Potential Liability in Retail Rental Operations

by Charles H. Van Gorder

For a variety of reasons, outdoor retailers may move into equipment rental as well as retail sales. This is one way of allowing customers to try out equipment before making a purchase decision. It may also be a way of getting a customer hooked on a new form of recreation. If lucky, the retailer will benefit from increased sales and a net profit from rentals. Rental operations significantly increase exposure to potential legal liability resulting from customers who are injured while using rental equipment. This article is directed at identifying sources of such added potential liability and suggest ways of minimizing such additional exposure.   

Rental Equipment
One initial problem facing the renting retailer is whether the customer is qualified to use the rented equipment. Without any standard certification process, should a retailer try to assess the ability of the customer to safely use the rented equipment, and if so, how to do it. One approach is to simply let the customer decide if they are qualified to use the rented equipment or livestock. This may let the retailer off the potential liability hook of assessing the customer's qualifications, but may also result in letting customers get in way over their head with the equipment they choose to rent. If a standard certification is not available, a retailer may offer its own instruction or test the abilities of customers, These steps may be costly and involve additional sources of potential liability. Another option is to require customers to specify their own level of experience or expertise in terms of hours of experience or specific skill levels. This puts the burden of evaluation on the shoulders of the customer, but still puts the retailer into a position of making a judgment call on whether the customer is qualified to use the rental equipment. 

It is essential that both the retailer and the customer inspect the rented equipment to ensure an accurate tally of the equipment being taken by the customer. Each party to the rental contract must be satisfied the rented equipment is clean and in good repair when the customer receives it. As much as possible, the retailer should demonstrate the rented equipment is operating properly. Upon return of the rented equipment, once again both the retailer and the customer should jointly inspect the rented equipment to ascertain its condition and working order. If there is damage to the rented equipment, or if it requires additional cleaning, it should be noted by both parties. 

To what extent should a retailer take on the responsibilities of instructing a customer in the use of rental equipment? It may be reasonable for a retailer to demonstrate a particular piece of equipment, such as a stove, to be sure the customer is aware of how to properly use that particular brand or model. The demonstration is also one way to show that the equipment was functioning properly when it was given to the customer.  

Another concern is ensuring the equipment is a proper fit for a customer. Certain types of equipment can be, and therefore should be adjusted to fit the customer properly. With kayak rentals, the foot pegs or rudder pedals should be adjusted for the length of the customer's legs. It is important that the fit be snug enough so that the customer won't flop around when paddling, yet not so tight to inhibit a release in the event of a capsize. Packs should also be fitted and adjusted so they will carry the load as designed and not come loose and throw the customer off-balance when climbing. A retailer can be expected to provide these services, and should be prepared to do so.

Transporting Equipment
In the case of retail rentals, customers will usually transport the rented equipment away from the rental facility for use elsewhere, and the customer is primarily responsible for safely transporting the equipment. The retailer should ensure the customer has the proper equipment to transport the equipment. Often this will involve the use of a roof rack or other type of rack transport system. If the customer provides their own rack system, the retailer should be sure that the rack is appropriate for the equipment being rented. If the retailer rents a rack system to the customer, it is the retailer's responsibility to be sure the rack is appropriate for the vehicle. Specifi­cally, the manufacturer's specifications must be complied with. For example, if the specifications for a Yakima roof rack call for the use of a "stretch kit" for a particular vehicle, the retailer had better supply the rack with the required stretch kit. The proper clips must also be available. If the wrong equipment is supplied, the retailer could be held responsible for any resulting damages. 

In addition to providing the correct rack system, the retailer may be held to be responsible for ensuring the customer knows how to use the rack properly. While the retailer may install the rack at the rental facility, the customer will need to be able to remove the rack, and then reattach it for the return trip. Alternatively, the retailer may want to supply locks for a roof rack, perhaps avoiding the necessity for the customer ever having to remove the rack. While there can be no assurance that the customer actually will be able to reattach the rack properly when the time comes, the retailer needs to take the time and effort to instruct the customer as thoroughly as possible.

Sometimes a rack system alone will not be sufficient for transportation of the rented equipment. For example, when transporting canoes, sea kayaks or rafts, the bow and stern usually need to be stabilized by ropes tied to the bumpers or other parts of the vehicle. This will prevent the boats from swaying while driving down the highway. The retailer may be able to tie the boats down when the customer rents the equipment (and thereby assume the responsibility for properly doing so), but what about the return trip? Once again, while nothing will guarantee the customer will remember how to do it when the time comes, the retailer should instruct the customer on how to tie the boats down, and then have the customer demonstrate how to do it. 

