hidden defect. The hidden defect is a legal concept.
Some lease-purchase agreements stipulate:
“In case of dispute regarding the performance of the leased property, the Court may, until the resolution of the dispute, suspend your obligation to pay rents.”
These clauses are not included in all lease-purchase agreements. Like the contracts used by Lixxbail, no clause allows for the suspension of lease payments.
If such a clause exists, the lessee, based on an amicable expert report and a judicial expert report, can apply for interim relief under Articles 872 and 873 of the Code of Civil Procedure for the suspension of lease payments.
No appellate or Supreme Court ruling has addressed this question. By an Order dated April 24, 2015, the President of the Commercial Court of Cannes granted the request initiated by the Lessee.
In this case, he had already initiated a substantive action aiming to obtain the termination of the sale contract for his vessel, which was clearly affected by latent defects rendering it unfit for its intended purpose. The application of the said clause then raised no difficulty.
It should be noted that all lease-purchase agreements stipulate a clause for the suspension of lease payments in case of difficulty in the performance of the sale contract.
In proceedings aimed at obtaining the termination of the sale of a vessel acquired under a lease-purchase agreement, after having summoned the seller and the lessor for the appointment of a judicial expert, the Lessee can, in a second step, apply for interim relief to authorize the suspension of lease payments.
With the aim of obtaining the termination of the sale contract, the suspension of lease payments serves as a first step towards the termination of the lease-purchase agreement.
Financial leasing had given rise to significant theoretical difficulties when the sale contract for the leased asset was terminated. The termination of the sale contract for the leased asset thus raised the question of the fate of the financial lease agreement. Should the lessee continue to perform the financial lease agreement? What happened to the payments made?
To admit the termination of the financial lease agreement thus amounted to considering the sale contract and the lease agreement as interdependent. The lease agreement, finding its cause within the meaning of Article 1131 of the Civil Code in the sale contract, the termination of one would entail the termination of the other.
Conversely, if the two contracts were considered autonomously and independently, then the termination of the sale would have no effect on the performance of the lease agreement.
After a controversy between the First Civil Chamber of the Court of Cassation and the Commercial Chamber, a ruling by the Joint Chamber dated November 23, 199043 settled the question.
“The termination of the sale contract necessarily entails the termination of the financial lease agreement, subject to the application of clauses intended to regulate the consequences of this termination”.
Nevertheless, despite this case law, some lease-purchase agreements stipulate:
“If the sale is annulled by the Court, the lease agreement is automatically annulled (provided, however, that the lessor intervened in the proceedings or was implicated by the lessee or the seller”.
Although not conforming to the aforementioned case law, these clauses have the merit of enshrining the interdependence of the agreements.
These clauses originate from the standard model of preliminary lease offer with promise of sale stemming from Decree No. 78-509 of March 24, 1978, enacted for the application of Articles 5 and 12 of Law No. 78-22 of January 10, 1978, concerning consumer information and protection in the field of certain credit operations.
The 1st Civil Chamber of the Grenoble Court of Appeal, ruling on referral in a decision dated April 28, 2009, ruled on the said question. A BENETEAU FLYER F1 type vessel was financed under a lease-purchase agreement granted with BNP PARIBAS PERSONAL FINANCE.
Complaining of various defects analyzed by the Lessee as latent defects, the beneficiary of the lease-purchase agreement summoned the seller for termination of the sale and the lessor for termination of the lease-purchase agreement.
The Grenoble Court of Appeal recalled in this case that, concerning a vessel with a value exceeding 140,000 Francs, it was necessary to apply the provisions of common law and not the provisions of the law of January 10, 1978.
In this regard, the standard lease-purchase agreements stipulate clauses:
“If the leased asset is intended for the professional activity needs of the Lessee, the lease-purchase agreement does not fall within the scope of Articles L.121-20-8 et seq. of the Consumer Code, nor Articles L311-1 et seq. of the Consumer Code, and Articles 2b to 2e, 6a, 11a and 11c below are inapplicable.”
Consequently, the termination of the sale contract being established and undisputed in this instance, this retroactive annulment of the sale contract entailed the termination of the lease-purchase agreement.
It would seem that the case law has undergone a reversal.
