STAND. COM. REP. 1340
Honolulu, Hawaii
, 2003
RE: S.B. No. 562
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-Second State Legislature
Regular Session of 2003
State of Hawaii
Sir:
Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 562 entitled:
"A BILL FOR AN ACT RELATING TO TERMINABLE RENTAL ADJUSTMENT CLAUSE VEHICLE LEASES,"
begs leave to report as follows:
The purpose of this bill is to clarify that motor vehicle fleet licensing contracts that contain terminable rental adjustment clause (TRAC) provisions are true leases that do not establish a sale of the vehicle nor create a security interest in the vehicle.
Testimony in support of this bill was received from the Hawaii Bankers Association.
Your Committee finds that TRAC motor vehicle leases involve the leasing of commercial fleets of vehicles by one business to another. The TRAC provision permits the lease rent to be adjusted upward or downward to compensate for any difference between the projected value of a vehicle at the time of contract, and the actual value upon termination of the lease. The objective of the TRAC provision is to provide an incentive for the lessee to keep the leased vehicles in good repair.
Your Committee further finds that this bill will:
(1) Serve public interests by assuring both the lesser and the lessee that the courts will recognize the true-lease status of these arrangements, thus avoiding unnecessary litigation and transaction costs that would otherwise be passed on to the consumer; and
(2) Make Hawaii's law uniform, predictable, and consistent
with statutes in 43 other states that have
enacted similar legislation.
As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 562 and recommends that it pass Third Reading.
Respectfully submitted on behalf of the members of the Committee on Consumer Protection and Commerce,
____________________________ KENNETH T. HIRAKI, Chair |
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