What Exactly is a Trailer Rental Agreement?
A trailer rental agreement is a written document outlining the terms and conditions of the rental of a trailer and any other related services. The contract will typically be signed by both the trailer rental company or business and the renting party, who must intend to be bound by the terms of that agreement if he or she is over the age of 18. The registered agent of the company may sometimes sign some of these contracts on behalf of the rental company.
When a rental contract is signed for a trailer, it usually contains explicit information about the responsibility for certain fees, repairs, costs and other terms such as insurance for the trailer for an agreed upon period of time. Payments are often made in advance for a daily, weekly or monthly rental term .
While not all contracts for the rental of trailers are labeled as "rental contracts," the term can include other types of written contracts for the rental of trailers from rental companies or stores, such as a trailer lease or rental agreement.
Some trailer rental contracts are called "rental orders" and are essentially a company contract and an order for one or more new trailers. These are sometimes offered by certain national auto retailers.
Contract agreements, if not already presented to a customer at the time a trailer rental occurs, may be mailed or emailed to customers.
Certain provisions are often used in trailer rental contracts, including liability requirements for passengers and cargo, mandatory collision insurance, limits on the rental use of the trailer to certain states, and limits on mileage. Tracking devices have little legal recourse due to their theft protection, so a contract may disclaim liability for the theft of vehicles and other equipment.
Key Clauses in Trailer Rental Agreements
Inclusion of certain clauses within a trailer rental agreement can assist the landlord and tenant from a dispute perspective if something goes awry. At a minimum we recommend inclusion of the following ("Essential Clauses"):
(a) Rental Period: It is useful to be clear about the start and end dates of the Rental Period. Future options or renewal periods should also be clearly stated.
(b) Rental Fees: The fee for the rental period should be clear in the trailer rental agreement including individualized charges for any extras. These can include additional costs such as damage deposits, fees for the use of services or amenities, garbage collection, snow removal, street sweeping, maintenance fees, water usage, sewer rates, taxes, etc.
(c) Insurance Requirements: By including an insurance clause, the landlord may require the tenant to carry insurance. A landlord may want to be named on the tenant’s policy so that they can be notified of any changes or cancellations to the policy.
(d) Liability Provisions: While liability and indemnification are implied through common law, our recommendation is that a trailer rental agreement include the requirement of proof of insurance with regard to liability and indemnification.
Rights and Obligations to Consider
"The terms and requirements of a trailer rental contract govern the underlying obligations of both parties to the contract for the period under which the trailer is rented."
As with any leased equipment, a party that leases such equipment, in this case, a trailer, is responsible for any damage caused to the rental trailer during the period under which the trailer is being rented. Any trailer rental contract will likely impose liability for physical damage to the trailer on the lessee or renter. Therefore, unless the renter protected itself through its property insurance or through the purchase of a separate policy, the renter will be responsible for any damages to the rental trailer, up to the total value of the trailer.
The rental company, however, is responsible for the maintenance and upkeep of the rental trailer itself, in that they have an express and implied duty to provide a safe and non-defective trailer to the end-user. This is because the rental company knows that the trailer is going to be used in a business, and not just by individuals who may not necessarily be conscientious in inspecting and operating the trailer. Accordingly, the rental company’s knowledge of the intended use of the trailer by the lessee gives rise to a heightened duty on the part of the rental company or the entity leasing the trailer, to ensure that the trailer is safe and free from defects.
Unfortunately, because most parties fail to properly vet and inspect the safety of a rental trailer before delivery or at the time of delivery, it is difficult to prove an allegation or claim that a defect in the trailer caused an accident. Many a defense attorney will argue that the trailer was altered by the end-user of the trailer when it installed a load, making it inherently unstable, and therefore the end user of the trailer cannot prove that any alleged defect in the trailer caused the accident. Without an expert to determine the exact cause of the accident, which is difficult to locate and expensive to secure, the burden is on the party who was not negligent to prove what caused the accident, which is both time consuming and costly.
For this reason, parties entering into a trailer rental contract should be aware of their respective rights and liabilities outlined under the contract, and should take it upon themselves to inspect the trailer before it is delivered to the end user. Additionally, the risk of an accident and the extent of possible liability will be different if the trailer is being used in interstate commerce, as most trucking companies have a higher level of insurance coverage, and may provide more of an opportunity for the end user to recover for the harms and losses that were suffered in an accident. It is always best to have an attorney review the contract before signing.
