Contract conditions

By Murray Pollok18 March 2008

One of the complications of renting across borders in Europe is the fact that each country uses different contract conditions. As anyone who has rented equipment around Europe will know, contracts vary widely from country to country, depending on local practices, laws and preferences.

One of the principal aims of the ERA is to help create a genuinely pan-European rental market. One way of promoting this is to come up with recommendations that can be used throughout Europe on a voluntary basis. It is a complicated task, but one that the ERA's General Rental Conditions Technical Committee is attempting.

One of the first things the committee did was to establish a checklist that can be used by a European company active in the rental of equipment to see if the rental agreement and/or connected general terms & conditions cover the main potential problem areas of rental activities. The committee reviewed 12 different issues in total - things like rental period and rate, collection and delivery, damage and other losses, handover of equipment.

The committee then decided to focus its efforts on standard contract conditions and look at how they are covered by existing contract conditions in eight different European countries. So far, nine key issues (see box, bottom left) have been reviewed, with more to come.

The committee is currently carrying out a comparative analysis of how each of these topics is covered by existing conditions and has already concluded that there are “clear similarities” among different countries for the majority of issues.

Even so, there are still some very big differences. Supplier liability is one topic where you will find different levels of protection, with, for example, countries treating quite differently the case of a machine breaking down on a customer's site.

This comparative analysis will continue in the coming 12 months, with the goal of creating conditions of contract where a common wording can be adopted for as many topics as possible, across Europe.

Standards as goal

Ultimately, ERA hopes to establish standard general rental conditions that will cover as many issues as possible and also include many markets and product groups.

There are wider legal issues surrounding the subject as well. Many to do with competition law. So, any newly created General Rental Conditions should not restrict competition between rental companies and in particular should not lead to price fixing or ‘market partitioning’ between competitors.

Equally, the conditions should not include details or information about cost factors and calculations of fees, and rental companies should be free to adopt alternative conditions. The conditions should be used on a voluntary basis, have the status of guidelines only, and be freely available for any rental company in the European Union, and not just ERA members.

As already stated, it is a difficult task, but one that has at its heart the key goals of ERA: to facilitate cross-border rentals and the creation of a pan-European market.

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