A Brief Introduction of Truck Lease Agreement
A truck lease agreement is an agreement wherein a truck is leased out by the owner of the truck to a lessee for a certain period of time. The lease agreement contains certain predetermined conditions that have been decided by the parties. This agreement is necessary to mention the terms under which the truck is being leased out to the lessee and the manner in which the truck is to be used by him. The agreement will also contains all the clauses regarding the obligations of both parties. Such a contract may also be known as a truck driver lease agreement.
There can be multiple versions of this agreement depending upon the situation and the requirement of the parties such as dump truck lease agreement and commercial truck lease agreement.
Who Takes the Truck Lease Agreement?
A truck lease contract is entered into between the person who owns the truck (known as the “owner ” or the “lessor”) and the person who wishes to rent it out from him and use it for a certain period of time (known as the “tenant”).
Purpose of the Truck Lease Agreement
The purpose of this truck lease agreement is to evidence the details that have been agreed to by both parties. It contains all the terms regarding the use and maintenance of the truck and any possible damage caused to the truck by the lessee. Having an agreement like this in place protects the parties from any misunderstandings that may arise in the future.
It is an important agreement as it contains all the particulars that are needed to serve as proof of the truck being leased to the lease. Hence, parties are always recommended to create this agreement, whether they are the lessor or the lessee. The purpose of any agreement is to capture the understanding of the parties and provide for a redressal mechanism in case of any default.
Contents of the Truck Lease Agreement
A standard truck lease agreement template contains the following clauses
- The contract must first identify the lessor and the lessee with their names and their contact information. It must mention the date on which the agreement is being created and the date from which the lease shall come into existence. The lease may be for a period of one year, or it may also be a month-to-month lease, as the parties may decide.
The agreement must lay down the amount of rent that will be payable by the lessee and the date by which such payment is to be made each month. The amount of security deposit payable should be clearly mentioned.
The description of the truck must be provided in detail. The obligations of the lessee, such as maintaining the truck in good condition, maintaining liability insurance, etc. must be listed out in the agreement. It should also provide for the actions to be taken if the lessee causes any damage to the truck or if the truck is stolen or lost.
Lastly, the situations in which the agreement may be terminated by either party must be laid down.
How to Draft the Truck Lease Agreement?
Consider a truck lease agreement sample when drafting your agreement. Some of the steps that are required to be followed drafting a truck lease contract are:
- The lessor and the lessee will have to conduct negotiations among themselves regarding the important aspects of the transaction, such as the amount of rent, the amount of security deposit, the term of the lease, etc.
- The Lessee accepts the agreement and pays attention to the vehicle maintenance, storage, and free or dirt.
- The lessee agrees to obey all the laws of the state and the city mentioned in the agreement.
- The agreement should be drafted in a clear, precise manner that brings forth the intention of the parties and prevents any confusion which includes points like keeping the vehicle in the right condition. Also, the Lessee should ensure that there isn’t any accident or damage caused to the vehicle during the lease.
- The agreement must then be reviewed and signed by both parties.
- Both parties must keep a copy of the agreement with themselves for the entire term of the agreement.
- The agreement should also include indemnification clauses assigning responsibility for any damages incurred during the course of agreement
- It should also contain an acknowledgement stating that the hired assets have been satisfactorily examined and the current condition is approved
In a lease agreement of this type, the negotiations will mostly revolve around the amount of rent, the manner in which the truck shall be used, remedies in the event of any default, etc. The agreement should be such that it is balanced between both parties and protects their interests.
Benefits of the Truck Lease Agreement
The following are the benefits and drawbacks of truck leasing agreements:
- The major benefit of having a written agreement in place is that it serves as proof of the conditions under which the truck has been rented out to the lessee. This can prove to be very helpful in case there is any dispute between the parties with regard to the terms of the agreement.
- In case the lessee causes any damage to the truck or violates any of his obligations under the agreement, the lessor will have certain remedies in place.
What Happens in Case of Violation?
The agreement will contain details about the remedies available to the lessor if there is any damage caused to the truck or in case the truck is lost or stolen.
If the truck is lost or stolen, the lessee shall be liable to pay the lessor the depreciated value of the vehicle. If there is any damage caused to the truck by the lessee, he will have to pay the necessary costs required to repair the damage to the lessor. The agreement should also talk about the actions to be taken if the damage caused to the vehicle is a result of any act of God such as floods, lightning, earthquake, or events such as riots, fire, etc.
If there is any breach of terms or obligations under this agreement by the lessee(1), the lessor can serve a notice asking the lessee to cure the breach within a specific period of time. If this is not done, the lessor can terminate the agreement and take back possession of the truck.
This agreement is very important and must be created whenever a truck is being leased out. In situations like this, parties sometimes choose to enter into an oral agreement, but that is not recommended. An oral agreement cannot serve as evidence of the details of the lease.
In a written agreement, the parties can set down the terms that have been agreed to in writing and thus protect their individual rights and interests. This contract is an extremely essential one and helps to protect the interests of the lessor in case there is any damage caused to the truck by the lessee.