Common Mistakes to Avoid
It is essential for renters to read the terms of a trailer rental contract before signing to avoid common mistakes such as:
-the express language that the trailers are rented exclusively for personal use, and only to rent trailers for non-business purposes
-the express language that the trailers are not insured, and that they are taking the trailers "as-is"
-the limited liability presented to the car rental company in the event of damage or theft
-that the business has a right to subrogate against the renter in the event of damage or theft
-that the pictures of the trailer provide the business with a right to determine the condition of the trailer at the end of the rental period .
Negotiating for Better Terms
The most significant way a trailer rental contract can be negotiated is through the limitation of liability clause. Having an indemnity clause that requires the renter to indemnify the trailer rental company for the trailer’s loss or damage will likely cause the trailer rental company to alter its otherwise unilateral limitation of liability provision. Not having an indemnity clause obviously doesn’t insure the lessor will accept the renter’s proposed limitation of liability clause, but it does make it more likely.
Renter’s insurance is the most powerful tool the renter has to convince the trailer rental company to accept damage limitations. This, along with not having an indemnity clause, can result in the trailer rental company’s agreement to limit its damage claims to the amount of insurance coverage. Another reason trailer rental companies might accept the insurance concept is because insurance companies carefully craft their policies to eliminate ambiguity, and therefore are less likely to waste time litigating over the meaning, effect or status of the policy.
Another strategy for negotiating a limitation of liability clause is having a competing trailer rental company’s standard rental contract immediately available for the proposed transaction. This is often successful in persuading the trailer rental company to agree to the proposed limitation of liability clause, especially if the competitor’s limitation is more beneficial to the trailer rental company than the original provision in its standard rental contract.
Requiring the trailer rental company to mark the trailer "full value subject to agreement" may also be an effective tool in eliminating or at least reducing the amount of money the renter can be forced to pay if the trailer is reported lost or damaged.
It may also be effective to resist providing a credit card as collateral for [the limited or no liability] provision, in exchange for giving up other rights, because the trailer rental company will usually initially demand a credit card as collateral, and only settle if asked to do so.
Submitting a generic CDW or LDW form to the trailer rental company, without mention of the insurance and indemnity concepts, and omitting the name of the proposed renter in the __________ blank, may also produce results. Of course, once the fourteen days has expired, the result, if any, may be a lawsuit. However, it may achieve some success to the extent that a generic form showing the renter’s awareness that the trailer rental company is seeking to eliminate its liability for lost or damaged trailers is useful evidence should litigation follow the failed attempt to obtain a rental car.
Our proposal is not, however, that you endorse our approach, just that it is a possible option. We recommend that you carefully consider what the risks are in your transaction, be aware of deadlines and statutory requirements, and consult experienced counsel knowledgeable of the subject area to assist in deciding whether this or another approach should be further explored to best protect you in a transaction with the lessor.
Legal Protections for Tenants
The law in this area has changed in the last few years so that there may be express rights for small business operators under the new consumer legislation. For example, the BC Consumer Protection Act now provides that a rental business cannot make a "contract term that customer gives up or waives any rights, benefits or remedies conferred by any law".
As such, even where trailer rental contracts may contain some form of limitation of liability clauses, or waivers of customers’ rights, the new consumer protection rights may render such contractual provisions unenforceable.
There are also some clauses in the rental business’ form contract that may be otherwise unenforceable as a matter of law (regardless of the rights given to consumers). For example, there can be a section of a rental business’ standard form contract which states that the rental business is not responsible for any damage caused by the renter during the rental period . This may be unenforceable on the ground that the rental business could be enhancing its own position at the expense of the rental trailer’s owner/operator, and the rental business should not altogether escape liability, maybe because if the trailer was defective, for example, the renter should not be held liable. In the commercial context, such a clause may also be unenforceable if it contravenes the common law rule against penalties, or the new B.C. statute against penalties, but in the consumer context, these types of liability disclaimers should be unenforceable if they offload onto the consumer all the liability, risks and assumption of damage.
While there are lots of rights and remedies to be considered from the renter’s point of view and there may be lots of statutes to look at, at the end of the day, these new consumer protection statutes provide for some express consumer rights and require consumer contracts to be fair within the entire contract, to the extent that a court interprets an unfair contract term to be one that causes a significant imbalance of the rights and obligations under the contract.
