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Car Rental Agreement

Car Rental Agreement

A car rental agreement chiefly is a legal contract, which is of course, enforceable by law. That is, where the agreement or rather the contract is not seen through or performed, either party can sue the other party.
Scholasticus K
Any rental agreement is potentially a contract of lease between two parties. In such a case, there is a lessor and a lessee. As per common contract law, which is almost universal in nature:
  • A lessor is chiefly a person who owns an asset and rents it out against money to the lessee. A lessor is often known as a landlord, in real estate renting transactions.
  • A lessee, on the other hand, is a person who rents the asset for use, by paying the lessor or the owner (or the landlord) an agreed sum of money.
Potentially any material or an asset can be leased or rented out. Out of all the assets, car, automobiles such as trucks or earth moving machines, land or other similar real estate are rented or leased out. While leasing out assets a very important document is framed and signed by both the parties. Such a document is known as the 'rental agreement' or the 'lease agreement'.

Legal Premise

In case of a car rental contract, if he lessee does not pay the rent on time or if the lessor does not give the car for usage, the contract has been breached, or has not been performed or has been dishonored or has not been seen through. Here the other party can sue the non performing (the other) party.

This agreement is usually put forth on paper, or is written and signed, as it provides the parties, the legal systems and courts substantial evidence, that such a contract had indeed come into being. The following are some of the common and essential elements of such an agreement.
  • The first clause of the agreement refers to the parties of the contract. Here the lessee and the lessor are defined and identified. Such a clause usually carries the address or any other prominent identifying facts with respect to the contract.
  • The second clause carries the details of the car/automobile. The common details such as the vehicle identification number and details of the car are mentioned in this clause. Such a clause is commonly referred to as an objective clause, here the total time period of the rental is also mentioned.
  • The third important clause is known as the consideration clause. In this clause, some important aspects regarding the rent payment, and deposit is mentioned.
  • The last clause is known as the remedy clause, here some mutually accepted remedies for loss incurring incidences are mentioned and accepted by both the parties. For example what would happen if the vehicle got into an accident. The remedy of such problems is discussed in such clauses.
  • The last clause is known as the signatory clause where the seal and signature of either parties, witnesses and also the notary public are put forth.

Note that in some cases, applicable laws, completed compliance such as state mandated insurance are also mentioned.

Example of a Car Rental Agreement

The following is a simple example that will further illustrate the point.

Car Rental Agreement

The following agreement is a vehicle rental agreement between parties:
  1. John Smith of 3/3 Block, Brown Street, Jamestown, the owner of the vehicle which has the details that follows, who for the purpose of this document would be referred to as the lessor, and
  2. Dan Ricardo of 55th Avenues Smith Street, Jamestown, who would be leasing the vehicle, the details of which have been included, and for the purpose of this document would be known as the lessee.
The object of the contract is the automobile, owned by the lessor, having the following details:
  • Registration Number:...
  • Vehicle Identification Number (VIN):...
  • Model:...
  • Year of Manufacture:...
The condition of the vehicle is fit and proper for a regular road use and is free from defect and flaws and would not cause the lessee or any person or property any kind of harm as long as the lessee takes appropriate precautions and follows a rightful prescribed decorum, and also follows an appropriate legal premise while operating the vehicle.

The period of the rental agreement of the automobile shall extend from 1st of June 2011 till 1st of June 2012. Every monthly rental payment of approximately $700 and $10 for operational charges shall be made. A safety deposit of approximately, $1,400 would be held by the lessor in order to recover all or any cost for repairing the vehicle, for damages caused as a result of the carelessness of the lessee. The cost of state mandated insurance is to borne equally by the lessor and the lessee.

In any case of any breach and dispute, the law of the land and the courts and magistrates of the Federation and state shall dispense the worthy verdict.


Well, an agreement is usually governed by some state and some Federal law. Hence, to ensure that you have complied with these laws, I would recommend that you talk with your lawyer about it. Alternatively, you can research on your own and find out the legal premise and compliance of the agreement.