Legal Aspects of Equipment Leasing in Latin America

Leasing is the financial tool of the future for Latin America. A study of the causes, the evolution and the dimension of the external debt problem in Latin America lead the author to conclude that the flow of petrodollars in the 1970's to the oil producing countries in South America did not result in a real investment or economic growth. Growth did not occur because the fragile cash structure that exists in South America can allow for a deviation of cash flow to uses different from those originally intended. This sort of deviation can not occur with leasing because leasing does not provide for delivery of cash but rather of tangible and productive assets, which can not be diverted from their intended purpose. An overview of the leasing business in Latin America, including a description of its role in modern life, its potential use as a tool to satisfy market demand, and its legal nature and the regulations that govern it are analyzed herein. Equipment leasing has become the dominant and most feasible tool for effectivizing sales of capital goods, equipment, machinery and technological devices to Latin America.