The car hire agreement: what a UK hire agreement must say

A car hire agreement does its real work months after it is signed: when a penalty notice arrives for a car that went back six weeks ago, or when a customer disputes a damage or refuelling charge. This guide covers what a UK hire agreement has to say before any of that happens, with each rule linked to its source. It is general information, not legal advice. It is not a template and does not offer one: the agreement is yours to write, with your own legal adviser, around your own insurance policy and fleet. Where no primary source settles a point, the guide says so and names who to confirm it with.

1. Who the contract is with, and which law reads it

Who the agreement is with decides which law reads it. Under the Consumer Rights Act 2015 a consumer is an individual acting for purposes wholly or mainly outside their trade, business, craft or profession, and a trader is a person acting for purposes relating to theirs (Consumer Rights Act 2015, section 2). A family hiring a car for a holiday is a consumer; a plumber hiring a van for a job probably is not. Most small fleets serve both.

For consumer hires, four provisions do most of the work:

• Unfair terms are not binding. A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations to the consumer's detriment (section 62).
• Written terms must be transparent: plain and intelligible language, and legible (section 68).
• Ambiguity goes the customer's way. Where a term could have different meanings, the one most favourable to the consumer prevails (section 69).
• Price is protected only if it is prominent. The price escapes a fairness assessment only if the term is transparent and brought to the consumer's attention so that an average consumer would be aware of it (section 64).

There is also a hard floor: a trader cannot exclude or restrict liability for death or personal injury resulting from negligence (section 65). The most practical reading of all this is the Competition and Markets Authority's guidance on unfair contract terms, CMA37, last updated on 22 July 2026, which sets terms unlikely to be fair beside versions more likely to be fair (CMA: unfair contract terms guidance).

2. Cancellation: no 14-day cooling-off for a dated hire

Customers often assume a 14-day right to cancel. For a dated hire there is none. Regulation 28(1)(h) of the Consumer Contracts Regulations 2013 excludes "vehicle rental services" from the cancellation rules where the contract provides for a specific date or period of performance (Consumer Contracts Regulations 2013, regulation 28).

Your own cancellation term is still a consumer term. The Consumer Rights Act lists as potentially unfair a term letting the trader keep sums paid when the consumer cancels without equivalent compensation when the trader cancels, and one requiring a consumer who cancels to pay a disproportionately high sum (Consumer Rights Act 2015, Schedule 2, paragraphs 4 and 5). The CMA says a sliding scale of cancellation charges may be acceptable, provided there are no circumstances in which the charges are likely to be disproportionate or punitive (CMA37, paragraph 6.64). In practice that means a short tiered table shown before payment, tied to how much notice you get, and a line saying what happens when you are the one who cancels.

3. The statement of liability: the clause that moves fines to the hirer

A fixed penalty notice to owner for a hire car arrives with you, the registered keeper. Section 66 of the Road Traffic Offenders Act 1988 lets a vehicle-hire firm pass it to the hirer, but only if the agreement was built for it. It needs a statement of liability in which the hirer acknowledges they "will be liable, as the owner of the vehicle, in respect of any fixed penalty offence which may be committed with respect to the vehicle during the currency of the hiring agreement" (Road Traffic Offenders Act 1988, section 66). Four details decide whether your agreement qualifies:

• the vehicle is let for a fixed period of less than six months;
• within the period allowed for response, you provide a statement on an official form signed by the firm, a copy of the agreement and a copy of the signed statement of liability;
• an authorised person may, within six months of serving the notice to owner, require the originals, and if you cannot produce them the section stops applying;
• the agreement contains the prescribed particulars.

Those particulars are set by the Road Traffic (Owner Liability) Regulations 2000 (Road Traffic (Owner Liability) Regulations 2000, Schedule 2):

The substitute vehicle line is the one most often missed. If a car is swapped mid-hire after a breakdown, the agreement must show which car the customer had when, or a notice for the second car points at nobody.

Council parking penalties, private parking charges and road user charges each have their own hire-firm route, with their own wording and deadlines. Private parking, for example, needs a statement in which the hirer acknowledges responsibility for parking charges and gives an address for documents (Protection of Freedoms Act 2012, Schedule 4, paragraph 13). Those routes are set out in PCNs and fines on hire cars. Ask your adviser whether your statement covers every regime your cars will meet.

4. Licence checks, and what to record

A GB licence holder can create a DVLA check code using their licence number, National Insurance number and postcode, letting you see the vehicles they can drive and any penalty points or disqualifications; the code is valid for 21 days and the service does not cover Northern Ireland licences (GOV.UK: view or share your driving licence information). You need the code and the last eight characters of the licence number, and the code can only be used once (GOV.UK: check someone's driving licence information).

