What is the Graves Amendment and Why Does it Matter?

This federal law often affects U-Haul and other rental vehicle collision claims. A fully-loaded, 26-foot U-Haul truck weighs about 36,000 pounds. When these trucks are involved in high-speed collisions, the resulting injuries are often catastrophic.

Frequently, U-Haul drivers have little or no insurance. This lack of insurance is normally not a problem. Under the negligent entrustment rule, vehicle owners are financially responsible for damages if they knowingly allow incompetent operators to drive their motor vehicles. 

Given the size of U-Haul trucks and the fact that the drivers normally do not have commercial licenses, many U-Haul drivers are incompetent. However, an obscure provision of federal law, the Graves Amendment, protects some U-Haul owners in some cases.

Fortunately, the Graves Amendment has some holes that a Marietta personal injury attorney can exploit. As a result, these victims can usually obtain maximum compensation for their economic losses, such as medical bills, and their noneconomic losses, such as pain and suffering.

Trade or Business

Negligence immunity only applies under 49 U.S. Code § 30106 if the lessor was in the trade or business of renting vehicles. 

The Graves Amendment was a policy rider which a Missouri Congressman attached to a large omnibus transportation bill. Like most such add-ons, there is no legislative history in support of the amendment, other than a brief floor debate. So, key phrases, like “trade or business,” are undefined.

In these situations, lawyers must look elsewhere for guidance. The Uniform Commercial Code, which is widely used in contracts and other commercial cases, does not define “trade or business.” However, it does define “merchant,” which is a similar term. This definition, which is in UCC Section 2-104, defines a “merchant” as:

  • Dealer in Kind: Beer and wine are usually the biggest-selling products at Georgia convenience stores. However, that fact does not make them liquor stores. Similarly, even though most of their revenue comes from truck rentals, many U-Haul establishments are moving supply and self-storage companies. They are not “dealers in kind” when it comes to vehicle rentals.
  • Specialized Knowledge: Under the UCC, sellers are merchants if they have special knowledge about the goods they handle. Most U-Haul workers do not have unique insight into the trucks in their parking lots. For example, they could tell you how to operate a vehicle’s air conditioner. But they could not tell you the unit’s BTU capacity or any other such information.

The Graves Amendment is an affirmative defense to a negligent entrustment claim. So, insurance company lawyers must prove it applies. Given this discussion, this showing is not easy to make.

Not Otherwise Negligent

The second major component of the Graves Amendment speaks to the incompetent operator portion of the negligent entrustment rule. 

In the early 2000s, when Congress passed the Graves Amendment, there was no effective way to verify a drivers’ license at a rental transaction, other than via visual inspection. Technology has advanced by leaps and bounds since then. Today, it is arguably the industry standard to verify a license.

Usually, people with safety-suspended or otherwise invalid licenses are incompetent as a matter of law. People with poor driving records that include recent at-fault collisions are presumptively incompetent. Usually in these cases, the lessor has a duty to ask questions, like “Have you ever operated one of these vehicles before?”

Willful blindness is not an excuse. U-Haul owners have a legal duty to check licenses and take appropriate action.

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