Legislative Memo

T 518.465.7511


S.1410 (Johnson) / A.2620 (Canestrari)



Vicarious Liability Reform



April 26, 2005


The Business Council of New York State, Inc., whose membership includes large and small companies, chambers of commerce and associations strongly supports the above captioned legislation.

This legislation provides that the lessee of a motor vehicle for a term of more than one year shall be deemed to be the owner of such vehicle for the purpose of determining civil liability for the damage caused by use of such motor vehicle.

This change would bring New York's statute more in line with not only other states but with other similar transactions within this state. Individuals who finance their vehicles through leases would be governed by the same standard as those who purchase their vehicles and finance them through conventional borrowing. These individuals would be responsible for their own actions, placing responsibility with the “owner” of the vehicle.

New York is the only state in the nation where leasing firms may be held liable for the actions of others by virtue of no fault on the leasing business's part other than having provided the financing for the vehicle. Indeed, as the sponsors have pointed out, a leasing company can be held liable even where the vehicle was stolen. The fundamental unfairness of this liability standard is the poster child of what is wrong with our tort system.

Under the existing liability standard, businesses have suffered and consumers have suffered. New York consumers, on average, pay over $500.00 more in lease acquisition fees and over $700.00 more in taxes on balloon type financing than consumers in other states. Competition has decreased as numerous financing firms have withdrawn from the market. The net result is New York consumers have less choice and higher costs when it comes to the financing of vehicles they lease.

For all the above stated reasons, The Business Council strongly supports passage of S.1410/A.2620.