EQUIPMENT HIRE AGREEMENT: HOW DO I KNOW IF MY HIRE AGREEMENT HAS BEEN DRAFTED CORRECTLY?
From the outset, hire agreements can appear to be quite simple and easily accessible.
De Marco Lawyers have come across several clients who have requested advice regarding a hire agreement template they have seen on the internet. Whilst these templates can be accessed relatively easily and without expense, they are not specifically tailored to the individual or company proposing to hire out equipment.
To assist you in understanding the main components of a hire agreement, and whether your agreement has been drafted correctly, De Marco Lawyers outline their ABC’s for creating and reviewing a hire agreement.
A is for “Agreement Details”
A hire agreement should identify the use, maintenance and operation of the equipment being hired.
As an existing or prospective hiring business, you should ensure that you provide to the hirer, written instructions on how to use the equipment and any maintenance requirements that need to be completed by the hirer either daily, weekly or monthly. The agreement should include a clause to the effect that the hirer acknowledges receiving such instructions for use and should the hirer not follow the instructions, or maintenance requirements, they will be liable for any fault as a result. Furthermore, it is important that the agreement includes such a provision that prevents the hirer from altering the vehicle in any way without written consent of the hiring business. Such alterations can include any repairs, removing identifying marks or safety information on the equipment.
B is for “Bond”
To protect your interests, De Marco Lawyers recommend that every hire agreement include a clause that requires the hirer to pay a bond or security deposit which is conditional upon the return of the equipment in its original condition (other than general wear and tear). Should such clause not exist in an already existing agreement, we recommend a clause be added to the agreement which requires the hirer to pay a security deposit at the commencement of the term of hire. Such security deposit clause will allow you to recover costs (should there be any) upon the return of the equipment. However, we note that the sum of the security deposit will have to be considered carefully as a high security deposit may deter potential customers.
C is for “Customer Cancellations”
A hire agreement, like any agreement, should cover the event of customer cancellations. This includes a consideration as to the amount of notice required to exit the agreement without penalty, or whether a cancellation fee will be charged to the hirer.
D is for “Delivery Conditions”
Any specific delivery and pick-up conditions should be detailed within the hire agreement. This includes delivery timeframe and delivery area. Whilst this does not have to be thoroughly covered within the hire agreement terms and conditions, it should be listed within the Schedule annexed to the agreement.
In general, De Marco Lawyers recommend that the following questions are considered when reviewing your hire agreement:
Whether the hiring business or the hirer will be responsible for delivery/collection of the equipment at both the commencement and termination of the agreement;
When, after signing the agreement, can the equipment be collected or delivered;
What locations will the hiring business deliver to and what will happen should the hirer be located outside of the specified delivery area; and
Consequences (if any) should the customer not be available to collect or receive the equipment within the agreed timeframe.
E is for “Exclusion of Liability”
Most importantly, a hire agreement should include an indemnity clause that limits the owner’s liability should the hirer be at fault. This should be drafted to protect your interests so far as the law allows.
De Marco Lawyers recommend that any agreement template, particularly those downloaded off the internet, are properly reviewed to ensure you and your business are protected.
This article is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this article without first obtaining specific professional advice.
DISCLAIMER: We accept no responsibility for any action taken after reading this article. It is intended as a guide only and is not a substitute for the expert legal advice you can get from De Marco Lawyers and other relevant experts.