Is this thing even legal!?
It’s not an entirely off-base question. And I hear it frequently when describing the new technology that allows leasing companies to wirelessly disable any leased equipment in the field in the event of a payment default – with the simple click of a mouse.
Of course it is.
Start with the Uniform Commercial Code – the law in every one of our states for lease and loan payment enforcement – specifically allows lessors to disable equipment in place. This law has been in place and applied in the decades-old technology that remotely disables cars and trucks that have been leased.
It’s tried and true and entirely supported by the courts and legal scholarship.
“But what if our client suffers damages and comes after us when we shut them down?”
I admit I chuckle a bit at this one, because put another way, they’re telling me their client is making money using their collateral while not paying them for the use – and they’re worried about the customer complaining about that in court?
Every day across the country hundreds of trucks, planes and pieces of heavy equipment are repossessed without notice, often in the middle of a haul when the trucker stops for a break, or at the beginning of a production run. Nobody has ever won judicial sympathy for a repossession when they don’t pay their bills – irrespective of the inconvenience or financial loss it causes to those who have defaulted on their loans.
In the case of this new payment enforcement technology, the leasing company is not even taking the collateral away, they’re just temporarily shutting it down – until the customer makes their payment. Once they do it’s turned back on immediately.
I want to represent the leasing company when the judge looks over her glasses at the plaintiff arguing for damages in that context. I can hear her now… “Well, why didn’t you just pay what you owed and get back in business?… Case dismissed”.
It’s your collateral, and you can shut it down whenever you want. It’s the law in every state.
Peter N. Tamposi, Esq.
