Third Party Liability in Leased Vehicle Wrecks

greenville_sc_upstate_dui_attorney_rental_vehicleUnder traditional tort theories like respondeat superior – employers are responsible for the negligent acts of their employees – and negligent entrustment – owners are responsible for the negligent acts of persons who borrow their property – it would seem that Budget, U-Haul, and other similar companies would be responsible for damages if their vehicles cause a crash. These incidents are quite common, since in many cases, there is an inexperienced driver behind the wheel of a large and fully-loaded moving truck that might normally require a commercial driver’s’ license to operate.

But liability in these cases is far from certain, largely because of an obscure add-on to an omnibus spending bill in 2005.


In 2002, a Rhode Island jury ordered Chase Manhattan Auto Finance to pay $28 million after a tortfeasor (negligent driver) in a rented vehicle caused a gruesome crash that resulted in a wrongful death, the company ceased operations in several states, citing the liability risk.

This development created a fear among some that other rental companies would follow suit, and franchisees would lose business as a result. The powerful vehicle lease lobby also began to influence legislators on Capitol Hill.

The Graves Amendment

The ultimate result of these moves was 49 U.S.C. 30106, popularly known by the name of the Democrat Congressman (Sam Graves of Missouri) who introduced it. As is typical for these add-ons, there is practically no legislative history behind the Graves Amendment.

There were no committee hearings or other pre-legislative activities. In fact, there are only three pages of floor debate in the Congressional Record. The lawmakers who spoke on behalf of the amendment all shared the sentiment that, in the case of a car wreck, the owner was not “negligent” in the ordinary sense of the word. That conclusion is simply contrary to the law, as mentioned earlier.

The Graves Amendment states that a motor vehicle owner is not liable for damages if said owner “is engaged in the trade or business of renting or leasing motor vehicles” and there was no wrongdoing on the part of the owner or affiliate.

Bypassing the Graves Amendment

It is important to establish third party liability in these cases, because the tortfeasor is nearly always either uninsured or underinsured. And despite its language and intent, the Graves Amendment allows third party liability to be established.

  • Trade or Business: This phrase is not defined in the law, but generally means that the entity derives most or all of its income from that endeavor. Many vehicle leasing franchises may not meet this definition, because in addition to leasing cars, they also sell moving supplies, arrange for movers, and lease storage space, among other activities.
  • Otherwise Negligent: Some companies require more than a visual inspection of a driver’s’ license. If that is the case, and the driver causes a crash, owner or agent is arguably negligent for failure to follow proper procedures.

Damages in a car crash case generally include compensation for both economic and noneconomic losses.

Get Started on Your Claim Today

A collision that involves a rented vehicle is a complicated matter. For a confidential consultation with an attorneys who fights for victims’ rights, contact the Bateman Law Firm in Greenville.

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