ESCROW AGREEMENT

ESCROW AGREEMENT

THIS AGREEMENT is hereby entered into on this ………………day of …….……………. Two Thousand and ……………………………

BETWEEN

1.[Your Company Name], with its principal place of business located at [Your Company Address] hereinafter referred to as the(“Company”),

AND

2.[Driver’s Name], an individual with a primary address at [Driver’s Address] hereinafter referred to as the (“Driver”).

RECITALS

WHEREAS, [Your Company Name] (“Company”) is engaged in the business of leasing trucks, trailers, and other trucking tools to independent contractors for use in their trucking operations;

WHEREAS, [Driver’s Name] (“Driver”) is an independent contractor seeking to lease Equipment from the Company;

WHEREAS, the Equipment leased by the Company to the Driver is of significant value and requires protection against potential damages or losses during the rental period;

WHEREAS, both the Company and the Driver agree to establish an escrow arrangement to create a fund that will be used to cover any damages or losses incurred during the rental period;

WHEREAS, the Company and the Driver wish to set forth the terms and conditions governing the establishment and use of the escrow account in this Agreement;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

  1. PURPOSE:

3.1 The purpose of this Agreement is to establish an escrow arrangement to protect the Company’s equipment leased to the Driver by creating a fund that will be used to cover any damages or losses incurred during the rental period.

ESCROW ACCOUNT:

4.1 The Company and the Driver agree to establish an escrow account (the “Escrow Account”) with a reputable financial institution mutually agreed upon by both parties. The Escrow Account shall be dedicated solely to holding funds to cover potential damages to the equipment.

4.2 The Company shall deduct a specified amount from the Driver’s weekly checks (the “Deposit Amount”) to be allocated towards the Escrow Account. The Deposit Amount shall be determined based on the agreement reached between the Company and the Driver, and it shall be deducted from the Driver’s weekly checks commencing from [start date].

4.3 The Escrow Account shall be held in the name of the Company, with both the Company and the Driver named as beneficiaries of the account.

4.4 The Escrow Agreement shall remain in effect for a period of 6 months from the Effective Date or until the Escrow Account reaches a balance of $5,000, whichever occurs first. Upon reaching either of these conditions, the Escrow Agreement shall terminate, and any remaining balance in the Escrow Account shall be returned to the Driver within [number of days] from the termination date.

  1. USE OF ESCROW FUNDS:

5.1 In the event of any damage or loss to the equipment during the rental period, the Company shall have the right to request reimbursement from the Escrow Account to cover the cost of repairs, replacements, or any related expenses. The Company shall provide the Driver with written notice specifying the amount of funds to be withdrawn from the Escrow Account within [number of days] after the Company becomes aware of the damage or loss.

5.2 The Driver agrees to cooperate with the Company in assessing the damages and determining the appropriate use of funds from the Escrow Account.

5.3 Furthermore, the establishment of the Escrow Account serves an additional purpose. It enables the Company to utilize the funds to fulfill the Driver’s weekly responsibilities, which encompass various obligations such as Insurance. The Company reserves the right to employ the escrowed funds to cover any outstanding insurance coverage shortages that may arise. Additionally, it provides a means to address fines, tickets, or violations incurred by the driver while operating on the road. Given that drivers are frequently subject to weigh scales and potential citations for a variety of reasons, including but not limited to failure to maintain driver logs, drug violations, and unsafe truck violations, it is crucial for the driver to bear the responsibility for such fines or tickets. The Company, therefore, retains the prerogative to utilize funds from the escrow account to address any shortages caused by the driver, whether they stem from fines, violations, or insufficient funds to cover their insurance and associated fees, for which they are accountable.

  1. FAILURE TO PAY ESCROW AMOUNT:

6.1 If the Driver fails to make the required deposit into the Escrow Account or maintain the agreed-upon balance, the Company shall have the right to withhold the corresponding amount from the Driver’s paycheck. The weekly payments deducted from the Driver’s paycheck shall be applied towards replenishing the Escrow Account until the required balance is restored.

  1. EQUIPMENT LEASE:

7.1 The Driver acknowledges that the Company has leased trucks, trailers, and other trucking tools to the Driver for the duration of the lease agreement. The Driver shall be responsible for any damages or losses to the leased equipment, as specified in Section 3 of this Agreement.

  1. DUTIES AND OBLIGATIONS RELATING TO EQUIPMENT:

8.1 Equipment Usage and Maintenance

  1. a) The Driver acknowledges that they are leasing trucks, trailers, and other trucking tools (collectively referred to as the “Equipment”) from the Company.
  2. b) The Driver agrees to use the Equipment in a careful and responsible manner, ensuring its proper maintenance and compliance with all applicable laws and regulations.
  3. c) The Driver shall promptly notify the Company of any damage, malfunction, or required maintenance of the Equipment.

