The owner of the car can transfer it for temporary use to third parties. Previously, this required a power of attorney. Now its presence is not necessary, documents are enough. However, in some cases, a power of attorney and even an agreement for the free use of a car may be required.
Situations involving the conclusion of an agreement on the transfer of a vehicle for temporary use are few. They are mainly related to the benefits that signing the agreement provides.
Maintenance costs are borne by the person using it under the contract. This may include the replacement of consumables (filters, oils), seasonal tires, washing and other costs associated with operating the vehicle.
The fines that come to the owner must be paid by the driver who actually owned the vehicle and violated the traffic rules.
The agreement may provide compensation for wear and tear resulting from heavy use, such as in a taxi.
If the owner of a car uses it for business purposes, the company can compensate him for the costs of fuel and lubricants and take them into account in its expenses.
- when transferred to work in a taxi;
- when used for official purposes;
- when transferred to third parties who will use the car for a long time.
Free use differs from car rental in that in the first case there is no charge for use. In other words, the vehicle is transferred free of charge.
Typically, these types of agreements are not extensive. They contain no more than 10 articles reflecting the most important conditions.
Item
Without identification of the transferred object, the agreement is considered not concluded. Information about transport should be as detailed as possible; their purpose is to identify the vehicle. If the information is vague or incomplete, then instead of giving away a new Mercedes, you can get an old and battered one back. Therefore, in the relevant article it is necessary to indicate:
- brand;
- registration ;
- year of manufacture;
- body number;
- VIN number;
- PTS details.
The contract must indicate the authority of the owner and a document confirming it. In other words, include an article containing information about its details.
To protect yourself from the demands of bailiffs or other persons, officials or civilians, you need to include a condition that the car is not pledged, under arrest or is not the subject of a dispute. If someone makes demands, the contract may be terminated.
It is recommended that the contract for the gratuitous use of a vehicle indicate the purposes for which it will be used.
Special attention should be paid to the cost of the subject of the agreement. The fact is that during operation the car can be destroyed or significantly lose in value. To save yourself from unnecessary price determination, you need to immediately include in the contract a price that the parties agree on. This cost will be taken as a basis for possible calculations.
Rights and obligations of the parties
This section is important because it regulates important things regarding operation. So, for example, you can determine that the recipient of the transport must:
- repair;
- maintain working condition;
- carry out maintenance;
- return in working order.
In the same section it is possible to provide for the period during which the car must be transferred.
The provision for incurring operating costs can be included in this section or made as a separate one. Since this is one of the most important parts of the agreement, it is better if these provisions are structured separately.
Operating costs
The costs associated with the use of the vehicle are borne by its recipient, not the owner.
To avoid confusion and misinterpretation, you need to list the types of expenses that the recipient pays. They are usually divided into two categories: operational and maintenance.
Operating costs consist of:
- expenses for fuel and lubricants;
- washing;
- interior cleaning;
- air conditioner maintenance.
- To ensure normal operation of the car you need:
- maintenance;
- replacement of parts with a short service life;
- tire replacement, seasonal or as needed;
- elimination of breakdowns and malfunctions.
The MTPL, DSAGO or CASCO policy is paid for by the recipient. The type of insurance is agreed upon by the parties.
Responsibility
A contract for the free use of a car must include this section. It is recommended to provide for as many incidents as possible in order to avoid disagreements.
The provisions of this section may vary. For example, it can be established that if deficiencies are detected, the car must be replaced. The defects may have been unknown to the parties before the transfer of the transport, so the time of their discovery does not matter.
It is imperative to indicate that the recipient is responsible for the death or damage of the vehicle. If such a case occurs, he compensates the owner for expenses or the cost of the subject of the contract.
Validity of the agreement
This section specifies the period during which the vehicle will be used by the counterparty and the conditions for its extension. If you plan to use it for a long time, it is recommended to provide automatic renewal. It lies in the fact that if no one notifies of their desire to terminate the contract, then it is extended for the same period and on the same conditions.
If the parties do not specify a term, the agreement will be considered unlimited. It will be terminated upon prior notification of one of the parties to the contract for the free use of the car. You can also provide conditions for early termination.
