Leasing

The Federal Court of Justice has confirmed its previous stance on voluntary representative action in leasing situations and redefined the obligations of the parties involved to determine the extent of damage. With regard to the rights of consumers to withdraw from contracts, the Court of Justice of the European Union has provided clarity on mileage-based leasing contracts without an obligation to purchase.

Residual value under the law on damages in the event of an accident involving a leased vehicle

On 2 July 2024, the Federal Court of Justice handed down a judgment (VI ZR 211/22) that redefined the calculation of the residual value in the event of damage to a leased vehicle.

In a decision, the sixth division for civil matters considered the assertion of third-party property damage in a voluntary representative action relating to leasing. The facts of the case were based on a traffic accident involving a total write-off of the leased car. The defendant’s liability for the full accident damage was established. Nevertheless, there were two further key problems.

Firstly, the lawfulness of the voluntary representative action was in question. The Federal Court found that the lease customer could, in principle, assert both its own claims arising from the breach of the right of possession and the claims of the lease provider in a voluntary representative action. However, in order for the claim to be sufficiently specific, the court said it had to be clear which of the claims should be asserted primarily. Otherwise, this would constitute an impermissible alternative aggregation of claims. In this case, the lease customer primarily pursued the lease provider’s claims in a voluntary representative action.

As a result, it was hard to determine the residual value of the leased vehicle. The lease customer hired an expert who put the residual value at €13,800 and then he sold the vehicle for that price. The next day the defendant submitted an offer calculated via an online marketplace for €22,999. It was questionable which of the prices were to be deducted from the replacement value of the vehicle to determine the damage. The Federal Court of Justice once again defined the parties’ obligations: The injured party would normally not have to perform any further market research and could rely on the expert’s opinion. However, if the injured party is a company which also focuses on selling used cars, the obligations for determining damage go further, the court said. At least an online search would then be reasonable. Since the lease customer in this case asserted the rights of the lease provider in a voluntary representative action, the obligations of the lease provider are decisive in this respect.

The Federal Court of Justice therefore used the residual value from the internet marketplace as a basis. In the court’s view,he residual value of €22,999 is to be deducted from the replacement value to determine the actual damage.

The decision is overall in line with the case law of the Federal Court of Justice to date on voluntary representative actions, since these are not intended to give the injured party a procedural advantage. However, in court practice to date, lease situations were not examined particularly closely and thus it is likely the judgment will lead to a change or stricter approach in case law.

No right of withdrawal from mileage-based leasing agreements

The Court of Justice of the European Union (CJEU) once again considered individual issues of consumers’ rights of withdrawal in a long-awaited judgment (C-38/21, C-47/21 and C-232/21).

The Court of Justice of the European Union clarified that consumers who have entered into a mileage-based leasing agreement without an obligation to purchase have no right of withdrawal as they have not agreed to buy the vehicle at the end of the lease period. This applies even if the contract was entered into as a distance contract or an off-premises contract. As grounds, the Court of Justice of the European Union stated that such a leasing agreement can be equated to a car rental agreement and thus falls within the exception in Article 16l of Directive 2011/83/EU.

The situation is different with credit agreements for the purchase of a motor vehicle. In these, consumers can apply their right of withdrawal under certain conditions if they were not fully and accurately informed of their rights and obligations. However, the Court of Justice of the European Union also found in this context that a right of withdrawal becomes obsolete upon complete fulfilment of the loan agreement and in those cases consumers no longer have a right of withdrawal.

The decisions create clarity once again about the existence and scope of the right of withdrawal from leasing agreements and end the uncertainty about whether, and to what extent, a borrower may still assert rights after complete fulfilment of the agreement.

Leasing during insolvency: challenges in times of crisis

Given the current economic situation and increasing number of insolvencies, we expect this topic to continue to become more important this year too.

During an insolvency the issue of continuing or ending the leasing relationship plays a central role. However, termination of the leasing agreement by the lease provider if the leasing customer is insolvent is not always possible due to the ban on termination under insolvency law. Lease providers thus face the challenge, if the leasing customer becomes insolvent, of getting the leased item back or coming to any other type of contractual solution with the insolvency administrator. There is often the issue of calculating damage that is typical in leasing.

This article is part of the "Update Commercial 2025". All insights and the entire report as a PDF can be found here.