8.2 Repairs and Maintenance

  1. a) The Driver shall bear any costs associated with repairs or maintenance of the Equipment resulting from their negligence or improper use.
  2. b) The Driver shall notify the Company of any repairs or maintenance required due to their negligence or improper use of the Equipment and shall obtain the Company’s prior approval before proceeding with any repairs.

8.3 Equipment Inspections

  1. a) The Company reserves the right to inspect the Equipment at reasonable intervals to ensure its proper condition and usage.
  2. b) The Driver agrees to cooperate with the Company during inspections and provide access to the Equipment as reasonably required by the Company.
  3. c) If during an inspection, the Company identifies any damages or issues with the Equipment, the Driver shall promptly address such damages or issues at their expense, subject to the terms of this Agreement.
  4. TERMINATION:

9.1 Termination by Mutual Agreement: This Agreement may be terminated at any time by the mutual written agreement of both Parties.

9.2 Termination by Company: The Company reserves the right to terminate this Agreement immediately and without prior notice if the Driver fails to comply with any material provision of this Agreement, including but not limited to non-payment of the Escrow Amount, breach of obligations relating to equipment usage and maintenance, or violation of applicable laws and regulations.

9.3 Termination by Driver: The Driver may terminate this Agreement upon [number of days] written notice to the Company, provided that all outstanding obligations under this Agreement have been fulfilled.

9.4 Effects of Termination: Upon termination of this Agreement, the following provisions shall apply:

  1. a) The Company shall return any remaining balance in the Escrow Account to the Driver within [number of days] after termination.
  2. b) The Driver shall promptly return all leased Equipment to the Company in good condition, normal wear and tear excepted.
  3. c) The Parties shall settle any outstanding payments, reimbursements, or liabilities as per the terms of this Agreement.
  4. d) The rights, obligations, and liabilities of the Parties accrued prior to termination shall survive the termination of this Agreement.
  5. DEFAULT AND REMEDIES:

10.1 In the event of a material breach of this Agreement by either party, the non-breaching party shall have the right to terminate the Agreement and pursue any available legal remedies.

10.2 Upon termination of the Agreement due to default by the Driver, the Company shall be entitled to retain any funds in the Escrow Account to cover outstanding damages or losses, and the Driver shall be responsible for any remaining balance.

  1. DISPUTE RESOLUTION MECHANISM:

11.1 Any disputes arising out of or relating to this Agreement shall be resolved through binding arbitration in accordance with the rules and procedures of the American Arbitration Association.

11.2 The arbitration shall take place in Tennessee unless otherwise agreed upon by the Parties. The decision rendered by the arbitrator(s) shall be final and binding on both Parties.

  1. CONFIDENTIALITY:

12.1 During the term of this Agreement and thereafter, the parties agree to keep all information related to the company, business affairs, finances, strategies, and any other confidential information disclosed by either party in connection with this Agreement confidential. The parties shall not disclose such confidential information to any third party without the prior written consent of the disclosing party, except as required by law.

  1. INDEMNIFICATION:

13.1 The Driver agrees to indemnify, defend, and hold the Company, its officers, directors, employees, and agents harmless from any claims, liabilities, damages, losses, costs, or expenses (including reasonable attorney’s fees) arising out of or related to the Driver’s use of the leased Equipment, except for damages covered by the Escrow Account.

  1. GOVERNING LAW AND JURISDICTION:

14.1 This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee, without regard to its conflict of laws principles.

14.2 Any legal actions or proceedings arising out of or relating to this Agreement shall be brought in the state or federal courts located in the State of Tennessee. Both parties hereby submit to the jurisdiction of such courts and waive any objection to venue in any such courts.

  1. ENTIRE AGREEMENT:

15.1 This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or written.

  1. AMENDMENT:

16.1 No modification or amendment of this Agreement shall be valid or binding unless it is in writing and duly executed by all parties hereto.

  1. COUNTERPARTS:

17.1 This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

Signed by or on behalf of:

THE UNDERSIGNED HAVE READ, FULLY UNDERSTOOD AND BY SIGNING

COMPANY                                                             DRIVER

NAME:                                                                    NAME:

_________________________                           _________________________

SIGNATURE:                                                       SIGNATURE:

_________________________                     _________________________

DATE:                                                           DATE:

_________________________                     _________________________

At Legal writing experts, we would be happy to assist in preparing any legal document you need. We are international lawyers and attorneys with significant experience in legal drafting, Commercial-Corporate practice and consulting. In the last few years, we have successfully undertaken similar assignments for clients from different jurisdictions. If given this opportunity, The LegalPen will be able to prepare the legal document within the shortest time possible. You can send us your quick enquiry ( here )