Court Upholds Lease Termination by Mail
August 1, 1999
A U.S. Court of Appeals has ruled that owner-operator leases canceled by mail can relieve the carrier of liability, even if the owner-operator continues to display the carrier's placard.
Federal regulations make carriers liable for damage or injuries caused by leased equipment and, in most circumstances, require that equipment to carry placards identifying the lessee carrier. Years ago the rules made carriers responsible for removal of the placards, but those were changed in 1986 when the Interstate Commerce Commission, recognizing the logistics problems, allowed carriers to pass placard removal responsibility to the vehicle owner. Those amendments also allow carriers to withhold the final settlement check until placards are returned.
Bob Digges, an attorney with the American Trucking Assn's Litigation Center, says many of the concerns regarding so-called "logo liability" were addressed with those changes.
This latest case, however, is important because it addressed the issue of notification. The carrier's contract with the owner-operator stated that the lease would be considered terminated two days after mailing of written notice. Letters mailed to the address given by the owner-operator came back marked "undeliverable," thus the plaintiff's attorneys argued that mail shouldn't be considered an effective way to terminate lease contracts.
Both a lower court and the appeals court disagreed, noting that cancellation by mail was "the most practicable and sensible course" under the circumstances. They also rejected any claims that the carrier was liable simply because its logo was on the side of the truck.