Transfer certificate
The car is transferred according to the acceptance certificate. It indicates the equipment being transferred, for example, an alarm system, a fire extinguisher, a radio tape recorder, and others. For each of their objects, information about the name, brand, number and other information is provided.
The act indicates the condition of the vehicle, mileage, and shortcomings that are known to the parties to the agreement.
The agreement form can be downloaded here.
The contract in question is not the most complex. Most often, it is needed to compensate an employee for expenses for using personal transport for business purposes. Because of this, we can say that it is purely formal in nature. However, even in this case, detailing the conditions may not be superfluous.
in a person acting on the basis, hereinafter referred to as " Borrower", on the one hand, and gr. , passport: series, No., issued, residing at: , hereinafter referred to as “ Lender", on the other hand, hereinafter referred to as the "Parties", have entered into this agreement, hereinafter " Agreement”, about the following:1. SUBJECT OF THE AGREEMENT
1.1. The Lender transfers for free temporary use to the Borrower a car of make, year of manufacture, engine No., body No., colors, license plate number, vehicle passport No., issued in 2019 (hereinafter referred to as the “Car”), owned by the Lender.
1.2. The cost of the car is established on the basis of the appraisal report, which is an Appendix to this Agreement.
1.3. The lender confirms that the specified car has not been promised to anyone, has not been sold, is not the subject of pledge, is not in dispute and is not under arrest.
2. RIGHTS AND OBLIGATIONS OF THE PARTIES
2.1. The Lender undertakes:
2.1.1. Provide the car in good condition according to the acceptance certificate, which is an integral part of this Agreement.
2.1.2. Hand over to the Borrower, together with the Car, its accessories, tools and related documents (technical passport, etc.).
2.2. The borrower undertakes:
2.2.1. Upon expiration of the Agreement, return the car in the condition corresponding to that reflected in the acceptance certificate, taking into account normal wear and tear.
2.2.2. Maintain the vehicle in good condition, carry out routine repairs at your own expense, and also bear other operating costs. The fuels and lubricants necessary for the operation of the vehicle are purchased by the Borrower at his own expense.
3. DURATION OF THE AGREEMENT
3.1. The Agreement was concluded for a period from "" 2019 to "" 2019. After this period, the Agreement may be extended by the Parties by mutual agreement for an indefinite period.
4. RESPONSIBILITY OF THE PARTIES
4.1. The borrower is responsible for the safety of the car in working hours and in the event of loss or damage to the car at this time, he is obliged to compensate the Lender for the damage caused or to provide an equivalent car within days after its loss or damage. In case of delay in compensation for damage or provision of an equivalent car within the specified period, the Lender has the right to require the Borrower to pay a penalty in the amount of % of the cost of damage or the estimated value of the car (clause 1.2 of this Agreement) for each day of delay.
4.2. If the Lender does not transfer the car to the Borrower, the latter has the right to demand termination of this Agreement and compensation for actual damage incurred.
4.3. The Lender is responsible for any defects in the car that he intentionally or through gross negligence did not specify when concluding this Agreement. If such deficiencies are discovered, the Borrower has the right, at his own discretion, to demand from the Lender the elimination of the defects of the vehicle free of charge or reimbursement of his expenses for eliminating the defects, or early termination of the Agreement and compensation for actual damage incurred by him.
4.4. The Borrower bears the risk of accidental death or accidental damage to the car received for free use if the car was damaged due to the fact that the Borrower did not use it in accordance with this Agreement or the purpose of the car or transferred it to a third party without the consent of the Lender. The borrower also bears the risk of accidental death or accidental damage to the car if, taking into account the actual circumstances, he could have prevented its death or damage by sacrificing his thing, but chose to keep his thing.
5. EARLY TERMINATION OF THE AGREEMENT
5.1. The Agreement may be terminated by agreement of the Parties.
5.2. The Lender has the right to demand early termination of this Agreement in cases where the Borrower:
- uses the vehicle not in accordance with the Agreement or its purpose;
- fails to perform duties to maintain the vehicle in good condition or maintain it;
- significantly worsens the condition of the car;
- transferred the car to a third party without the consent of the lender.
