TYPES OF LEASE
8 By reason of the variety of factors that will affect leases to
China (amount, duration, currency etc) every lease is likely to be
slightly different in its particular details.
However, all will
fall into one or two main categories, as either a "financial lease",
which is virtually an alternative to a supply contract, or as an
"operational le ase", which is a hiring contract, with the property
retained by the lessor at the end of the hire period.
NEGOTIATION OF A LEASING CONTRACT
9
The Chinese lessee will normally negotiate the contract price
and technical aspects of the transaction (specification, warranties
etc) directly with the UK supplier, whose responsibility for these
would remain.
10 Details of the leasing contract would be negotiated between the
Chinese lessee and the lessor who would then purchase the equipment
from the supplier in order to perform the leasing contract.
11
Negotiations may of course be more complicated than the above
suggests. It is likely that the negotiations with the supplier and
the lessor would take place at the same time and in the event that
a counter trade arrangement was required by the Chinese (see 12 below)
negotiations with the trader would also be involved. All parties
will of course need to work in close collaboration.
LEASING PAYMENTS CASH AND COUNTER TRADE
12 While lease payments are normally simple cash payments spread
equally over the term of the lease, the Chinese may well wish to
arrange for payments to be made in kind under a Counter Trade
Agreement.
.
In such circumstances it would be necessary to involve
a trader who would be willing to receive the goods and make the
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