Newsletter-21

281 LAW OF OBLIGATIONS property. The lease agreement solely provides the lessee with the right to utilize the leased property, and as such, the legal title of the as- set still remains with the lessor as also is the case for financial lease agreements. However, the provision under the financial lease agree- ment stipulating that the lessee will have the legal title of the leased property at the end of the term of the lease affects the legal nature of the agreement, as the obligation of the lessee to return the leased property constitutes the essential part of the lease agreements. It is important to point out that the lessee is granted with the right to purchase the leased property solely in cases where the lessee carries out all of its obligations under the financial lease agreement, it makes the lease payments, and the term of the financial lease agreement ends. In this respect, no such right is granted to the lessee under all of the cir- cumstances terminating the financial lease agreement. In cases where the financial lease agreement ends due to such reason prior to the end of the term of the same, the lessor will take the leased property back from the lessee, and utilize it in a way that it deems it appropriate. Only under such circumstances can it be claimed that the fact that the legal title of the leased property remains with the lessor, an actual security is provided for the lessor under the financial lease agreement. The leased property shall be returned to the lessor as a part of the obligation of the lessee to do so under the financial lease agreement. If the leased property cannot be returned, then the right for the lessor to compensate will replace such obligation of the lessee to return the leased property. As per Article 35 of the Code of Obligations, when the leased property is returned, it should be examined by the lessor, and in the case of the determination of any deficit or defect, the lessor shall notify the lessee, in writing. If such notification is not made, then the lessee cannot be held responsible for such deficits or defects. If the lessee does not return the leased property in the cases where the term of the financial lease agreement ends, it is accepted that the lessor can claim all of its damages it has incurred due to such non-compliance of the lessee. The lessor may claim such compensation under these circumstances, and is not solely comprised of the amount to be calcu- lated based on the number of days that such property is not returned to the lessor, but rather, if the damage of the lessor is higher than such amount, the lessee should also compensate lessor for such damages.