[Avodah] Auto Lease

[Henry Topas]

Dear RAM,

 

Your first line is exactly correct: the "buy back" provisions of the
auto lease do indeed require that the lessee makes sure that the value
is there at the end of the lease.

 

 

Essentially, the lessee will make smaller payments during the term of
the lease in favour of a higher buy back at the end or has the option of
making larger payments for a lesser risk of the marketplace at the end
of the term when, using your example, a Toyota situation could have
intervened.

 

So my question remains: In the absence of a standard of valuation, what
is the chiyuv of the lessee in terms of proving a value? Or, should the
lessor have provided a specific standard in the lease document and in
its absence, can he extract a presumed difference from the lessee?

 

HT

 

 

 

 

Cantor Henry Topas brought a case:

 

> Reuven leases a car from Shimon's leasing company.

> The lease stipulates that upon the end of the lease

> term, the vehicle must have a value of $30,000.

 

 

 

You seem to be interpreting this to mean that when the lease ends, and
Reuven returns that car to Shimon, he will be required to make sure that
it is worth $30,000 at that time.

 

That's not how I understand auto leases to work. Rather, at the time of
lease origination, a value is stipulated in advance, and when the lease
ends, Reuven has the exclusive option of returning the car or paying the
$30,000, regardless of what anyone thinks the car is actually worth.

 

Moreover, I don't know if a lease CAN work the way the OP suggests.
Reuven has no control over market forces. There's no way he can promise,
years in advance, how the market will value his car a few years down the
line. He can promise that the car will not have more than a normal
amount of wear-and-tear. But he cannot control whether this car will
turn out to have some sort of defect which causes the value to tumble,
such as in many of today's Toyota. Nor can he control gasoline prices,
which caused gas-guzzlers to tumble a few years back.

 

So here's the question as I see it: Shimon can agree that when the lease
is up, Reuven will have the option of returning the car or paying
$30,000 in lieu of that car. But does halacha (or civil law) allow
Reuven to obligate himself to $30,000, payable either in full or by
returning the car plus an amount of money to be determined at that date?
--- Well, now that I've phrased it in those terms, I suppose it can
indeed work like that. But I don't think it is actually done in that
way, because the leasing company is much more able to take the gamble
than the consumer is.

 

Akiva Miller

                

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