5.3. The Borrower has the right to demand early termination of the Agreement:
- upon discovery of deficiencies that make normal use of the vehicle impossible or burdensome, the presence of which he did not know and could not know at the time of concluding the Agreement;
- if, due to circumstances for which he is not responsible, the car is in a condition unsuitable for use;
- if, when concluding the Agreement, the lender did not warn him about the rights of third parties to the car;
- if the Lender fails to fulfill the obligation to transfer the car or its accessories and documents related to it.
6. OTHER CONDITIONS
6.1. In all other respects that are not regulated by this Agreement, the Parties are guided by current legislation Russian Federation.
6.2. The agreement is drawn up in two copies having equal legal force.
7. LEGAL ADDRESSES AND DETAILS OF THE PARTIES
Borrower Legal address: Postal address: INN: KPP: Bank: Cash/account: Correspondent/account: BIC:
Lender Registration: Postal address: Passport series: Number: Issued by: By: Telephone:
8. SIGNATURES OF THE PARTIES
Borrower _________________
Lender _________________
In DOC format
In PDF format
Agreement for free use of a car in RTF format
AGREEMENT
free use of a car
City ______________ Date of conclusion of the contract: ___ _______ 20___
_____________ (full name), __.__.____ year of birth,
_______________ code issued
________, hereinafter referred to as the “Lender”, on the one hand, and
____________________ (full name), __.__.____ year of birth,
passport of a citizen of the Russian Federation __ __ ______ issued ______________ code
divisions ___-___, registered at: ______________
_________, hereinafter referred to as the “Borrower”, on the other hand
The parties have entered into this agreement as follows:
1. SUBJECT OF THE AGREEMENT
1.1. The Lender transfers for free temporary use to the Borrower
Make, model of vehicle
Name (vehicle type)
Year of vehicle manufacture
Model, engine no.
Chassis (frame) No.
Body No. (cabin, trailer)
Color
Engine type
Ecological class
Vehicle manufacturer (Country)
Series, PTS No.
Date of issue of PTS
(hereinafter referred to as the “Car”). The period of free use is indicated in clause 3.1., according to
after which the Borrower is obliged to return or purchase the car from
Lender under the purchase and sale agreement. During the validity period of this
agreement The lender does not operate the car.
1.2. By agreement of the parties, the estimated value of the car is set at
_____(_________) rubles. This
the estimated value is taken into account when compensating for damage.
1.3. The lender confirms that the specified car is not the subject of collateral
and cannot be alienated on other grounds to third parties, in a dispute and under
is not under arrest.
2. CONDITIONS OF THE AGREEMENT
2.1. The Lender provides the car to the Borrower for driving and
operation in good condition according to the acceptance certificate, which is
an integral part of this agreement.
2.2. The car is provided for free use with all its
accessories, tools and related documents
(technical passport, etc.).
2.3. The borrower undertakes to return the
the car is in a condition corresponding to that reflected in the acceptance certificate, with
taking into account normal wear and tear, or purchase a car from the Lender under
estimated value taking into account depreciation.
2.4. The borrower undertakes to maintain the vehicle in good condition,
carry out its current repairs at your own expense, as well as bear other operational
expenses. Fuels and lubricants necessary for vehicle operation,
purchased by the Borrower at his own expense.
2.5. The borrower is given the right to use the specified car for personal
purposes, to independently drive and dispose of the above-mentioned vehicle,
monitor its technical condition, be a representative in the traffic police,
repair and re-equipment of a car, making changes to registration
documents with their subsequent registration with the traffic police, obtaining duplicates
registration documents for the car, including vehicle passports
funds and Vehicle Registration Certificate, obtaining new
state registration plates, passing instrumental
control and technical inspection, legal representation in case of traffic
transport accident, obtaining compensation for damage caused by the accident,
insure for all types of risk on terms and conditions at your discretion,
make changes to the insurance contract, terminate the insurance contract,
receiving cash upon its termination, make changes to the insurance
policy and receive insurance compensation, sign and perform all actions,
related to the implementation of this agreement.
2.6. When accepting and handing over a vehicle, the parties check its technical condition,
indicate existing faults.
2.7. At the time of transfer of the car, the lender is obliged to formalize and transfer
The borrower has a power of attorney to drive a car.