Destination Recommendations
One of the most difficult problems retailers face is how to respond to inquiries about where rented equipment should be used. If a retailer makes a recommendation, he or she takes on the added responsibility of making an appropriate recommendation (taking into consideration the abilities of the customer), and the potential liability if the recommendation results in injury to the customer. From a liability standpoint, the safest thing for a retailer to do is to point the customer to a book describing potential destinations. This puts the responsibility for making an appropriate choice on the customer. Another option is to refer the customer to a guide or guiding service, thereby transferring potential liability to someone else.

These choices ignore the reality that one of the most valuable services a retailer can render to its customers is personal recommendations on where to go. This is one thing which differenti­ates the local specialty store from the impersonal box store or web site. If a retailer decides to make a recommendation, they simply take on an additional duty to the customer, and a further risk of potential liability. This can be limited by fully evaluating the abilities of the customer for the requested trip, and by fully disclosing the risks which may be encountered at the recom­mended destination.

Many retailers ask where the customer is planning to use the rented equipment. If a retailer chooses to ask that question, it must be clear why that question is being asked. If the retailer wants to be sure the equipment will more likely be returned in good shape rather than destroyed, damaged or injured, the rental of the equipment may be seen as an endorsement of the appropriateness of the destination for the abilities of the customer. Is there a circumstance where the retailer would refuse to rent equipment due to the choice of destination? This whole situation may be one the retailer would be better off to avoid!

Sometimes the rented equipment is to be used at or near the rental facility, such as paddling in a bay or on a particular stretch of river, or skiing or biking on designated trails leading from the store. The retailer may specifically recommend, or require, that the rented equipment be used only within a certain area. Where this is the case, the retailer must be certain to advise the customer exactly where the recommended boundaries are located. The retailer should further advise the customer that it makes no representation regarding the suitability of the specified area for the customer's activity, and further, that the retailer is not available to assist the customer in the event the customer encounters difficulties. 

Liability Releases and Rental Forms
One of the most widely held misconceptions in the outdoor industry is that liability release forms are not worth the paper on which they are written. In fact, the courts in most states have upheld the validity of release forms if they are properly written and correctly used. The topic of release forms is too complicated to address in this article. However, release forms used in conjunction with rental operations can several issues unique to rental operations: 1) assessment of a customer's ability to use the rented equipment and the selection of a destination; 2) the condition of the rented equipment; 3) the customer's agreement not to permit anyone else to use the rented equipment unless authorized in writing by the retailer; and 4) the risks and obligations inherent in transporting rented equipment. 

A separate rental form spelling out the details of the contract between the retailer and the customer should be used by all rental operations. and should. A rental form may include the following items: 1) an itemized listing of the specific equipment being rented, 2) check offs for any equipment adjustment which must be made and an indication the rented equipment was not damaged, 3) the rental period, including a deadline for timely return, 4) the price for the rental, including late fees and cleaning penalties, 5) any rental deposit and conditions for return of the deposit, 6)fees for the repair of damaged equipment or cleaning of dirty equipment, 7) the names of persons authorized to use the rented equipment, 8) statements by the customer that they have viewed any appropriate safety or instructional film or video, or has declined the opportunity to do so, and that no malfunctions or incidents arose out of the use of the rented equipment or livestock, and 9) the customer's signature and acceptance of the rental agreement and other conditions of the rental.

It is especially important to include the names of all of those individuals authorized to use the rental equipment. Where customers are headed out on a trip, there should be a definite date stated for the return of the equipment and the name and telephone number of a person to contact in the case of an emergency or if the equipment is not returned on time.­ Each retailer must decide on its own conditions of rental and design a form which addresses the specific needs of its rental operation. 

Rental Procedures
In a rental operation, customers be fully advised regarding the equipment they are renting and the risks they are assuming. This may be accomplished through the use of a detailed rental checklist which is followed by every employee involved in any phase of the rental operation. These phases may include responses to initial inquiries in person or by telephone, rental reserva­tions and deposits, equipment pick up (including itemization, inspection and fitting), instruction in the use of the rented equipment, and the return of the rented equipment, including inspection, damage/cleaning deposits and late fees. Particularly important is advising customers that everyone who intends to use the rental equipment will have to personally sign liability release forms.

Where a retailer has more than one employee dealing with rental customers, it is important that rental procedures be written down and followed with every rental. In this way, if there is a question about what occurred in the course of a particular rental, the retailer can rely on an established routine rather than memory to prove what was actually said in any one instance. The most impor­tant thing is to be sure that ALL proce­dures are fol­lowed EVERY time so that the retailer can testify it was done in a partic­ular instance because it is ALWAYS done that way. If the retailer cannot show such an unvarying practice, it may be difficult to prove that the proce­dures were followed in any one particular instance.