What a Contract Hire Agreement Is

A usufructuary – this is what a person is called when he enters into a contract hire agreement.

A contract hire agreement is an agreement involving cars. It is another term for car leasing. In this contract, one party is the owner of the car, and the other is the usufructuary. A usufructuary is a person given the right by the lawful owner to use the property owned by the latter under the condition that he will not alter the substance of the property. Together with this right is his right to the fruits yielded from his use of the property. In the contract for a car lease, the person leasing the car will take control of it or will be the lawful possession of the same for a period of time. It is his drive, but not to own.

The agreement between the parties – the owner and the one leasing the car, will include how long the contract would last, how much will the use of the car would cause, what are the terms of payment (that is, every day day or week or month will the person leasing the car would pay), the rights of the user, liabilities of the same in case of negligence, misconduct or any reason causing damage to the property, etc.

There are a number of advantages in entering this kind of agreement. On the part of the owner, the advantage of this contract agreement is that while not losing the title of an owner, he is earning from the money paid for the lease. The advantage of this agreement to the other party, on the other hand, is that he does not have to carry the responsibilities of the owner in owning the property, but he gets to use it and benefit from the same.

But despite several advantages, allowing someone to use one's property always carries with it the risk that the same would be damaged. Of course there is always indemnity in cases like this. Regardless of the motive or negligence of the other person, the owner will never be left not indemnified if the property was damaged in any degree or level. But to less such risk, the owner must always exercise due diligence in choosing the person who he will enter a contract hire agreement with. One has to make sure his property will be taken care of. It may be helpful to interview the person leasing one's property before entering into a contract with him.

Source by Gerry Walter