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Truck Topics

Before You Sign...That Lease!

By Lee Kurtzmann
Posted Oct 7th 2002 2:21PM

If you're like most people, you're probably intimidated by any legal document with all the "whereas" and "wherefores" and "the party of the first part hereafter known as....." 

It can be a confusing and worrisome proposition when signing that lease agreement with an expediting company, wondering just what you might have gotten into and what it all means. Examining the lease agreement carefully before signing can help reduce those nasty surprises that pop up on the first settlement check.

Many Owner/Operators have discovered to their dismay what they consider to be "hidden charges" or company policies hidden in the legal language of a lease agreement that, with a little bit of research, they would have been aware of, and would have helped greatly in their decision to sign on with that company.

Most professional drivers have a working knowledge of a variety of topics, but there are probably very few that have more than a passing acquaintance with legal terminology or contract law as it relates to the lease agreement.

The Owner/Operator considering leasing on with a company would be well served in obtaining a copy of the lease agreement and spending a few dollars for the services of an attorney specializing in contract law(and hopefully the trucking industry) to analyze the document. This first step could save you some grief later on.

Fortunately, the Owner/Operator does enjoy protection under law covered in the Code of Federal Regulations. Presented in layman's terms, the Written Lease Requirements touch on areas of which many O/O's may be unaware, such as:

Ӣ A carrier is prohibited from requiring an owner-operator to purchase anything from the carrier

Ӣ A carrier must pay for loads within 15 days after the receipt of load documents

Ӣ A carrier must state in the lease what it will deduct from the owner-operator's pay

Ӣ A carrier must return any escrow money to the owner-operator within 45 days of a lease termination

Ӣ The lease must clearly state how pay is calculated

Ӣ A carrier must give the owner-operator a copy of the freight bill at the time of settlement if the driver is paid on a percentage basis.

"Any type of legal contract, including a lease agreement, must be examined in great detail," says Lawrence Feinberg, an attorney from the Cincinnati, OH area. "I've represented many people who didn't even really look over what they were signing; in some cases they did ask about certain sections of the document but were told the usual 'it's just a standard contract' and didn't question it further.

Unfortunately, a few of those people became trapped within the terms of those agreements, and it cost them substantially more to renegotiate than if they had consulted with an attorney first."

Some important topics to check in a lease would be: Overall Scope and Coverage of the Lease   Termination Policies Settlements and Compensation  Non-Compete Clauses Fuel Tax Responsibility Insurance  Deductions Escrow Policies

Feinberg adds, "It's important to remember that the document you're signing is written for the company's benefit and protection. Once again, it's up to the individual to know what he's signing because in the event of a dispute, a court will usually back the terms of the lease, unless some of the terms are in violation of the law."

A little bit of time spent on the lease now, can save a whole load of problems later.

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