Equipment Lease Agreements FAQ
What are Equipment Lease Agreements?
Equipment Lease Agreements are a type of contract in which two parties (both an owner and a renter) agree to the terms of a long-term rental of a particular piece (or pieces) of equipment. The Equipment Lease Agreement is separate and distinct from other types of lease agreements, such as Residential Lease Agreements, in the subject being discussed in the contract.
An Equipment Lease Agreement is different than a short-term rental because leases typically run for longer periods of time; during the terms of a lease, the renter typically has some responsibilities for care and maintenance of the equipment that make a lease more like a temporary ownership rather than a short-term rental.
What kind of equipment falls under the jurisdiction of an Equipment Lease Agreement?
Just about any type of equipment you can name – as long as it is legal to lease out to someone and it is outlined in the terms of the Equipment Lease Agreement – can qualify. As for specific examples of equipment that most warrant a contract like an Equipment Lease Agreement, it’s important to note that equipment varies from industry to industry. Some examples might include high-tech video equipment or other electronic equipment that a business or production company needs to use while not being able to afford a full purchase of the equipment in question.
How does an Equipment Lease Agreement differ from other types of lease agreements?
Aside from the subject that the Equipment Lease Agreement deals with, there are a few subtle differences in this type of agreement that are worth taking a look at. For example, a provision in an Equipment Lease Agreement might cover the use, maintenance and storage of the equipment in question; this type of provision will look entirely different if you are signing an automobile lease or a residential lease.
Because the rental of equipment requires different upkeep and maintenance than other types of property, it’s important for the owner of the equipment to establish the ground rules for how the equipment is going to be treated throughout the terms of the lease. Additionally, a provision identifying and describing the condition of the equipment being leased should also be included in most Equipment Lease Agreements.
Who is liable for repairs if the equipment is broken?
The lease should detail this itself, but typically there will be an explicit outline of who is responsible for the repairs of the equipment if it is broken during the renter’s use. If the renter uses the equipment in a way that is not prescribed in the lease, then the liability will likely fall to the renter; because their usage was not part of the agreement, they may have to cover the costs. The key to avoiding this kind of liability is to stick closely to the terms of the lease as written, even if you receive assurances from the owner verbally that what’s written is not necessarily the case.
As a renter, do I have to return the equipment in the same shape?
Not necessarily. Normal wear and tear is part of the bargain for most leases, and equipment leases are no exception. If you take a look at your own Equipment Lease form, you should find a provision that mentions how the equipment is to be returned. If you have not yet used the Equipment Lease Agreement that you intend to use, be sure that you check for this type of provision in order to establish the proper expectations going into the terms of the lease.
When do I have to return the equipment?
If you’re the renter, the terms under which you should return the equipment will be explicitly laid out in the Possession and Return of Leased Equipment provision in your Equipment Lease Agreement. If you have not yet signed such an agreement, be sure to look at what’s written to have an idea of what will be expected of you when it comes time to rent the equipment out from its owner.
As an equipment owner, is there anything about Equipment Lease Agreements I should be aware of?
As the owner, you should be aware of everything that goes into the lease agreement that you’re signing. Be sure that all of the terms are laid out explicitly and in clear detail. You’ll also want to be sure that you enter in the correct details as is relevant through each of the provisions; for example, make sure that you clearly define how the equipment is to be maintained and cared for throughout the lease terms.
When is an Equipment Lease Agreement valid?
Provided that the equipment being rented out is legal, the requirements of an Equipment Lease Agreement’s validity hinge upon issues most common to contract law. For example, it is imperative that both parties be of legal age to sign, that they are of sound mind when signing the contract and that they are not influenced in any way into signing the contract under duress. Additionally, the equipment will have to be owned by the party claiming ownership, otherwise the entire Equipment Lease Agreement could be considered invalid.
When is an Equipment Lease Agreement enforceable?
After validly signed, the most important aspects of the Equipment Lease Agreement will hinge upon the lease term dates. The contract is technically enforceable once it’s signed, but its true enforceability will never be called into play unless some aspect of the lease has been violated, which technically can only happen within the terms of the lease.
When is an Equipment Lease Agreement effective?
After its valid signing. This effectiveness will then continue on through the life of the lease itself. The contract is still effective even after the lease ends; for example, the owner might discover that the equipment was not cared for in the way it should have been and may challenge the renting party in the legal system. In this case, the lease is still considered effective and active.
