I entered a Lease Purchase Agreement with my partner for equipment we were to use in our business in March, 2013 with the owner of the equipment. The equipment was used and we were essentially replacing the prior owner's agreement. Our terms were 23 months of payments. After 6 months, my partner and I dissolved our business relationship and my partner approached the lease purchase company to remove myself from the lease purchase agreement and she also returned one of the pieces of equipment. At that point, the owner of the equipment entered into a new agreement for purchase of the one piece of equipment, with an extended term to 13 additional months, but a lower monthly payment. Essentially, the owner took back the one piece of equipment, applied no credit from payments we made during the 6 months, extended the lease - causing my former partner to still pay for the two pieces of equipment but owning only one. At the time my former partner signed the new agreement for the equipment, the owner instructed her to not share with me that there was a new agreement in place.
In the agreement I signed it states all parties must be notified and in agreement if changes are made. I was told about the new agreement from my former partner. The agreement also states it replaces any older or prior agreements. I attempted to remove myself as a named insured on the equipment, as per the agreement I had, I no longer own the equipment and there is now a new agreement in place. The owner of the equipment is stating I cannot remove myself from the insurance (he also sold the insurance) and that my agreement is binding until my former partner pays for the equipment in full. What if anything am I responsible for?
I hope this message finds you well, present circumstances excluded. This is an interesting case for a number of reasons. The most obvious issue that comes to mind is that you essentially have two different contracts at the outset (contract for the equipment and an insurance contract for the equipment). You have been removed from the equipment contract and no one can refute that simply fact.
As I understand it, even though you no longer have an equity interest in the equipment whatsoever, they are attempting to still enforce your original liability on the insurance.
Since you have no equity interests in the equipment, it is counter intuitive for the opposing party to claim you cannot cancel your insurance agreement over said equipment. Moreover, they should not be able to use your signature on the insurance agreement as a binding act of law relative to the equipment.
If there is a penalty provision in the insurance agreement for early withdrawal, you may be contractually bound to pay that penalty, in whole or in part (may be able to prorate). However, you are not legally bound to stay in the contract and insurance property to which you have no legal obligation. As such, your partner in assuming payments for the equipment must necessarily assume the insurance coverage as well.
In short, barring a penalty provision in the insurance contract to which you may owe a fine for early withdrawal, you have no legal responsibility in this situation based on the information that you have shared with me.
Let me know if you have any additional questions or comments.
Best wishes moving forward!
The insurance piece of the situation is minimal, as it clearly states in my policy I cannot receive a refund for the insurance. I do,however, want my name removed from the policy.
The concern I have, is the fact the Owner is stating if the new agreement placed between himself and my former partner goes into default, the agreement we had prior is binding. Which is incorrect with all the changes made, equipment switched, etc.
The agreement states all changes need to be signed by all parties. This never took place and it shouldn't have as they moved on to the current and binding agreement together.
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