Subletting a vehicle during a car lease agreement
Entrepreneurs, running car rental companies, who decide to sublease cars, first of all must ensure that the lease agreement with a leasing company allows further rental of the vehicle to the customer.
Article 709(12) of the Civil Code establishes the principle that without the consent of the financier (i.e., the lessor), the lessee (i.e., the lessee operating the rental company) may not give the thing for use to a third party (i.e., the target customer). Therefore, if an entrepreneur running a rental business wants to rent leased cars commercially, he needs the leasing company’s express consent to do so. It can be included in the contract or in the form of a separate document agreeing to rent the car for profit to a customer of the rental company.
Lack of the lessor’s consent to rent a leased car can have unpleasant consequences. The Civil Code provides in such a situation the possibility of termination of the lease agreement by the lessor. The consequence of termination is that the rental company must return the vehicle and must repay the entire lease agreement (i.e., pay off all future lease installments already when the agreement is terminated after termination).
The contract may also provide for other consequences of renting a car without the lessor’s consent – such as the obligation to pay a contractual penalty.
Subletting a vehicle during a car rental agreement
According to Article 666 § 1 of the Civil Code, the lessee should, for the duration of the lease, use the leased thing in the manner specified in the contract, and when the contract does not specify the manner of use – in a way that corresponds to the properties and purpose of the thing.
At the same time, according to Article 668 § 1 of the Civil Code, the lessee may give the leased thing in whole or in part to a third party for free use or for subletting, if the contract does not prohibit him from doing so.
However, the lessee is liable to the lessor for the sublessee’s use of the vehicle. If a thing is given to a third party, both the lessee and the third party are responsible to the lessor for ensuring that the leased thing is used in accordance with the obligations under the lease.
If the rental agreement does not prohibit the subletting of the car, typically, use of the vehicle in violation of the agreement by the sublessee will be subject to immediate termination of the agreement and the obligation to return the leased vehicle. It may also entail contractual penalties in favor of the lessor, if they are stipulated in the contract.
The intention to obtain a car for its further subletting within a professional car rental company is not insignificant from the perspective of the chosen form of financing. Therefore, the possibility of using the vehicle for business purposes should be clearly stated in the contract.
|Is it possible to sublease a car? What is the rule?||Can the rule be changed in the contract?|
|Lease agreement||No. Without the lessor’s consent, the car cannot be subleased for a fee.||Yes. With the consent of the lessor, the car may be subleased for a fee.|
|Rental agreement||Yes. It is possible to sublet the car for a fee.||Yes. The contract may prohibit subletting for a fee.|