How is the lawful termination of a lease agreement?

Since I haven’t I have no need to use a car and want to earn more money, I let my car leased by Mr. Nam. Recently, I found out that Mr. Nam let some one lease my car while there was no sub-lease agreement between us. I would like to ask if I am entitled to terminate the lease agreement signed with Mr. Nam.

FDVN’s Opinions:

The lease agreement between you and Mr. Nam fell into Section 5 - contracts for lease of property - of Chapter XVI of Civil Code 2015. Then, the rights and liabilities of the involved parties and the terimination of the lease contract are stipulated as follows:

According to Article 475 of Civil Code 2015 on sub-leasing: “A lessee may sub-lease leased property with the consent of the lessor.”

According to the information provided, you let Mr. Nam lease the car and did not agree that he could let somebody sub-lease your car. Therefore, that Mr. Nam subleased the car without your consent is an act of improper use of the leased property.

It is stipulated in Article 480 of Civil Code 2015 that: “1. A lessee must use leased property strictly in accordance with its utility and the agreed purpose. 2.Where a lessee fails to use leased property strictly in accordance with its utility and purpose, the lessor has the right to terminate unilaterally the performance of the contract and to demand compensation for damage.”

Because there was no agreement on the unilateral termination of the contract, Clause 2 of Article 428 of Civil Code 2015 is applied in this case: “A party terminating unilaterally the performance of a contract must notify the other party immediately of its termination of the contract and must compensate if the failure to notify causes damage.”

Therefore, to terminate the contract signed with Mr. Nam, you shall send him a notice on the termination. At that time, you may apply Clause 3 of Article 428 of Civil Code 2015: “Where the performance of a contract is terminated unilaterally, it shall terminate from the time when the other party is notified of the termination. In such case, the parties are not required to continue to perform their obligations, except for agreement on fines for violations, compensation for damage and settlement of disputes. A party which has already performed its obligation may demand the other party to make payment for the performed obligation.”

Hoàng Trần Ngọc Anh – FDVN Law Firm

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