• There are several different types of lease agreements including master lease agreements, standard trip lease agreements, permanent leases, property interchange agreements and time specific leases.
• Each type of lease agreement has different durations, requirements, and provisions.
• It is important to choose the type of lease agreement with the requirements necessary to meet the needs of the business.

Master lease agreement

A master lease agreement may be used for on-going, intermittent trip leases with the same lessor/owner. The master lease consists of three documents: The master lease agreement, and the master lease supplement and equipment receipt. Used together, the leasing requirements in Part 376 are satisfied. The master lease is drawn up to detail the overall terms of the agreement and lists the equipment that may be used for a trip lease between the same lessee and lessor. This allows an individual trip lease to take place without drawing an entirely new agreement for each trip. When a trip takes place, a master lease supplement and equipment receipt must be executed which sets forth the actual time and date of the beginning and end of the trip.

In a master lease situation, the lease begins when the lessee takes possession of the vehicle to be leased and issues a receipt to the lessor. The lease terminates when the lessee returns possession of the vehicle to the lessor, and the lessor issues a return receipt to the lessee. When the lease is in effect, the lessee has exclusive possession and use of the leased equipment and assumes complete responsibility for the operation of the equipment.

Standard trip lease agreement

A standard trip lease agreement is used for a single trip or a lease of short duration. This agreement is a pre-printed form on which the required information is entered; it also has provisions for designating the exact time the lessee took possession of the equipment, and the exact time the lessee released the equipment standard terms and conditions are printed on the back of the form, and, with the information on the face of the trip lease contract, meet the leasing requirements in Part 376.

In a trip lease situation, the lease begins when the lessee takes possession of the vehicle to be leased and issues a receipt to the lessor. The lease terminates when the lessee returns possession of the vehicle to the lessor, and the lessor issues a return receipt to the lessee. When the lease is in effect, the lessee has exclusive possession and use of the leased equipment and assumes complete responsibility for the operation of the equipment.

Permanent lease

A permanent lease is used when a carrier is leasing equipment that will be exclusively used by the lessee for the term of the lease. The lessee/carrier is the authorized carrier and is responsible for the legal operation of the vehicle for the duration of the lease. A long-term, or permanent, lease agreement is generally a detailed contract that includes individual company requirements and policies while meeting the requirements for written lease agreements in Part 376. Neither the standard trip lease, nor the master lease agreement is suitable for a long-term lease agreement.

Property interchange agreement

Interchange agreements allow carriers to extend their service into locations they normally do not, or cannot, serve. There are also times when a motor carrier has freight to deliver to a destination from which there is little chance of a return load. To avoid returning empty and underutilizing their equipment, carriers may arrange to “interchange” the load with another for-hire carrier for part, or all, of the trip.

Under an interchange arrangement, the carrier parties must have an interchange contract, lease agreement, or other contractual arrangement in writing. The agreement for the interchange service must describe the specific equipment involved, the points or locations of interchange, and how the equipment will be used. The contract should state whether there will be charges or fees for use of the equipment or delivery of the load and what those agreed upon rates are. Any charges between the carriers for the use of the interchanged equipment must be kept separate from the revenues paid by the shipper for transporting the freight. Other matters to clarify include deciding who will be responsible for damage to the equipment during use in an interchange movement, and how cargo loss or damage claims will be resolved. While the originating carrier is liable to the shipper for the claim, the interchanging carrier bears responsibility for the goods while they are in its custody. The written interchange agreement should outline how the carriers will resolve loss and damage claim issues.

Loads transported in an interchange service must move on a through bill of lading issued by the originating carrier. Because the freight is tendered to the originating carrier, the bill of lading is a contract between the originating carrier and the shipper. The rates charged and revenues collected from the shipper must be based on the originating carriers published or agreed rates and charges. In other words, the rates charged to the shipper must be the same as if there had been no interchange. Likewise, any rules or accessorial charges assessed against the shipper must be those of the originating carrier, regardless of any rules or charges the interlining carrier maintains. The originating carrier will be responsible, under the bill of lading, for any freight loss or damage claims submitted by the shipper.

The carrier partners in the interchange movement must have the necessary authority and permits to perform the transportation between the interchange point and the destination. If the interchange transaction involves a power unit, the “authorized” carrier receiving the load and equipment must display their US DOT number as required by 390.21. Before giving up possession of the equipment, the preceding carrier must remove all identification showing it as the operating carrier. In regulatory terms this is referred to as “interchange of equipment.”

The Federal Motor Carrier Safety Administration (FMCSA) regulates interchange agreements for motor carriers of property in 376.31.

A copy of the interchange agreement or a statement certifying the authorized interlining carrier’s operation of the equipment must be carried in the vehicle during the interchange service. The statement must identify the equipment by company or state registration number, indicate the specific points of interchange, the date and time the carrier assumed responsibility for the equipment, how the equipment will be used, and be signed by the parties to the agreement.

If only trailers or semitrailers are involved in the interchange service, a copy of the agreement or statement is not required to be carried with the vehicle.

Time-specific lease

A time-specific lease is a contract of set longer duration, usually 12 months. This lease usually automatically renews, unless either party notifies the other prior to the specified termination date. The lessee/carrier is the authorized carrier and is responsible for legal operation of the vehicle for the duration of the lease. A time-specific (or long-term) lease agreement is generally a detailed contract, drawn according to individual company requirements and policies (while meeting the requirements for written lease agreements in Part 376). Neither the Standard Trip Lease nor the Master Lease Agreement is suitable for a lease agreement of this type.