3. DURATION OF THE AGREEMENT
3.1. The contract was concluded for the period from “___”__________ 20__ to “___” ___________ 20__.
3.2. After this period, the contract may be extended by the parties by mutual
consent for an indefinite period.
4. RESPONSIBILITY OF THE PARTIES
4.1. The borrower is responsible for the safety of the car during the term
validity of the contract and in case of loss or damage to the car during this time
is obliged to compensate the Lender for the damage caused.
4.2. If the vehicle is damaged or lost when used in accordance with
This agreement requires the Borrower to repair the damage at his own expense.
or compensate the Lender for the loss caused.
4.3. The borrower bears the risk of accidental death or accidental damage
received for free use of a car, if the car was
damaged due to the fact that the Borrower used it not in accordance with
agreement for gratuitous use or assignment of a vehicle, or transferred
to a third party without the consent of the Lender.
4.4. Liability for damage caused by the car to third parties during the period
the validity of this agreement is borne by the Borrower. The lender is not responsible for
damage caused by the car during the period of validity of this agreement.
5. TERMINATION OF THE AGREEMENT
5.1. The contract may be terminated by agreement of the parties.
5.2. The lender has the right to demand early termination of the agreement without compensation
use in cases where the Borrower uses the car for purposes other than
in accordance with the contract or the purpose of the thing, does not fulfill obligations under
maintaining a vehicle in good condition or maintaining it, without consent
the lender transferred the car to a third party.
5.3. The borrower has the right to demand early termination of the agreement
free use if defects are found that make it normal
use of the car is impossible or burdensome, the presence of which
he did not know and could not know at the time of concluding the contract, if due to circumstances,
for which he is not responsible, the car will be in a condition unsuitable for
use; if the Lender fails to fulfill the obligation to transfer the car
or its accessories and related documents.
6. OTHER CONDITIONS
6.1. In all other respects that are not regulated by this agreement, the parties
are guided by the current legislation of the Russian Federation.
6.2. The agreement is drawn up in two copies having equal legal force.
ADDRESSES AND DETAILS OF THE PARTIES
Lender
_____________________ (full name)
__.__.____ year of birth,
passport of a citizen of the Russian Federation __ __ ______
issued by _____________
department code ___-___
__________________________
Borrower
______________________ (full name)
__.__.____ year of birth,
passport of a citizen of the Russian Federation __ __ ______
issued by _______________
department code ___-___
registered at: _________________
_______________________
SIGNATURES OF THE PARTIES
Lender
Full name
Borrower
Full name
ACT OF TRANSFER ACCEPTANCE
to the agreement for the free use of a car
from "___" ______ 20__
City ______________
Date of drawing up the act: ___ _______ 20___
_____________________ (full name), __.__.____ year of birth,
passport of a citizen of the Russian Federation __ __ ______ issued _________________ code
divisions ___-___, registered at: _____________
_____________________, hereinafter referred to as the “Lender”, on the one hand, and
________________________ (full name), __.__.____ year of birth,
passport of a citizen of the Russian Federation __ __ ______ issued ________________ code
divisions ___-___, registered at: _________________
____________, hereinafter referred to as the “Borrower”, on the other hand
The parties have drawn up this act on the following:
In accordance with the agreement for the free use of a car dated “__” _______ 20__.
The Lender transferred for free temporary use to the Borrower
a car owned by the Lender as private property:
Make, model of vehicle
Identification number (VIN)
Name (vehicle type)
Vehicle category (A, B, C, D, trailer)
Year of vehicle manufacture
Model, engine no.
Chassis (frame) No.
Body No. (cabin, trailer)
Color
Engine power, hp (kW)
Engine displacement, cubic meters cm.
Engine type
Ecological class
Vehicle manufacturer (Country)
Name of the organization that issued the PTS
Series, PTS No.
Date of issue of PTS
Vehicle registration certificate
Date of issue of the vehicle registration certificate
State registration plate
The vehicle is provided with all its accessories, tools and
documents related to it (vehicle passport, certificate of
registration, service book, _________).
The Lender gave the Lender a power of attorney for the right to drive a car.
The Lender gave the Borrower ___ set of car keys.
