Liquidated damages in a lease contract cannot be enforced
Is the lessor entitled to charge liquidated damages to the consumer if the consumer terminates the lease contract or fails to pay the lease instalments?
For lease contracts, where a natural person – consumer acts as the lessee, the provisions of the Consumer Protection Act (ZVPot) apply, in addition to the general rules of contract. As a result, setting liquidating damages for early termination or failure to pay the lease instalments is considered unfair to the consumer.
The Supreme Court of the Republic of Slovenia recently ruled that a lease contract in which the lessee may redeem the subject of the lease contract cannot be classified as a lease contract, where the purchase price is paid in instalments, rather it must be classed as a rental contract. Such contracts are also considered consumer contracts where liquidated damages are expressly prohibited by the ZVPot.
The payment lease instalments (rent) is considered to be a monetary obligation. Violations of monetary obligations do not carry liquidated damages as per the general principles of the Code of Obligations (OZ). Instead, default interest takes the place of the liquidated damages.
Therefore, provisions in consumer lease contracts stipulating liquidated damages, for example in the amount of 6 lease instalments (especially when the damage does amount to this extent) runs contrary to the principle of good faith and fair dealing, and cannot be enforced by the lessor.
