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Lessors Beware

BY Barry A. Graynor
September 24, 2013

Shipping containers are large reusable boxes designed for the efficient carriage of cargo worldwide. Because they are intermodal (they can be used in the shipment of goods by rail, sea or highway) and secure (after goods are loaded at their origin, the container is typically sealed until unloaded at its final destination), shipping containers have been instrumental in promoting the growth of world trade. Shipping containers are financed in many different ways. One common structure is for an owner to hire a manager, such as Textainer Equipment Management, to manage the containers and lease them out to a third party on a short- or long-term lease. The third party, in turn, may sublease the containers to yet another party.

Textainer Equipment Management Limited

Those were basically the facts in Textainer Equipment Management Limited v. The United States, 2012 WL 5465983 (Fed.Cl.). The equipment managers (Textainer, CAI International, and Cronos Containers) leased certain intermodal containers to a company called TOPtainer. TOPtainer, in turn, subleased the containers to the U.S. Army pursuant to a Master Lease Agreement. The Master Lease between TOPtainer and the Army was already in place when the managers signed their respective leases with TOPtainer.

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