The car was inspected by the parties, comments were made on the technical condition and appearance
No.
The place where the car is handed over is the parking lot (parking lot), located at:
_______________________
ADDRESSES AND DETAILS OF THE PARTIES
Lender
______________ (full name)
__.__.____ year of birth,
passport of a citizen of the Russian Federation __ __ ______
issued by ___________________
department code ___-___
registered at: _________________
________________________
Borrower
__________________ (full name)
__.__.____ year of birth,
passport of a citizen of the Russian Federation __ __ ______
issued by _____________________
department code ___-___
registered at: _______
__________________
SIGNATURES OF THE PARTIES
Lender
__________
Full name
Borrower
How does a contract for the free use of a car differ from other similar contracts?
Despite the fact that all agreements for gratuitous use are regulated by the same chapter of the Civil Code of the Russian Federation and have the same feature - the absence of fees for use, an agreement for the gratuitous use of a car has significant differences. They are due to the special responsibility that is associated with owning a vehicle as an object of increased danger, as well as the many responsibilities assigned to the owner of the car.
The second feature of an automatic vehicle (motor vehicle) as the subject of a gratuitous use agreement is the complexity of the object transferred by the lender (owner of the automatic vehicle) to the borrower (user). A car, in addition to structurally inseparable elements, also has elements that do not meet the characteristics of non-consumables, that is, they require replacement during the operation of the car (for example, tires).
In addition, the operating options for vehicles have a wide range, and the condition of the vehicle and its value directly depend on the method of its operation. Despite the fact that cars have a specific purpose, they can be used for this purpose in different ways: for example, a passenger car can be used for private trips, or it can be used as a taxi. Automatic telephones also easily suffer from physical and moral wear and tear due to use.
All the subtleties of the subject of the agreement, therefore, should be reflected in the agreement for the free use of a car. This will protect the rights of its owner and at the same time allow the borrower to make the most of the received property.
What is better - a contract or a power of attorney?
| Download the contract |
Both documents make it possible to exercise the rights of use to a person who is not the owner of the automatic telephone exchange. Nevertheless, an agreement for the free use of a car has at least 2 advantages over a power of attorney:
- The agreement details the rights and obligations of the parties to the agreement and imposes on the user of the property the obligation to bear operating costs.
- The agreement is the basis for including operating costs as expenses of a legal entity.
Sample contract for free use of a car
AGREEMENT
free use of a car
_______________ "___" _______ ____
“Lender” ______________________________ on the one hand and “Borrower” ___________________________ on the other hand have entered into this agreement as follows:
Article 1. Subject of the agreement
1.1. The Lender transfers to the Borrower for temporary free use a car brand _________, state-owned registration number ______________, with accompanying equipment, hereinafter referred to as the Property. The composition of the Property is presented in Appendix 1 to this agreement.
1.2. The property belongs to the Lender by right __________________, which is confirmed by __________________, series ___________, number ____________, date of issue ___________.
1.3. The Lender confirms that the Property is not the subject of a dispute or pledge, is not under arrest and is not encumbered by the rights of third parties.
1.4. The property is transferred to the Borrower for use for the purposes of __________________________.
Article 2. Value of the Property
2.1. By agreement of the parties, the cost of the Property on the date of conclusion of the contract is ___________ (________________________) rubles and is used by the parties when determining the amount of liability in the event of damage or loss of the Property.
Article 3. Responsibility of the parties
3.1. The Lender transfers the Property to the Borrower no later than ______________________ under an act signed by both parties.
3.2. If defects are discovered that prevent the use of the Property for the purposes of this agreement, which were not known to the parties at the time of concluding the agreement and signing the act, the Lender is obliged, in agreement with the Borrower, to replace the property with an equivalent one, to compensate the Borrower for the costs of eliminating the defects of the Property, or to eliminate the defects at its own expense. invoice within the period agreed with the Borrower.
3.3. The risk of damage or accidental loss of the Property during operation rests with the Borrower in the event of:
- operation of the Property not for its intended purpose or in accordance with the purposes defined in clause 1.4 of this agreement;
- if the Borrower has not taken measures to prevent damage or loss of the Property.
