Legal Definitions - hell-or-high-water rule

The hell-or-high-water rule is a legal principle that applies in two distinct contexts:

1. In Personal Property Leases:

• This rule dictates that when an individual or business leases personal property (such as equipment, machinery, or vehicles, as opposed to real estate like land or buildings), the lessee (the person or entity leasing the property) is generally obligated to make all required payments to the lessor (the owner of the property) for the entire lease term. This obligation holds true even if the lessee encounters problems with the leased property or has disputes with the lessor. The only exceptions are if the lessee can prove they had significantly less bargaining power when the lease was signed, or if the lease terms themselves are found to be extremely unfair or oppressive (legally termed "unconscionable").

• Example 1: A small landscaping company leases a specialized commercial lawnmower for a three-year period. Six months into the lease, the lawnmower begins to malfunction frequently, requiring costly repairs and causing delays in the company's projects. The landscaping company wants to stop making lease payments until the lessor fixes the issues or provides a replacement.

  Explanation: Under the hell-or-high-water rule, the landscaping company would still be legally required to continue making its lease payments. Its grievances regarding the lawnmower's performance or the lessor's service are separate matters that it would need to address through other legal avenues, rather than using them as a justification to withhold payments.

• Example 2: A startup tech company leases high-end computer servers from a large data center provider for a five-year term. Two years later, the server manufacturer unexpectedly goes out of business, making it impossible to obtain replacement parts or technical support for the leased equipment. The tech company argues it should not have to pay for servers that can no longer be properly maintained.

  Explanation: The hell-or-high-water rule would typically still obligate the tech company to continue making its lease payments to the data center provider. The manufacturer's closure, while problematic for the lessee, does not automatically relieve the tech company of its payment obligations to the lessor, unless the lease agreement specifically provides for such a contingency or the tech company can demonstrate unconscionability or a severe imbalance of bargaining power at the time the lease was signed.

2. In Automobile Liability Insurance:

• In the context of automobile insurance, this rule means that if you borrow someone else's vehicle and are involved in an accident, your own personal automobile liability insurance policy will generally provide coverage for damages you are legally responsible for. This coverage applies *only if* you were using the borrowed vehicle in a manner that was strictly within the scope of the permission granted by the vehicle's owner. If you deviate from or exceed that permission, your own insurance policy might not cover the incident.

• Example 1: Emily asks her friend, Ben, if she can borrow his SUV to pick up a large antique cabinet she purchased, specifying she will drive directly to the store and back home. Ben agrees. While driving the SUV to the antique store, Emily is involved in a minor collision that is determined to be her fault.

  Explanation: Since Emily was using the SUV precisely within the scope of the permission Ben granted (driving to the store and back for a specific purpose), her own automobile liability insurance policy would typically cover the damages she is responsible for in the accident.

• Example 2: Mark borrows his sister's car to drive to a doctor's appointment across town. His sister explicitly tells him not to let anyone else drive the car and to return it immediately after his appointment. After the appointment, Mark decides to pick up a friend and allows the friend to drive the car to a different city for a concert, where they are involved in a significant accident.

  Explanation: In this scenario, Mark's own liability insurance might *not* cover the accident. By allowing another person to drive the car and by driving to a location beyond the scope of the original permission, he exceeded the specific terms of use granted by his sister. The "hell-or-high-water rule" here means his coverage is contingent on his strict adherence to the permission given.