When the Leasing Company Itself Decides Who the “Violator” Is – Consumer Rights in the Georgian Leasing Market

Acquiring a car through leasing is an increasingly common practice in Georgia — especially for those who do not wish to pay a large sum all at once. Recently, however, we are seeing consumer complaints ever more frequently that revolve around the same scenario: the leasing company finds a formal, often groundless reason, repossesses the vehicle, and does not refund the money already paid.

Circumstances of the Case

One such complaint that came to our attention clearly illustrated this problem. According to the victim's statement, he/she purchased a 2017 Japanese sedan from a leasing company and had already paid approximately GEL 8,000 under the agreement. According to the same account, just three months after the purchase, the company first accused the customer of "improper" use of the vehicle (presumably due to driving by another person — a spouse), and then contacted the police claiming that the driver was intoxicated. According to the victim, the breathalyzer test showed a 0% result; nevertheless, the vehicle was remotely disabled via a GPS device and ultimately towed away.

It is important to note: these facts currently rely solely on the victim's unilateral testimony and have not been confirmed by the court or law enforcement authorities. Therefore, until a final decision is made on the case, we are referring not to proven allegations, but to alleged violations that require verification. Furthermore, if other consumers share a similar experience, it is important for these cases to be connected and challenged collectively through lawful means — which facilitates framing individual complaints as a systemic issue and taking effective action.

What the Law Says

1. Nature of the Leasing Agreement

In financial leasing, ownership of the vehicle remains with the leasing company for the duration of the agreement, while the consumer uses the vehicle and gradually pays its cost based on applicable payments. This does not mean that the leasing company can unilaterally terminate the contract and repossess the vehicle under any pretext without proof — unilateral termination of the agreement and repossession of the property is legal only if there is a material breach that is objectively proven, and if the principle of proportionality is observed.

2. Unfair Contract Terms

According to the Law of Georgia "On the Protection of Consumer Rights", a contract term that has not been individually negotiated and, contrary to the requirement of good faith, creates a disproportionate imbalance in the parties' rights and obligations to the detriment of the consumer, is deemed unfair and void. This directly applies to practices where the company effectively decides on its own whether the contract was "breached", subsequently prohibits appeals itself, and retains the amounts already paid.

3. Fate of the Paid Amount — Unjust Enrichment

If the contract is terminated without ground or without a material breach on the part of the consumer, the retention of the paid amounts by the company gives rise to the institution of unjust enrichment provided for under Article 976 of the Civil Code: a person who has transferred something to another person in performance of an obligation may demand its return if the legal basis of the obligation itself is void or no longer exists. In other words, the company has no right to retain both the vehicle and all amounts already paid for it, unless the basis for terminating the contract is proven and lawful.

4. Criminal Law Aspect

If it is proven that the company systematically and intentionally used fabricated pretexts to receive a significant portion of the vehicle's value from the consumer and then artificially created a "breach" to repossess and resell the vehicle, such action may contain elements of fraud provided for under the Criminal Code. However, this is a factual and evidentiary issue that can only be established within the framework of an investigation or court proceedings — not automatically based on an individual complaint.

Reader's Question: Why Is the Risk Unilaterally Shifted to the Consumer?

One of the most logical questions raised regarding this practice is as follows: if the vehicle turns out to have a factory or hidden defect — for example, if the transmission turns out to be defective and breaks down during operation — does the leasing company assume liability and reimburse the consumer for repair costs?

Answer: In principle, it must reimburse — if the defect was hidden and existed at the time of delivery.

According to the Civil Code, if an item had a defect at the time of delivery that was not noticeable or known to the buyer/lessee, the seller/lessor is liable for this defect — the buyer may demand both termination of the contract and compensation for damages incurred (Article 491 et seq. of the Civil Code, in relation to general rules — Article 352). This is logical: the consumer could not have known or discovered a factory defect at the time of acquisition; therefore, the risk lies with the party that delivered the item.

This is precisely where the internal contradiction that you rightly highlight becomes evident:

If the leasing company disclaims liability for technical defects and claims that this is an "operational risk" shifted entirely to the consumer — then what logical ground is there for the same company to strictly define and restrict specifically who can drive the car (for example, prohibiting driving by a spouse)?

These two positions contradict each other both logically and legally:

  • In the first case (technical defect), the company says: “This is your risk, we bear no liability.”
  • In the second case (driver's identity), the company says: “This is within our sphere of control, we ourselves determine who sits behind the wheel.”

If the company indeed assumes no responsibility for the vehicle's technical condition and the risks associated with its use, then it also lacks grounds to simultaneously strictly control who sits behind the wheel — because if the risk rests entirely with the consumer, then the right to drive is also entirely for the consumer to decide (naturally, within general statutory requirements, such as holding a driving license). Otherwise, the company selects only those control levers that are convenient for it — which is precisely the "unfair imbalance" in rights and obligations prohibited by the Law on the Protection of Consumer Rights.

Such contractual asymmetry — where one party (the consumer) assumes all risks while the other (the company) retains all control rights without risk — is precisely the type of term that a court may declare void as an unfair standard term.

Advice for Consumers

  • Before signing the agreement, carefully read the terms, especially articles regarding unilateral termination, penalties, and driver restrictions.
  • Keep all receipts and bank documents to prove the payments made.
  • If your vehicle is repossessed, immediately request written justification and evidence.
  • In case of an unfair term or groundless repossession, apply to the court and/or the Consumer Protection Agency.
  • If you believe such practices are systemic, individual complaints should be combined into collective complaints — this increases the chance that the case receives an appropriate response.