Motor Vehicle Leases
By George Hathaway
Ford Motor Credit Company has recently revised its agreement form for motor vehicle leases. This new form is a great improvement over the usual lease. Therefore, we give our first Clarity Award of the year to the Ford Motor Credit Company Legal Office team of Robert Aitken, Margaret Cumming, Paula Kelly, Richard Mossburg, Stephen Secrest, Stanley Szuba, and Karen Watkins, for developing Ford Credit's Michigan Red Carpet Motor Vehicle Lease Agreement.
Notice that the lease does not contain any of the following items in our Legalese List:
- Formalisms such as whereas or witnesseth or In witness whereof.
- Archaic words such as hereby, hereinafter referred to as, or therein.
- Redundancies such as any and all, consent and agree, free and clear, and terms and conditions.
Notice also that the lease uses short sentences (15 words a sentence); strong active-voice verbs such as "You must maintain" and "This includes"; and simple words such as under rather than wordy phrases such as pursuant to.
According to Mr. Aitken:
Ford Credit management was committed to developing a "best-in-class" lease to use in our market-leading Red Carpet lease program, and we used the adoption of voluntary disclosure standards by two industry trade associations, American Financial Services Association and Association of Consumer Vehicle Lessors, as the catalyst for the change. These standards, which were strongly supported by Ford Credit, provide for the disclosure of "Capitalized Cost," "Capitalized Cost Reductions," and "Net Capitalized Cost." These numbers (lease section #l) form the basis for calculating the monthly payment.
Besides adding the disclosure section, we rewrote our 1987 lease with the goal of providing customer-friendly language and layout. To do this we compared our lease with about a dozen other leases in the industry, which all contained the same basic material. We broke down all the leases and performed a best-in-class analysis by comparing the leases topic by topic, paragraph by paragraph, and clause by clause. The result was modifications in the substance and style of our previous lease. Here are some examples of what we did:
1. Reduced the number of words by about a thousand.
2. Rephrased to improve readability.
3. Grouped the "detail" sections (#15-31) under headings.
4. Highlighted the primary financial-disclosure sections with icons.
5. Provided an inviting color scheme that assists in visual grouping of sections.
6. Added more unused white space to avoid a cluttered look.
We believe the resulting innovative document will be pleasing to both dealers and customers and, more importantly, improve consumers' understanding of their leases.
The Ford Credit form is a good example of a contract for the sale or lease of personal property. This form proves that contracts for the sale or lease of personal property can be written in reasonably plain English without legalese. The team in the Ford Motor Credit Company Legal Office did not rationalize the use of legalese because of precision, complexity, case precedent, statute, or inertia. They wanted to write a contract without legalese. And they just did it.
"Plain Language" is a regular feature of the Michigan Bar Journal, edited by Joseph Kimble for the State Bar's Plain English Committee. The assistant editor is George Hathaway, chair of the Committee. The Committee seeks to improve the clarity of legal writing and the public opinion of lawyers by eliminating legalese. Want to contribute a plain English article? Contact Prof. Kimble at Thomas Cooley Law School, P.O. Box 13038, Lansing, MI 48901. For information about the Plain English Committee, see our website. George Hathaway is a senior real estate attorney at the Detroit Edison Company and chair of the Plain English Committee of the State Bar of Michigan.