Negligent Drivers and Rental Cars
Liability for rental car costs
The law determining when a negligent party is liable to meet an innocent party’s cost of hiring a rental car in New Zealand is reasonably clear. Where the innocent party needs to hire a rental car while his or her car is being repaired, (i.e. the innocent party is not in hospital or otherwise indisposed at the time), the negligent driver is liable for the hire cost as long as the rental car is broadly comparable and the cost is reasonable.
Now let’s add another factor to this scenario. Let’s say a wealthy friend of the innocent party offers to hire his spare car to that party at the current hire rate for rental cars. The wealthy friend requires the innocent party to sign a contract to this effect. The contract also appoints the friend as the innocent party’s agent allowing the friend to use his best endeavours to recover the hire cost from the negligent party. If the innocent party does recover the cost, he or she must pay the money over to the friend. If the innocent party does not recover the cost, then the innocent party must pay the hire cost to the wealthy friend.