3.4. In the case provided for in clause 3.3 of the agreement, the Borrower compensates the Lender for the costs of eliminating damage or the cost of lost property based on the assessment of the value of the Property given in clause 2.1. The Borrower has the right, by agreement of the parties, to provide the Lender with equivalent property as compensation.
3.5. Responsibility for damage caused to third parties in connection with the operation of the Property lies with the Borrower.
Article 4. Costs of maintenance and operation of the Property
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4.1. Operating costs and expenses for maintaining the Property in working order are borne by the Borrower. To fulfill its obligations, the Borrower is authorized to enter into agreements with third-party organizations for the provision of services related to the maintenance of the Property.
4.2. Operating expenses include: expenses for fuels and lubricants, dry cleaning of the interior, washing the car, refilling the air conditioner.
4.3. The costs of maintaining the Property in working condition are: vehicle maintenance, replacement of vehicle parts that have a short service life, replacement of tires when worn out, elimination of equipment breakdowns that are of a natural nature.
4.4. The Borrower, at his own expense, receives an MTPL policy for the car, for which the Lender gives him necessary documents or provides personal presence as required by the insurance company.
Article 5. Obligations of the Lender
6.1. Within the time limits established by this agreement, transfer to the Borrower the Property in a complete set that makes it suitable for operation for the purposes specified in clause 1.4 of this agreement, as well as the documents necessary for the operation of the Property.
Article 6. Obligations of the Borrower
6.1. Maintain the Property in working condition, carry out timely repairs and maintenance, and make efforts to prevent damage or loss of the Property.
6.2. During the term of the agreement, provide the Lender with the opportunity to inspect the Property upon prior notice received no earlier than ____________ before the expected date of inspection.
6.3. Upon expiration of the agreement, for any of the reasons specified in Article 7 of this agreement, return the Property to the Lender in working condition, taking into account normal wear and tear in accordance with the period of use, together with the documents necessary for the operation of the Property.
Article 7. Duration of the agreement
7.1. This Agreement was concluded before _______________.
7.2. If ______________ before the end of the period specified in clause 7.1, neither party sends the other party a notice of intent to terminate the contract, the contract is extended for ________________ on the terms and conditions set forth in this contract.
7.3. The lender receives the right to demand termination of the agreement before the end of the period specified in clause 7.1, provided that:
- The Borrower uses the Property entrusted to him not in accordance with the purposes defined in clause 1.4 or the purpose of the Property;
- The borrower does not fulfill his obligations listed in clauses 3.4, 3.5, 4.1, 4.4, 6.1, 6.2, 6.3 of the agreement;
- The Borrower transferred the Property for use to a third party without the consent of the Lender.
7.4. The Borrower receives the right to demand early termination of the agreement in cases of violation by the Lender of its obligations listed in paragraphs 3.1, 3.2, 4.4, 5.1.
Article 8. Other provisions
__________________________________________________________________________________________________________________________________________________________________________________________
Article 9. Details and signatures of the parties
Lender Borrower
__________________________________ ____________________________________
__________________________________ ____________________________________
__________________________________ ____________________________________
__________________________________ ____________________________________
________________/________________/ ___________________/________________/
The name of the free use agreement reflects the essence as much as possible of this document. By and large, it is a vehicle rental agreement in which one party transfers the right to drive the car to the other party free of charge. In this case, the borrower assumes full responsibility for maintaining the technical condition of this vehicle, and is also responsible, from a legal point of view, for his actions using the leased vehicle.
Legislative regulation
From a legislative point of view, this agreement is governed by the Civil Code of the Russian Federation of January 26, 1996 Federal Law No. 14-FZ. According to this legislative act It is prohibited to transfer any type of property, including a vehicle, for rent if any sanctions are imposed on it by government authorities.
Article 689 of this part of the Civil Code defines what constitutes a contract for gratuitous use. It also specifies what may be the subject of this agreement. For example, according to paragraph 1 of this article, the borrower undertakes to return the vehicle in the condition in which he received it.
Filling Features
Like any document, a contract for the free use of a vehicle has its own characteristics. It can be composed:
- between individuals;
- individual and organization;
- between a private person and an individual entrepreneur.
Between individuals
The standard contract specifies wallpaper data individuals:
- passport series and number;
- registration address.
