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Thomas, Lawyer
Category: UK Law
Satisfied Customers: 7617
Experience:  BA (Hons), PgDip, Practising Solicitor
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if you take out a lease purchase and the company goes bust

Resolved Question:

if you take out a lease purchase and the company goes bust but they have passed the lease to another company can you end the contract as you are not getting the backup originally supplied with the contract. ?
Submitted: 7 years ago.
Category: UK Law
Expert:  Thomas replied 7 years ago.



Thank you for your inquiry.


If the original tenant company has assigned (ie. transferred) their interest in the Lease to a new Tenant company lawfully under the terms of the Lease then the Landlord to is only able to terminate the Lease in accordance with the terms of the Lease.


If the original Tenant has been made insolvent then this would affect the Landlord in the event that the new Tenant company defaulted in paying their rent (or other sums due under the Lease) and the Landlord then sought to reclaim this from the original Tenant Company (ie. possibly by way of an Authoried Guarantee Agreement entered in to upon assignment of the lease to the new tenant company). If the company is insolvent, then plainly pursuing them for the sums due would be fruitless (ie. because they have no money).


The most common methods of terminating a lease are by way of break clauses specified in the Lease, which would grant to either the Landlord or Tenant the right to terminate at specified period (s) during the lease term upon the service of notice to terminate (for which there would certainly be a minimum notice time period). Failing that a lease can come to end either by expiration of the Lease term, or by the Tenant forfeiting the lease because of the tenant not performing their obligations under the Lease.



I hope this helps. If so, please kindly click accept or otherwise feel free to ask any further related points to follow up.


Kind regards,



Customer: replied 7 years ago.
this was a lease on equipment not on a property. the lease was originally for equipment and backup but when the company went bust the backup part of the lease obviously is not being forfilled but we still have to pay for the equipment and pay out for our own backup. there was also an upgrade yearly agreement but this was verbal only and obviously cannot be proved or upheld with a finance company. can we get the finance company to take back this equipment with a 3 month notice as it is only a lease a nd it is not of much use without backup assisstance ?
Expert:  Thomas replied 7 years ago.


Right, sorry about the misunderstanding.


You should refer to the agreement originally made with the Company to check that the original agreement was assignable (ie. able to be sold to another company under the terms of the agreement).


If the lease agreement has correctly been sold by the original party and bought by another company each party to the agreement (ie. you and the new company that has purchased the insolvent company's interest in it) would be still be bound to perform their responsibilities under the agreement.


The agreement should refer to each parties' responsibilities and if the new company is not fulfilling a term of the agreement (ie. providing back up) then the agreement may entitle you to terminate it and return the items.


If the agreement does not entitle you to terminate it because of the breach of duty to provide backup then you will nevertheless be able to make a claim under contract law for a breach of contract for any expenses or losses incurred as a result of the breach (ie. the expense of paying for alternative backup)


After checking the agreement you should write to the other party confirming the breach, detail the costs incurred as a result of the breach and claim the sum from them. Ask to be paid within 7days failing which a claim will be made in the small claims court . You will be able to this yourself online though


If this has been helpful please kindly click "accept".


Kind regards,




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