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I. Introduction, History, and Concept
The earliest examples of leasing investment goods date back to the ancient Phoenicians, but the foundation of financial leasing in the modern sense emerged in the late 18th century during the Great Depression (see Adam Smith)1. Indeed, the concepts of "Leasing" as an umbrella term and "Financial Leasing" as the most commonly used form of this system, which are often mentioned together, are products of the Anglo-American legal system.
In Turkish law, financial leasing practices first came to the fore after 1980 and were given a legal basis with the repealed Financial Leasing Law No. 3226. Today, in parallel with the development of financial markets, the renewed Financial Leasing, Factoring, and Financing Companies Law No. 6361 ("FFFK") is in force.
The leasing system offers a financial solution focused on "use" rather than ownership for businesses that struggle to adapt financially to rapidly changing free market conditions but do not want to be left out of the competition. In other words, only the economic benefits of the asset are transferred2 to the lessee, and the capital burden is lightened without the burdens of ownership.
II. Financial Lease Agreement: Definition and Elements
A financial lease agreement is defined in Article 18 of the FFFK as follows:
"A financial lease agreement is a contract whereby the lessor, at the request and selection of the lessee, purchases an asset from a third party or directly from the lessee, or otherwise obtains or already owns the asset, and transfers possession of the asset to the lessee in exchange for a lease payment, with the intention of providing all benefits."
The legal regulation provides for three different financial leasing methods, but the basis of the financial leasing agreement is the lessor transferring the economic ownership3 of an asset to the lessee in exchange for a rental fee, with the aim of providing all benefits. Accordingly, (i) the lessor (which refers only to participation banks, development and investment banks, and financial leasing companies) may purchase the asset from a third party at the request and choice of the lessee; (ii) the asset may be purchased directly from the lessee and made available to the lessee (sale and lease back); (iii) an asset previously acquired by the lessor or obtained by other means may be the subject of a financial leasing agreement.
The first type of financial lease agreement involves the lessor procuring the product selected and requested by the lessee from a seller. This method is the most common4 approach in practice. As a rule, this method involves two separate debt relationships: the sales agreement between the seller and the financial leasing company, and the lease agreement between the financial leasing company and the lessee. At this point, the principle of the relativity of the debt relationship becomes important in asserting the discretionary rights arising from defects. This study examines the conditions and circumstances under which discretionary rights can be asserted when the leased property is defective under a financial leasing agreement.
III. The Lessor's Liability for Defects
As stated, in the most common financial leasing method encountered in practice, the goods are mostly selected and identified by the lessee and procured by the lessor from the seller. In this context, it is accepted that the lessor's relationship with the leased asset is limited5, as the lessor procures the leased asset from the seller. Indeed, the lessor purchases the product specified by the lessee under the terms agreed between the lessee and the seller, and the process, including delivery of the goods to the lessee, is carried out directly between the seller and the lessee. Parallel to this, financial leasing agreements concluded in practice include a commitment clause stating that the lessee has agreed with the seller on the conditions, including the nature, characteristics, delivery, and purchase of the leased asset.
In such circumstances, holding the lessor liable for a defect in the leased property would not be equitable and would also defeat the purpose of the financing function intended to be achieved through the leasing system. Similarly, Article 24/6 of the FFK clearly stipulates that the lessor cannot be held liable for defects in cases where the leased property is procured from a seller/manufacturer or the lessee. Therefore, the only circumstance in which the lessor is liable for defects is when they have included property currently in their possession in the financial lease agreement. In other words, the lessor is not liable for defects in cases where the leased item is procured from a seller/manufacturer and at the lessee's discretion.
IV. Transfer of Authority to the Lessee as a Solution in Practice
As explained above, the lessor cannot be held liable for defects if the leased property is obtained from a seller. It must be stated that the seller will be liable for any defects in the leased property. The seller's liability is to the lessor as a party to the contract, and it is precisely at this point that a solution is needed due to the principle of relativity of the contract. Indeed, even though the lessee is not a party to the sales contract, the lessee's claims against the defect arising from the warranty under Articles 219 et seq. of the Turkish Code of Obligations ("TBK") numbered with 6098 are directed at the seller.
This issue is addressed in practice by the "authority transfer" clause added to financial lease agreements. This clause stipulates that the lessor shall not be liable for defects and that the lessee shall exercise the lessor's rights against the seller. In a sense, the lessee is granted the authority to represent6 the lessor in asserting warranty provisions against the seller. Thus, in doctrine, it is also accepted that, within the scope of the financial leasing agreement, the lessor has a secondary obligation to transfer these rights7, arising from Article 2 of the Turkish Civil Code numbered with 4721. Based on these contractual provisions regarding assignment, it has become possible for the lessee to assert their discretionary rights against the seller, file a lawsuit against the seller, and obtain the necessary information and documents from the lessor in this regard.