The party that leases the car is called the lender, and the party that accepts the car is called the borrower. The main thing when filling out the contract is to correctly indicate the vehicle data from the car documents. The standard agreement states:
- series and number of the vehicle registration certificate;
- brand;
- year of manufacture;
- engine number;
- body number.
Transfer deadline. One of the clauses of the agreement on free use stipulates the period for transferring the car. According to the Civil Code, this paragraph may not be indicated. In this case, the lease is considered unlimited.
Responsibility of the parties. Equally important is filling out the clause on the responsibility of the parties. It stipulates the conditions under which the borrower takes upon himself the safety of the car at any time of the day, obliging to reimburse it within the period specified in the agreement.
One of the subparagraphs of the “Other conditions” clause indicates the estimated cost of the vehicle in case of any damage or breakdown. At the end of the agreement, the details of both parties are indicated. By mutual agreement, it can be extended for an indefinite period. It does not need to be certified by a notary or other registration authorities. It can be in simple written form indicating all the necessary information.
Between an individual and an individual entrepreneur, LLC
Russian legislation provides for the option of concluding a free use agreement between an individual and an individual entrepreneur (IP), as well as with legal entities (LLC).
Unlike the previous type, the details of the company must be indicated here, and if there is a seal, its imprint is left on the contract form, in the “Details” section.
The official who carries out the transaction is indicated if the car belongs to a legal entity.
Contract for free use of a car and MTPL insurance
When transferring a car under a contract for free use, certain circumstances of its operation arise that are related to the policy compulsory insurance. If the MTPL policy is issued for an unlimited number of persons, then when registering a lease there is no need to indicate the borrower in the insurance policy.
In a situation where the policy is issued to specific persons, it is mandatory that the car owner enter information about the renter into the insurance policy, otherwise he may receive a fine.
Even if the owner of the car is sitting next to you, this does not give you the right to drive without a policy.
Tax consequences
When transferring a car under a free use agreement, certain tax consequences arise. For the lender:
- The lender is required to pay transport tax, since he is the owner of this vehicle. He takes this amount into account as expenses for income tax.
- Simultaneously with the transfer of the vehicle for free rent, the owner must stop accruing depreciation if he is a legal entity.
The borrower also faces tax consequences:
- It must indicate non-operating income from the gratuitous transfer of a vehicle for use at the end of each reporting period in the amount of the market value of the transferred vehicle.
- In the event of a car breakdown and the cost of repairing it, the car lessee can take the corresponding amount into account for income tax purposes.
To determine the market price, the parties can involve an independent appraiser. For these purposes, you can also use publicly available sources of information, such as the media, the Internet, and television.
Receiving a car for free rent does not entail any obligations to pay value added tax, since this is not the sale of goods, works or services, or the transfer of property rights. When renting a car from an organization to an employee, he does not incur additional tax on personal income, since the rental is free for him.
Which is better, a contract or a power of attorney?
In essence, a power of attorney and an agreement for the free use of a car provide a third party with the right to drive a vehicle. However, these two methods have significant differences, which make it possible to give preference to DBP:
- Completeness. A vehicle is a complex mechanical device that consists of inseparable units, as well as parts that require regular replacement, such as brake pads or tires. Under the agreement for free use, the lessee is obliged to return the car in the condition in which he took it, fully equipped.
- In this case, all responsibility for violating traffic rules and the occurrence of an accident falls on the tenant, and not on the owner. When drawing up an agreement, it is much easier to recover damages from the borrower.
- When drawing up an agreement, you can legally include operating costs as legal expenses. faces. A power of attorney does not provide such an opportunity.
- The contract can be terminated at any time and the amount of damages can be recovered from the tenant in case of violation of the terms of the contract.
A contract for the free use of a car in 2019 is one of the safest forms of leasing a vehicle for both parties. Regulation by the state allows you to accurately separate the rights and responsibilities of the parties; to do this, you just need to draw up a form of an agreement and write down all the features in it, you don’t even need to contact intermediary organizations. This type of agreement is significantly different from a power of attorney and has its own advantages.
Hidden taxes when using an agreement on free use of a car for individual entrepreneurs and LLCs
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