The costs incurred by a lessor directly associated with negotiating and executing a specific leasing transaction (i.e., commissions, legal, documentation). (KPMG LLP)

Risk means a chance of loss.

Speculative Risk – exists when there is a chance of loss and also a chance for profit i.e. gambling at a casino – these risks cannot be insured against.

Pure Risk – exists when there is a chance of loss but no chance of profit i.e..: driving an asset- these risks can be insured against.

Broadly, there are three choices:

(1) Eliminate the risk: implement preventive measures to reduce risk i.e..: fire alarms, sprinklers, seat belts.

(2) Assume the risk: bear the cost of losses as they occur or set aside an amount of money periodically in order to self insure against losses.

(3) Transfer the risk: transfer the risk to someone whose financial capability to handle a loss is greater than your own. This risk transfer comes at a price and is called insurance. (Hunter Keilty Muntz & Beatty)

Premium means the single or periodical payment under a contract of insurance and includes dues, assessments, administration fees paid for the administration or servicing of such contract, and other considerations. (Ontario Insurance Act)

Insurance means the undertaking by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of the insurance is exposed, or to pay a sum of money or other thing of value upon the happening of a certain event. (Ontario Insurance Act)

An agreement between the owner trustee and the indenture trustee: The owner trustee mortgages the equipment and assigns the lease and rental payments under the lease as security for amounts due to the lenders. Same as security agreement or mortgage. (U.S. Equipment Leasing Association)

These contractual provisions essentially require that the lessee perform its obligations under the lease without right of setoff, deduction, abatement, compensation or counter-claim for any reason whatsoever. For the lessor, the purpose is to ensure that it will invariably receive its monthly rental payment. (Gowling Lafleur Henderson LLP, Montréal)

Accounting practices which have been codified in the (Canadian Institute of Chartered Accountants) CICA Handbook, or which are in common usage. (Leasing in Canada [Third Edition], Ralph Selby, FCA, Butterworths, 1999)

A national value-added tax imposed on taxable supply of goods and services provided in Canada. Supply is defined to include sale, transfer, barter, exchange, licence, rental, lease, gift or disposition. (PricewaterhouseCoopers LLP)

A lease in which the total of the lease payments pays back to the lessor the entire cost of the leased property including financing, overhead and a reasonable rate of return, with little or no dependence on a residual value. (Blakes Cassels & Graydon LLP)

[see also Bargain Purchase Option, Bargain Renewal Option, Fair Market Purchase Option, and Purchase Option]

An option given to the lessee to purchase the leased property from the lessor on the option date for a guaranteed price, determined at the inception at the lease. (Blakes Cassels & Graydon LLP)