In a ruling dated April 13, 2018, the Joint Chamber of the Court of Cassation ruled:
“Whereas the Court of Cassation had hitherto ruled that the termination of the sale contract necessarily entailed the termination of the financial lease agreement, subject to the application of clauses intended to regulate the consequences of this termination (Ch. mixte., November 23, 1990, appeals n° 86-19.396, n° 88-16.883 and n° 87-17.044, Bull. 1990, Ch. mixte, n° 1 and 2; Com., October 12, 1993, appeal n° 91-17.621, Bull. 1993, IV, n° 327; Com., January 28, 2003, appeal n° 01-00.330; Com., December 14, 2010, appeal n° 09-15.992). Furthermore, it has been ruled that concurrent or successive contracts that are part of an operation including a financial lease are interdependent (Ch. mixte., May 17, 2013, appeals n° 11-22.768 and n° 11-22.927, Bull. 2013, Ch. mixte, n° 1) and that the annulment of any one of them entails the lapse, as a consequence, of the others (Com., July 12, 2017, appeal n° 15-27.703, published).
Whereas, if this latter case law is not transposable to the movable financial lease agreement, which is accessory to the sale contract, the lapse it provides for, which does not affect the formation of the contract and can occur at a time when it has received a commencement of performance, and which differs from termination and rescission in that it does not sanction a non-performance of the financial lease agreement but the disappearance of one of its essential elements, namely the principal contract in consideration of which it was concluded, constitutes the appropriate measure.
Therefore, it is appropriate, modifying the case law, to decide that the termination of the sale contract entails, as a consequence, the lapse, as of the effective date of the termination, of the financial lease agreement and that the clauses provided for in case of termination of the contract are inapplicable.
It was therefore rightly that the Court of Appeal held that the lessee had to return the vehicle to the bank and that the latter, who could not invoke the contractual clauses of guarantee and waiver of recourse, had to reimburse him for the payments received in execution of the financial lease agreement.”
In a ruling dated February 21, 2019, the Aix-en-Provence Court of Appeal ruled that the fraud committed by the seller led to the nullity of the vessel’s sale contract. Consequently, the Court ruled that the nullity of the sale contract led to the lapse of the lease-purchase agreement. In a ruling reported in DMF47, the user of a vessel affected by various defects brought an action for latent defects and requested the termination of the sale in addition to compensation for loss of enjoyment.
The latent defect is qualified by the judges, the termination of the sale being established, yet compensation for loss of enjoyment was denied on the grounds that the shipyard had offered to repatriate the vessel to its premises for repair.
The decision is overturned under Article 1645 of the Civil Code, which states, “if the seller was aware of the defects of the thing, he is bound, in addition to the restitution of the price he received for it, to all damages and interest towards the buyer.”
The decision also rules on the consequences of the termination of the sale with regard to the financial lease. Indeed, the lower court judges had concluded that there was an indivisibility between the lease agreement and the sale contract, the two then forming an inseparable whole. The seller was then ordered to pay the lessor the total price of the vessel, in addition to the contractually agreed interest.
This amounted to opposing to the seller the terms of the lease-purchase agreement concluded between the Lessor and the Lessee.
Here again, the overturning is pronounced under Article 1165 of the Civil Code. Indeed, it would have been necessary to qualify the “indivisibility” of the two agreements in order to oppose to the seller the stipulations of the lease-purchase offer.
Such case law could soon be challenged, due in particular to the draft reform of the law of obligations. The said draft, in its Article 1169, enshrines the hitherto judge-made theory of the interdependence of agreements.
Besides the difficulties that financial leasing can raise in the law of vessel sales, the vessel supplier also encounters difficulties related to the dissociation of the owner-operator status.
Chapter 2 – the Relationship between the Supplier and the Lease-Purchase Agreement
The use of a vessel, even a pleasure craft, generates significant costs (berth fees, hull cleaning, naval repairs…). The dissociation of the shipowner and owner status can raise questions regarding the recovery of a claim related to the vessel.
2.1. Vessel Operating Debts
It was demonstrated that in the presence of a vessel under financial lease, it is the lessee, the exclusive user, who assumes the status of shipowner.
The question raised in case law concerned debts incurred for the operation of the vessel. The contracts used by the lessor CAPITOLE FINANCE TOFINSO contractually regulate this point.
“Usage, maintenance, and repair costs are the responsibility of the Lessee, including major repairs, and this, by derogation from Articles 1719 of the Civil Code.”
