Equipment Rental Contracts: Everything You Need to Know
It is good practice to use a rental agreement of equipment rental contract anytime that you rent something from or to someone else. Not only will a contract help to limit your liability, but the contract also will provide protection for your equipment.3 min read
2. Forms That Should Accompany an Equipment Rental Contract
3. Sections to Include in An Equipment Rental Agreement
An equipment rental contract is an agreement between a company or individual and the person that is renting equipment from them. An equipment rental contract should include such things as:
- Both the owner's and borrower's legal names and addresses
- A full description of the equipment
- The cost of the rental
- The period of time the rental agreement is for
- Any security deposits that are required
- Fees for late returns
- The expected delivery date
- Location of the rental
- The value of the rental equipment
- Information on severing the agreement
- Address for any necessary notices
- General terms
- Any governing laws
- Any other details relevant to the agreement
When Should I Use an Equipment Rental Contract?
It is good practice to use a rental agreement of equipment rental contract anytime that you rent something from or to someone else. Not only will a contract help to limit your liability, but the contract also will provide protection for your equipment.
When using an equipment rental contract, you will be able to define the terms and conditions of the rental and specify certain conditions such as:
- In what manner and where will the equipment be used?
- Who is responsible for the repair of rental equipment?
- What is the damage deposit and how will it be charged?
- Will interest be charged on outstanding balances?
- Will the renter have the option to purchase the equipment at the conclusion of the rental?
If you have an option to buy within the contract, the renter will have the opportunity to purchase the equipment after the rental period has expired. When creating an equipment rental contract, you can either indicate a buyout price or list the price as negotiable at the conclusion of the rental. An equipment contract can also include additional clauses that will identify which party will be responsible for paying taxes, fees, additional supplies such as fuel, fines incurred for improper use, or coverages like rental insurance.
Forms That Should Accompany an Equipment Rental Contract
When a rental contract is created, it will often be accompanied by other documents such as a bill of sale in a rent-to-own agreement or an invoice form that lists all pieces of equipment being rented in detail, often including serial numbers.
Sections to Include in An Equipment Rental Agreement
When creating an equipment rental agreement, you will want to include verbiage at the beginning stating the names of the two parties, the dates, and the fact that they are entering into a rental agreement. Other sections that should be included in the agreement are:
- Description of the equipment for lease. This section should be as detailed as possible and include all parts and attachments that will be covered under the lease.
- Payment terms, including the rental fees and other charges including any conditions or fees that may be imposed when payment is late.
- The process for handling returned payments. If you charge return check fees, the amounts and policy should be listed in this section.
- Information regarding any security deposits and how they will be handled at the termination of the agreement.
- The terms including the duration of the lease and whether or not it can proceed month to month after.
- Location information where the equipment will be kept including the addresses of all locations it may be kept.
- A list of any care that is required for operation of the equipment and who is responsible for it.
- The amount of insurance the lessee must keep for coverage on the equipment.
- The amounts for taxes and fees that the lessee will be required to pay.
- Verbiage is stating that the lessee can not make any alterations to the equipment.
- Information on who is responsible for maintenance and repair costs for the equipment.
- A statement listing the lessee's renewal options and buyout options if offered.
- A section discussing what will constitute a default of the lease agreement.
- A section explaining the limitation of liability.
- How disputes and resolutions will be handled.
- An included indemnity clause.
- Information explaining the contract's severability.
- A section discussing a waiver.
- A section explaining a Force Majeure or catastrophic exceptions to the performance of obligations.
- A statement stating that the current rental agreement will supersede any previous agreements.
- An included section for signatures, dating, and witnesses.
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