The equipment rental agreement form is a legal document that outlines the terms and conditions of renting equipment. This legally binding document also specifies the legal responsibilities of every involved party.
Businesses and individuals use this agreement to specify and regulate all important terms of renting equipment like the cost of renting and the rental period. This rental agreement can regulate the renting conditions of any specific equipment. Furthermore, the following types of equipment appears in rental agreements more frequently;
- Heavy machinery
- Vehicles
- Audio and visual devices
- Event/Party/DJ equipment
- Medical equipment
- Power tools
- IT and electronic devices
- Catering equipment
- Storage and disposal units
- Construction materials
- Furniture
- Gym equipment
- Electronics and appliances
- Any other personal property
Table of Contents
Why do companies use an equipment rental agreement?
There are different reasons for using equipment rental agreement by the company. Renting gives a cost-effective alternative to purchasing when additional equipment is required. The businesses who operate on scarce resources and companies that require equipment for one-off projects, it is a usual course of action for them.
Moreover, companies can rent the equipment at significantly lower prices rather than spending capital or taking out a loan from the bank. Aspiring businesses without burning too much of their budget can procure cutting-edge technology through renting. Also, this ultimately improve their working capital flow.
What to include in an equipment rental agreement?
Here are the important elements to include in this agreement;
Details regarding involved parties
You have to include in the agreement the names of lessor and the lessee. These can be the names of either business entities or involved parties. Additionally, the mailing address of the lessor and the billing address of the lessee should also include in the agreement.
The duration of the lease
The agreement must include the duration of the lease or the rental period. The lessee can either agree on a short-term rental period or a longer duration of the lease on the basis of their requirements.
When the individual or the business requires equipment only once and for a specified period then short-term is more convenient. On the other hand, individuals and companies who require the equipment for a more extended period or can’t pay the total price then long term is more suitable for them.
Equipment’s description
Identifiers like product name and serial number must include in every agreement for equipment renting. Describe the equipment in detail because sometimes additional information is required. The model and make also specify in the most agreements. In case, the equipment had already been leased and used before the agreement then you also have to explain any visible damages, marks, or improvements.
The financial terms
The equipment rental agreement must include the following financial terms;
- A general timeline of the payments
- Payment methods
- Due dates for every billing period
- Security deposits
- Taxes
- Fees and penalties
The compensation due to the lessor
In this section, you have to specify the timeline of the payments with greater precision. Both the lessor and the lessee should agree upon a paying structure.
The market value of the equipment
An estimate of the equipment’s market value at drafting and signing must mention in every rental agreement template. This estimate is important because the equipment for rent and lease is usually costly. That’s why, to assess potential insurance costs, the lessee should understand the equipment’s market value.
Tax responsibilities
The lessee have to pay tax on the leased equipment in specific situations. It is important to specify these tax responsibilities beforehand.
Conditions for cancellations
Here, you must include terms of cancellation as there are various reasons for canceling the lease before the end of the rental period. So, you have to state the circumstances when the lessee is allowed to cancel the lease and relevant penalties.
Renewal options of the lessee
The lessee might be allowed to renew the agreement once the lessee expires. So, you must define in the agreement whether the compensation to the lessor will remain the same or not.
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Conclusion:
In conclusion, an equipment rental agreement form makes the lessee able to modify or make adjustments to the equipment. However, they also have to make sure that the usual condition must not be affected by these changes.