The case law of the Court of Cassation has ruled on this question. In a ruling bearing, as is customary in maritime law, the name of the vessel concerned, “THE ONE”, it ruled “The lessor and the lessee of a vessel are not co-debtors for debts arising from supplies made for its operation, which does not constitute a commercial operation common to them.”
Having noted that the supply of the disputed equipment was made for the needs of the vessel’s operation, an appellate court does not have to conduct the irrelevant search mentioned regarding the scope, among joint and several co-debtors, of the interruption of prescription by a protective measure taken against one of them.
It results from the combination of Articles L. 5423-2, para. 2 and 5411-2, para. 2 of the Transport Code and Article 92-4o of the Decree of October 27, 1967, that the clauses of time charter or bareboat charter contracts giving the charterer the status of shipowner are, for their enforceability against third parties, subject to publication on the vessel’s registration sheet only if the vessel is registered under the French flag.”
In this case, it concerned equipment supplied to a large pleasure vessel (over 65 meters). The said equipment ordered by the lessee had not been paid for, and the supplier was requesting payment.
The reported ruling did not concern a lease-purchase agreement for a pleasure vessel but could very well be adapted to it.
The entire interest of this ruling lay in the prescription enforceable against the supplier, who had acted more than one year after the delivery of the disputed equipment. The latter “then had in mind to argue that the protective measure he had initiated against the lessor had interrupted the limitation period inherent in his action against the lessee, insofar as proceedings brought against a joint and several co-debtor interrupt the limitation period with respect to the other in accordance with Article 1206 of the Civil Code.”
Thus, the Court of Cassation was faced with the question of joint liability between the lessor and the lessee for debts related to the operation of the vessel. The supplier’s action against the lessor encountered a major obstacle: the relative effect of contracts (Article 1165 of the Civil Code). In this case, there was no contractual link between the supplier and the lessor.
Indeed, the order for the disputed equipment had been placed between the lessee and the supplier. The principle of the relative effect of contracts was sufficient, on its own, to dismiss the supplier’s action against the lessor.
Furthermore, the lessor had at no time guaranteed the lessee’s commitments. The author Philippe DELEBECQUE, commenting on this ruling, notably emphasized that admitting joint liability between the lessor and the lessee would amount to admitting that a vessel operated under financial lease has two shipowners. Such a solution would have been highly debatable, although already adopted for a time charter contract.
By not admitting joint liability between the lessor and the lessee, the Court of Appeal and then the Court of Cassation considered the supplier’s action as time-barred.
The action being time-barred against the lessee, it was appropriate to focus on the action directed against the lessor. In this case, the supplier benefited from an act interrupting the limitation period initiated against the lessor.
The lessor had been condemned by the Court of Appeal on the basis of Article L.5423-2 of the Transport Code. Under this text, expenses incurred for operational needs must be borne by the shipowner, i.e., the owner, unless the contract is published. In this instance, the financial lease agreement had not been published. For the Court of Appeal, it was therefore the lessor who was liable for the expenses incurred for the operation of the vessel.
However, this publication requirement only applies to vessels registered under the French flag52, and the vessel THE ONE flew the Portuguese flag. The financial lease agreement, entailing the transfer of shipowner status, was not obligated to be published. The supplier’s action against the lessor was ultimately rejected by the Court of Cassation.
Applied to pleasure vessels, lease-purchase agreements are not published. The act of French registration distinguishes between the owner and the lessee and shows the name and status of each. Conversely, flag certificates do not make this distinction and merely mention the name of the registered owner.
In the absence of case law and in any event, a supplier’s action against a lessor of a French-registered vessel to recover debts for the use of said vessel would be doomed to failure. Indeed, the lease-purchase agreement transfers the status of shipowner to the lessee whose name appears on the act of French registration.
Conversely, a vessel under a flag certificate would not allow third parties to be informed of the existence of a financial lease agreement. Therefore, an action brought against the lessor could very well be deemed admissible.
This is merely a prospective analysis in the absence of positive law elements. The THE ONE case law will also surprise the informed reader. It is specified that the supplier had initiated a protective measure against the lessor, presumably a conservatory arrest of the vessel under the Brussels Convention of May 10, 1952.
