ARTICLES & UPDATES

Ministry of Commerce and Industry Issues New Rules Concerning Car Rental Agreements:

Date: December 5, 2024
Issuing Authority: Ministry of Commerce and Industry – Kuwait

Summary:

The Ministry of Commerce and Industry has issued Ministerial Resolution No. 231/2024 (“Ministerial Resolution”), which introduces new regulations concerning car rental agreements.

The Ministerial Resolution outlines several key provisions, including the prohibition of promissory notes and vague contractual terms, the obligation to deliver safe and secure vehicles, and the requirement to document the condition of the vehicle.

Undersecretary Ziyad Al-Najim emphasized that Ministerial Resolution No. 231/2024 aims to streamline car rental contracts by ensuring fair and clear terms for both the rental companies (lessors) and renters (lessees).

Key Highlights of the Ministerial Resolution

Delivery of Safe and Secure Vehicles:

Rental companies must provide vehicles in safe and proper working condition that meet all safety standards and are equipped with essential safety equipment, such as emergency kits, spare tires, etc.

Documentation of Vehicle Condition:

The condition of the vehicle must be properly documented through photos or videos before delivery and the contract should clearly specify any pre-existing damages or issues with the vehicle.

Comprehensive Insurance Coverage:

The resolution mandates that the rental car must have valid comprehensive insurance coverage.

Returning the Vehicle in Original Condition:

The lessee must return the vehicle to the lessor in the same condition it was received, with the exception of normal wear and tear that occurs from regular use. The lessee will be responsible for any damages not covered by the dealer’s warranty, including the loss of keys or documents. Any such damages/loss shall be charged in accordance with the dealer’s pricing or as determined by the concerned authorities.

In case of any damage during the rental period, the dealership’s assessment of the damage will serve as the official reference for determining the cost.

Rental Period Calculation:

The rental day is calculated as 24 hours from the time the car is received by the lessee. Any delay in returning the car will result in additional charges, which shall be calculated based on the extra hours or days of delay.

Accidents and Repairs:

In the event of an accident, the lessee is required to obtain a repair permit from the Ministry of Interior and pay for the insurance file opening fees and any applicable percentages specified in the contract.

Repairs shall not be carried out without the prior written consent of the lessor.

Vehicle Seizure/Impound:

If the car is seized or impounded by authorities due to any actions or inactions of the lessee, the lessee is responsible for the daily rental fee for the duration of the seizure or impoundment, as well as any damages to the car during this period.

Transparent and Fair Contracts:

Rental contracts must clearly outline the rights and obligations of both parties and should not contain vague clauses. The lessee must not be forced to sign trust receipts, bills of exchange, or any other financial documents beyond the scope of the lease agreement.

The lessor is required to provide the lessee with a copy of the rental contract and any related documents.

Application of the Ministerial Resolution No. 231/2024:

The rules under Ministerial Resolution No. 231/2024 apply to the car rental industry, including rental companies, individuals renting vehicles, and businesses involved in vehicle rentals in Kuwait.

Compliance Requirements:

Following the issuance of Ministerial Resolution No. 231/2024, companies in the car rental industry should focus on:

• Ensuring rental contracts comply with the new regulations and provide clear terms for both parties.
• Establishing procedures to document vehicle condition accurately before rental, using photographs or videos.
• Verifying that all rental vehicles are covered by comprehensive insurance.
• Developing policies to address scenarios such as accidents, vehicle impoundments, or delays in vehicle returns.
• Training staff on the updated regulations and ensuring they are familiar with the required procedures.

For more information contact us at info@arazzaqlaw.com.

PDF Link