CEU eTD Collection Hungary 9, Nadorutca 1051 Budapest, University Central European PROFESSOR: Tibor Tajti Transactions Secured Comparative COURSE: LL.M. SHORTTHESIS LEASING CONTRACT IN IN COMPARISON TO INCOMPARISON AZERBAIJAN IN CONTRACT LEASING © Central © Central European University March 29,2009 ORKHAN BAYLAROV UNITED STATES by CENTRAL EUROPEAN UNIVERSITY CENTRAL EUROPEAN INTERNATIONAL INTERNATIONAL BUSINESS LEGAL STUDIES CEU eTD Collection based on what was discussed in this thesis. in this was discussed what on based After Iwill objectvies achievingset Azerbaijan between comparison make States and United leasing inAzerbaijan and finally will describe situationthe leasingwith in United States. will anoverviewgive on history developmentof of leasing, then legal presentthe status of ishow regulatedand leasing contract howis itindeveloping Azerbaijan.At beginning the I comparison with the situation in United States of America. The aim of this research is to study This research is dedicated to the leasing contract in Azerbaijan Republic in Republic inAzerbaijan is leasingThis research tothe dedicated contract ABSTRACT i CEU eTD Collection parents andparents my especially wife. dear Finally workwouldthis nothave been possible without supportandthe my encouragement of time. the all I am also gratefull myto my from teachers universityprevious were alsowho me supporting myhelpat all of andassist to stages research. willigness likeI would also to RékaFutász from thank Writing for herAcademic Center permanent thesis. whose valuablehave advisesand support beenleadingme whole the throughout work on this First of all likeI would express to tomy gratitude extreme supervisor Professor Tibor Tajti ACKNOWLEDGEMENTS ii CEU eTD Collection ILORPY...... 54 BIBLIOGRAPHY...... 50 CONCLUSION...... LEASING 36 IN UNITED ...... STATES CONCEPT OF LEASING AND ITS HISTORICAL 5 FORMATION...... 1 ...... INTRODUCTION LEGAL REGULATION OF LEASING CONTRACT 16 IN AZERBAIJAN...... L S A T PARTIES S F E S A P H D C TAGES OF LEASING DEVELOPMENT IN UBLEASING ORM AND CONTENT OF THE CONTRACT LEASING OF THE ORM ANDCONTENT UBJECT OF THE LEASING CONTRACT LEASING THE UBJECT OF LEASING CONTRACT ARTIES THE OF EGAL REGULATION OF LEASING CONTRACT IN CONTRACT LEASING OF REGULATION EGAL YPES OF LEASING OF YPES SSENCE AND OFLEASING FUNCTIONS ONCEPT OF LEASING CONTRACT IN CONTRACT LEASING OF ONCEPT ISTORY ANDLEASING OF DEVELOPMENT ISTORY LTERATION AND RESCISSION OF THE LEASING CONTRACT LEASING THE OF AND RESCISSION LTERATION LLOCATION OF RISKS AND INSURANCE IN THE LEASING CONTRACT INTHE AND INSURANCE RISKS OF LLOCATION ISTINCTION OF LEASING FROM RENT AND CREDIT CONTRACTS ANDCREDIT RENT FROM OFLEASING ISTINCTION , SECURITY OF THE LEASE SUBJECT IN THE LEASING CONTRACT , TRANSFER OF THE RIGHTS AND OBLIGATIONS TO THE THIRD PARTIES BY THE CONTRACTING THE BY PARTIES THIRD THE TO OBLIGATIONS AND RIGHTS OF THE TRANSFER ...... 30 ...... TABLE OF CONTENTS A ...... 16 ...... 20 ...... 5 ...... ZERBAIJAN LAW ZERBAIJAN U NITED ...... 8 ...... S U TATES NITED ...... 21 ...... iii ...... 11 ...... 36 ...... S TATES ...... 27 ...... 9 ...... 43 ...... 18 ...... 24 ...... CEU eTD Collection someone else. to property the returns whosituation, the byowner, hiscan cover leasing sellingit costs or to non-payment entrepreneur’s of incase because financially, risk taking is not in practice investor Here the entrepreneur is notobliged toprove his solvency or to care about loan guarantee, while entrepreneur addresses to investorthe (lessor) who buys this equipmentand leases it tohim. the activity, hisbusiness for isnecessary which equipment the purchase to bank the from a dynamically market. developing and holding them level, on proper whichhelps them andcompete survive in conditionsthe of main in tasks business the sphere –providing permanentsupport meansto the of production with highly developed economies. Investments help business owners to cope with one of the Germany and Japan, whose economies were destroyed after World War II, to become countries one of the main toolsbecame for the attraction worldwide of fundsactivity to the economy.investment InvestmentRecently helped post-war securities. from coming profit and capital debt capital (authorized capital of legalthe person or personal funds of individualthe entrepreneur), Traditionally business owners used three sources for financing their activity: their own on state aid. chanceno expenses shareholders, totransferthese on employees enterprises these rely of orto havenot enough financial forassets the renewal of material-technicaltheir base. Thereis also economy,leadswhat disastrousto consequences forthe population.Most of enterprisesthe do activity are business entities Unfortunately,the mainthe of the is important.of assets enterprises very outdated and they have reachedINTRODUCTION their maximum almost in all spheres of our One of the main types of financing form is “leasing”. Instead of taking loan at interest at loan taking of Instead is“leasing”. form financing of types main the of One Azerbaijani of equipment and assets main the of