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What Risks To Consumers Are Hidden In Standard Contracts

  • 4 min read

So, how many times a day, week, or month do you sign some agreement, whether it’s maybe your cell phone agreement or something online to order an app, and you just sign it? How often do you look at the terms and conditions? Well, it may be important to take a look at some of the details because there may be things that are creating risk or liability for you that you’re not aware of.

Understanding Prohibited Use in Rental Car Agreements
We’re going to look at one example today. It’s not necessarily the only thing to be aware of, but it’s something that’s an example of the type of liability that you may be taking on every day without knowing it. Remember, we’re not attorneys; we’re not giving you legal advice. These are just consumer suggestions to be aware of.

The Typical Provisions in a Car Rental Agreement
What you see on the screen comes from a vehicle rental car agreement. Car rental, right? It doesn’t matter what the rental company is; most of them have similar terms and conditions. In this agreement, you’ll see it says “prohibited use and termination of the right to use.”

Examining Prohibited Uses and Their Consequences
It says the renter agrees to the following limits of use. It shall not be driven by any other person than the renter or authorized driver. Fair enough. But what about driving on an unpaved road? This seemingly innocent provision could have significant consequences.

Driving on Unpaved Roads: A Hidden Liability
Number nine in the agreement states that the vehicle shall not be driven on an unpaved road or off-road. While off-road makes sense, the prohibition of unpaved roads might catch many by surprise. The consequences of violating this term can be severe and impact insurance coverage.

Uncovering Unpaved Road Restrictions
In fact, driving on an unpaved road invalidates certain protections, even if you’ve purchased the collision damage waiver. Your insurance coverage may also be at risk, as technically, you don’t have the right to use the vehicle if you violate this provision.

The Domino Effect of Violating Terms
Even if the prohibited use occurred in the past and was unrelated to a subsequent accident, the rental company may use it against you, terminating your rights and potentially leaving you with significant liability.

Additional Consequences: Diminished Value and Electronic Data Recording
Apart from repair costs, there are additional expenses like diminished value, which is 10 percent over and above the repair costs. The agreement also mentions an electronic data recorder, which can be used to track the vehicle’s use, potentially impacting insurance claims.

Power of Attorney and Payment Authorization
Renting a car involves granting a power of attorney, allowing the rental company to sign your name for insurance claims and endorsements. The agreement also authorizes the company to charge your card for any billing you refuse to pay, initiating charges without further authorization.

Reading Between the Lines of Rental Agreements
This analysis is not an indictment of any particular Rent-a-Car company but aims to shed light on what signing terms and conditions entail. Contracts are designed to favor the vendor, and understanding your obligations and potential liabilities is crucial.

Hidden Costs and Liabilities Beyond the Daily Rate
When you sign a contract for something seemingly straightforward, like renting a car, it’s not just about the daily rate. The real focus is on the value of the vehicle and its potential liabilities. Insurance may not cover everything, and there could be unforeseen expenses.

Being Informed: A Consumer’s Responsibility
Be aware that rental contracts heavily favor the vendor. It’s not about losing sleep over it, but about being informed. Read contracts in advance, seek clarification, and understand your obligations before getting involved in complex consumer purchases or services.

Knowledge is Key in Consumer Transactions
Knowing what you’re signing up for, especially in rental agreements, can save you from potential financial and legal troubles. Take the time to understand the terms and conditions, and don’t hesitate to seek professional advice when needed.

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