Indeed, the Court of Cassation also considers the contractual provisions regarding the transfer of rights arising from the sales contract to which the financial leasing company is a party to the lessee to be valid (see Court of Cassation 19th Civil Chamber, Case No: 2014/17447, Decision No: 2015/3417). Moreover, in a dispute brought before the 11th Civil Chamber of the Court of Cassation, it ruled that a lessee who purchased a tractor from a financial leasing company could not apply to the importer and its dealer for the tractor's malfunction because the lessor did not authorize him to do so (see Court of Cassation 11th Civil Chamber, Case No: 2020/2806, Decision No: 2021/1856 ). Therefore, if the lessor does not expressly authorize the lessee in this regard, the lessee cannot assert claims against the seller or file a lawsuit.
At this point, if the aforementioned lawsuit can be filed, the next step to be considered will be to examine whether the notification and inspection obligations necessary for the exercise of the elective rights arising from liability for defects have been fulfilled (Court of Cassation ruling rejecting the lawsuit on the grounds that the notification and inspection obligations were not fulfilled despite the delegation of authority. 19th Civil Chamber, Case No: 2014/2605, Decision No: 2014/4784 K.). Undoubtedly, if the necessary obligations have been fulfilled, compliance with the limitation periods set forth in the provisions of Article 219 et seq. of TBK will be another subject of evaluation.
V. Consequences of Liability for Defects and the Compatibility of Elective Rights with the Transfer of Authority
The Lessee may refer to the provisions of Article 229 et seq. of TBK based on the sales contract between the Lessor and the Seller against the Seller. While it is established that the Lessor may delegate authority to the Lessee regarding the exercise of these discretionary rights, it is debated in doctrine whether the discretionary rights of "price reduction" and "withdrawal from the contract" are deemed appropriate for this delegation.
The majority opinion accepted by the Court of Cassation is that these rights are rights to receive payment in terms of their nature and consequences and can be transferred to the lessee8. Therefore, the lessee may exercise the discretionary rights to reduce the sale price against the seller due to the defectiveness of the leased property, to have the sold property replaced with a defect-free equivalent, to have it repaired, or to withdraw from the contract.
The lessor, who is in the position of the buyer in terms of their status in the sales contract, may also assign9 their right to claim compensation to the lessee in accordance with the general provisions of Article 112 of TBK. At this point, technically speaking, an assignment of a claim is involved, and the contractual provisions relating to the assignment must be made in accordance with the written form requirement stipulated in the relevant provisions of TBK.
VI. Conclusion
The exercise of elective rights regarding defective goods in financial lease agreements presents a different picture compared to sales agreements due to the nature of the structure and the principle of proportionality of debt relationships. In the common model where the leased item is procured from a third party at the request and choice of the lessee, the lessor's function is essentially limited to providing financing, and the seller is held responsible for defects in the goods subject to the contract. In this case, the lessee's right to exercise their discretionary rights based on the provisions of Article 219 et seq. of TBK directly against the seller is only possible if the lessor expressly delegates authority, as the lessee is not a party to the sales contract. The Court of Cassation also adopts this approach and has ruled that the lessee cannot apply to the seller unless authorized. In addition, the lessee's notification of defects, compliance with inspection obligations, and observance of limitation periods are mandatory conditions for the exercise of discretionary rights. Consequently, the assertion of claims arising from defects in financial leasing relationships depends on contractual arrangements containing an explicit delegation of authority by the lessor and the tenant's proper fulfilment of obligations under the defect regime. When these conditions are met, a balanced solution is achieved between the financing and usage functions of financial leasing.
Footnotes
1. Türkan Kırmızıtaş, 6361 Sayılı Finansal Kiralama, Faktoring ve Finansman Şirketleri Kanunu'na Göre Finansal Kiralama Sözleşmesi (Master's Thesis, Başkent University, 2016), p. 5.
2. İlhan Yıldırım, Türkiye'de Finansal Kiralama Yoluyla Gayrimenkul Finansmanı ve Uygulamalarının Analizi (PhD Dissertation, Ankara University, 2023).
3. Kuntalp, Leasing, pp. 29–30; Yavuz / Acar / Özen, p. 437; Court of Cassation (Yargıtay), General Assembly of Civil Chambers, E. 2008/21-535, K. 2008/586, 08.10.2008.
4. Sadullah Evliyaoğlu, Finansal Kiralama Sözleşmelerinde Kiralananın Bir Satıcıdan Temin Edildiği Hallerde Satıcının Ayıptan Sorumluluğu, (EBYÜ Law Review, Vol. 29, No. 1, June 2025, p. 25.)
5. Bilgehan Çetiner, 6361 Sayılı Kanun ile Finansal Kiralama Sözleşmelerine İlişkin Getirilen Yeni Düzenlemeler (Journal of the Turkish Justice Academy, No. 13, 2013, p. 77); Topuz, Finansal Kiralama (Leasing) Sözleşmesi, p. 351.
6. Kocaağa, p. 111; Altop, p. 14.
7. Barış Demirsatan, Finansal Kiralamada Kiralananın Ayıbı Nedeniyle Kiracının Başvurabileceği Haklar, 2025, p. 139.
8. Sadullah Evliyaoğlu, Finansal Kiralama Sözleşmesinde Kiraya Verenin Ayıptan Sorumluluğu (PhD Dissertation, Kocaeli University, 2025), p. 119.
9. Barış Demirsatan, Finansal Kiralamada Kiralananın Ayıbı Nedeniyle Kiracının Başvurabileceği Haklar, 2025, p. 121.
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