2.2. Protective Measures Taken against a Vessel under Lease-Purchase Agreement
The conservatory arrest of a vessel operated under financial lease is likely to cause difficulties when said arrest is carried out under French law.
Indeed, French law, unlike the Brussels Convention of May 10, 1952, does not recognize the action in rem. This institution, known for its effectiveness, is also notable for the innumerable difficulties in its application.
Professor VIALARD observed in a chronicle published in the DMF that “the provisional seizure of chartered vessels is an area where significant variations are observed between international maritime law, as expressed in the Brussels Convention of May 10, 1952 ‘for the unification of certain rules relating to the provisional seizure of seagoing vessels’, and domestic law.”
Analyzing the conditions for the provisional seizure of a vessel under a lease-purchase agreement refers to the study of the provisional seizure of a chartered vessel for the charterer’s (lessee’s) debts.
Under the Brussels Convention of May 10, 1952, the issue raises no difficulties. However, under domestic law, Professor VIALARD emphasized “the laconic nature of domestic law necessitates introspection.”
The advisability of effecting a provisional seizure on a vessel under a lease-purchase agreement depends essentially on the nature of the claim.
Decree No. 67-967 of October 27, 1967, relating to the status of vessels and other seagoing craft, imposes a privilege on the vessel intended to guarantee a certain number of claims related to its operation, even if the debtor is not the owner of the vessel.
The dominant doctrine55 draws the following conclusion: “The maritime lien is a true real right endowed with a right of pursuit, leading to in rem execution, regardless of the identity of the debtor; it must be admitted, by way of consequence, that if one can do more, one can do less, and therefore simple conservatory measures can be taken that prepare for the proper execution.”
When the supplier holds a privileged claim within the meaning of Article L.5114-8 of the Transport Code, then they will be legitimate in requesting authorization to provisionally seize a vessel under LOA, even under French law.
Admitting the provisional seizure of a vessel under LOA flying the French flag necessitates practical consideration of the claims allowing such a seizure.
In all likelihood, it is on the basis of Article L.5114-8, paragraph 6, that the majority of pleasure craft creditors will claim a privileged claim allowing them to request authorization to provisionally seize a vessel under LOA.
Lease-purchase contracts adapted to vessels transfer responsibility for provisional seizure to the lessee by stipulating clauses such as:
“The Lessee undertakes to ensure that the Lessor’s ownership right is respected throughout the lease term. The Lessee shall immediately inform the Lessor of any challenge to this ownership right and, in particular, in the event of seizure, shall take the necessary steps to obtain its release at their own expense.”
The practice of provisional vessel seizure within the framework of a lease-purchase agreement reveals the full complexity of dissociating the owner and the shipowner.
The Commercial Court of Cannes thus refused authorization to carry out a provisional seizure of a vessel based on domestic law. The said Order, which we deem impossible not to reproduce in extenso, ruled:
Whereas:
“Article L.5114-22 of the Transport Code stipulates that any person whose claim appears to be well-founded in principle may request authorization from the judge to carry out a provisional seizure of a vessel; It should be noted that the claim invoked by the applicant concerns the company ARIZONA, in its capacity as the credit-lessee of vessel ‘X’, and not as the owner; Consequently, the request of SAS Y to proceed with the provisional seizure of vessel X, belonging to NATIXIS LEASE, should be declared inadmissible.”
This perfectly illustrates the legal difficulty implied by the dissociation of the qualities of owner and shipowner.
CONCLUSION
At the end of this study, it is clear that the acquisition of a pleasure craft under a lease-purchase agreement involves considerable ambivalence.
The contractual symbiosis of this financing method, involving a sales contract and a lease contract, undeniably raises questions regarding the effect of agreements between each of the parties. The use of the legal technique of mandate was then necessary to overcome the relative effect of agreements.
Let us keep in mind that the Lessee is the exclusive user of the vessel. It is he who must exercise the main prerogatives devolved to the owner, and notably actions for hidden defects. The adaptation of maritime law rules to this operation encourages introspection. Legal solutions are often found by considering the rules applicable to bareboat charter agreements. The contracts studied in this thesis have served to finance more than 10,000 vessels. Studying the different clauses and confronting them with maritime practice is like opening a Pandora’s box that will probably never close.
Vessels acquired under lease-purchase agreements thus navigate in a legally formed sea. The jurisprudence of the Court of Cassation has not finished animating this already perilous ocean.