Because the code is single-use, what you record at the time is all you will have later. For each driver, including additional drivers, that means the date of the check and who ran it, the categories, points and any disqualification shown, and the licence particulars Schedule 2 requires. Your insurer's conditions decide which licences, ages and point totals you can accept, and overseas licences have no DVLA check at all. Write those conditions into the agreement as the customer's declaration.

5. Deposits, excess and damage

Schedule 2 lists as potentially unfair a term requiring a consumer who fails to fulfil their obligations to pay a disproportionately high sum in compensation (Consumer Rights Act 2015, Schedule 2, paragraph 6). The CMA's examples include a fixed arbitrary sum for any breach, claiming all costs rather than net costs resulting directly from the breach, being compensated twice for the same loss, and a term that gives the trader excessive discretion over the sum or is vague about it (CMA37, paragraph 6.63).

The same guidance contrasts two security deposit clauses. One that simply reserves the right to keep some or all of a deposit for damage is unlikely to be fair. One that allows a deduction only where the trader can reasonably demonstrate the damage happened during the customer's use and was not wear and tear, tells the customer the amount, reasons and evidence such as photographs, and gives them time to respond, is more likely to be fair (CMA37, examples following paragraph 6.84). The example concerns holiday property, but the logic carries across. A damage clause on that pattern states:

1. the excess in pounds for each cover level, shown before payment;
2. how condition is recorded at pickup and return, and that the customer can see that record;
3. how a charge is worked out, from a repair quote or invoice rather than a figure you choose;
4. that the customer is told the amount, reason and evidence before any charge, and how long they have to respond;
5. how a deposit or card hold is taken and released.

The excess is part of the price, so section 64 applies: an excess buried on page four is a weaker term than the same number shown beside the daily rate. Card surcharges are a separate rule, covered in the start-up guide's payments section.

6. Fuel and mileage

No statute sets a fuel or mileage policy for hire cars, so these terms are judged by the general rules. Schedule 2 lists as potentially unfair a term letting the trader decide the price after the consumer is bound, where no price or method was agreed (Consumer Rights Act 2015, Schedule 2, paragraph 14). The CMA says financial sanctions are more likely to be fair when the sum is objectively proportionate, the circumstances are clear and upfront, and the consumer can easily avoid it (CMA37, paragraph 6.65). That points to terms stating:

• the fuel or charge level the vehicle leaves with and must return at;
• how a shortfall is charged: a per-litre rate or a stated refuelling fee in pounds, not "at our discretion";
• the included mileage, the per-mile rate beyond it, and how the odometer is read at both ends.

Operators find most fuel disputes are about evidence, not price. A photograph of the gauge and odometer, shown to the customer at handover and return, settles more arguments than any clause.

7. Data, and the licence photo

The ICO says people must be told, when you collect their data, the purposes, your retention periods and who it will be shared with (ICO: the right to be informed). So the agreement or booking form should link to a privacy notice, and that notice should say you pass hirer details to issuing authorities when you transfer a penalty.

Data must be adequate, relevant and limited to what is necessary (ICO: data minimisation), and you must not keep it longer than you need, must be able to justify how long you keep it, and need a policy setting standard retention periods wherever possible (ICO: storage limitation). The ICO notes that guidance is under review following the Data (Use and Access) Act, so check it again when you set your policy.

For a hire business, retention has a concrete anchor: section 66 lets an authority ask for the originals up to six months after a notice to owner is served, and notices can arrive weeks after the hire ends. That argues for keeping the signed agreement and licence particulars for a defined period covering those windows, and deciding separately whether you need the licence photograph once the check is done. The length of that period, and whether an electronically signed agreement satisfies a request for "originals", are questions for your legal adviser. The ICO fee is covered in the start-up guide's data section.

Whatever runs your bookings needs the agreement findable by registration and date when a notice arrives. Glovebox keeps your agreement and declarations with each booking and the licence details and photo on the customer record; the UK features page lists the rest.

The checklist

1. Decide with your legal adviser whether consumer and business hirers get the same terms.
2. Have the agreement read against CMA37, with prices and the excess shown prominently.
3. Publish a tiered cancellation policy, and say what happens when you cancel.
4. Include a section 66 statement of liability, and confirm it also covers parking and road user charges.
5. Capture every Schedule 2 particular, including substitute vehicles and the actual return time.
6. Run the DVLA check code for each GB driver and record the result at the time.
7. Write damage, fuel and mileage charges as stated methods and sums, with evidence and a right to respond.
8. Link a privacy notice, set a retention period, and keep originals findable for the section 66 window.

Straight answers