Distinguish between the following: (iii) Finance and Operating lease

Answer 2A(iii) In case of 'finance lease', provision of non-cancellability should invariably be set forth in the lease agreement. In 'operating lease' the provision of cancellability is provided with responsibility of the lessor for repairs and maintenance, technology transfer and change of know-how and providing knowledge of running the equipment leased out to lessee. All these aspects, inter alia should be well provided in the document. In 'operating lease' it is the responsibility of the lessor to provide the lessee the benefits of innovations, change in technology of the equipment and the related know-how required for.