Can we get charged for terminating our chassis lease early.

We are a trucking company that is leasing chassis. The build quality of the
chassis is terrible and we’ve had to have our in house mechanic do repairs on
them because the leasing company would not. Our lease does not mention an early
termination fee but the company said we still have 20 months left on our lease
and they would charge us the remainder of the lease plus interest if we cancel
early. Can they do that if its not in our contract?

Asked on May 19, 2016 under Business Law, Washington


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

If the lease is for a definite period--e.g. a three-year lease--then if you terminate early, you can be charged the full remaining time on the lease, though you can't be charged interest unless the lease itself states that you can be.
If the other side has "materially", or in an important way, violated the written provisions of the lease, then you may be able to treat the lease as terminated by their breach and end it early without penalty. In theory, you could treat unacceptable quality chassis as a breach, even if the lease doesn't specifically say this, on the grounds that you are not getting what you are paying for: commercially acceptable, usable chassis. But this can be risky: if you terminate the lease and they sue you for the remaining money due under the lease, and a court disagrees with you and feels that the problems were not severe enough to warrant termination (i.e. were not a material breach), then you would be liable for the full amount due under the lease.

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