renewal of question the Nowadays 1 CEU eTD Collection leasing is appearing regularly at the local printed media andbusiness and law reviews, where cent-equity incent-equity stake provide and a$3million to loanUnileasing” to growing leasing companies (Unileasing) in Azerbaijan - agreementacquire per to a33-1/3 most the of one support “to isaimed project The 2007. in March in Azerbaijan project leasing first the of implementation the to aimed contract signed Development) and Reconstruction for the purpose of leasing developmentin Azerbaijan, for example EBRD money investing also are organizations international The in2003. than more times 22 and 2006 The number of leasing contracts concluded in 2007 is 1659; it is twice more in comparison to example leasing turnover Azerbaijan Leasing Portal 1 in Azerbaijan is conducted by ALCA leasing companies areentering intoAzerbaijan market. The observation on the leasing market companies is increasing, the existing ones are widening their scope of activities and foreign markets. external business country, so more and more investments are made to its economy by representatives of economy is developing and businessmarket is day-to-day.growing Azerbaijan is an oil expression as “leasing”. It started to develop after the collapse of . Now the 2009. 5 2009. -lastvisited on 29 March, 2009. 2 5 . informationaboutThe > - last visited on29 March, > - last visited on 29 March, > - last visited on 29 March, 4 (European Bankfor > -last CEU eTD Collection www.lawyer.az (www.azerbaijanleasing.com English Translation of Articlesthe was citied from Azerbaijan Leasing Companies Association 6 (World Bank). Of course my current supervisor at CEU will support me also in my research portfolio provided by Azerbaijan Leasingleasing Companies Associationon and Finance International Corporation statistics annual example for – work thesis my in materials statistical specializingin business and civillaw spheres. Ihave alsoused information up-to-date and have used the help and recommendations of my teachers at previous university who are Republic and some other legal acts to emphasize legal regulation of leasing in Azerbaijan. I which I have used in my research. Ihave also used Civil Code andbooks materials to related theory of leasing inAzerbaijani, Russian and literature foreign leasing in United States and world leasing market. of development the with in Azerbaijan leasing of comparisons practical the Conduct contract. leasing regulates which legislation existing the of objection and modification on leasing, of development further on suggestions practical and conclusions on output Make relationships. the leasing contract. Analyzeits legal nature, normative legal basis which regulates the leasing in is Azerbaijan present situation also made. hadfirst it roots. Overview of developmentthe of leasingin US and its then comparison to made the comparison analysis with the situation in United States – the country where leasing paper remedies this by making research on regulations of leasing contract in Azerbaijan. I of leasing activity are also improving. the topical problems of leasingthe business are analyzed. Thelegislative and methodical bases Please note that I have used theArticles of the Civil Code from different sources in this work. Most of the As the sphere is quite new, not too much has been written about it. There are good The aim of this thesisis maketo research on leasingin Azerbaijan; legal regulation of Still, few very publications have been devoted to the specific ofleasing.topic This website where the texts of codes are provided in both Azerbaijani and Russian languages. Russian and Azerbaijani in both provided are of codes texts the where website ) website where the translation in English is provided. I have also used 3 6 , Tax Code ofAzerbaijan Code , Tax CEU eTD Collection Azerbaijan and based on this make a comparison with the situation is United States. is United situation the with a comparison make on this based and Azerbaijan Azerbaijani legislation leasing.on legalleasing relationships by makingtypes, output on suggestions for improvement the rights and obligations to the third parties by the contracting parties, classification of the of transfer and subject lease the of security relationships, subleasing the of definition contract, leasing the of termination and formodification grounds the of examination subject, and parties leasing legal the relationships,regulates definingwhich the legal legislation status and contentAzerbaijani of the leasingexisting and contract, it’s leasing of development the of history writing. by me directionsgiving and recommendations and observing my the progress of thesis By describing the above stated issues, I will be able to define the status of the leasing in The given research aim will be achieved by:defining the essence leasing,of overview of the 4 CEU eTD Collection - last visited on 29March, 2009. Thomson/West 5 , p.889, St. Paul, MN, 2004. 8 : 9 ; CEU eTD Collection Moskva,2000). 13 http://www.unidroit.org/english/conventions/1988leasing/1988leasing-e.htm 12 11