Reading time: 4 minutes

If you run an equipment hire business, there are multiple ways you can provide your services. For example, you may choose dry hire, wet hire, marketplace hire or hire-to-purchase. Regardless of how you arrange your business, however, you will need an efficient hire agreement. Your equipment hire agreement tells your clients the terms and conditions under which you will provide the service. This article discusses the key terms to include in your equipment hire agreement.

Delivery, Pickup and Returns

You will need to decide whether you will: 

  • deliver the equipment to your client; or 
  • have the client collect and return the equipment to you. 

You should state what the process or penalty will be if a client fails to pick up a piece of equipment or returns it late. 

For example, you may wish to ensure that if the client fails to pick the equipment up within a certain time frame, you will not continue to hold the equipment for them. This means that you will be able to hire the equipment to somebody else if a walk-in client who is ready to pay approaches you. 

You may also wish to outline a fee the client must pay if they return the equipment late or whether it roles onto the daily rate of the next day.

Security Bond

Holding a security bond while the client uses the equipment can help to manage your business’ risks. It is essential to include this in the equipment hire agreement so the other party understands what you can use the security bond for in the event that they damage the equipment or fail to return it on time. A bond can only be offset against damage that actually occurs. 

For example, you can subtract the cost of repairing a damaged item from the bond.

Requirements and Conditions for Using the Equipment

You should include specific requirements for the client who will be using the equipment.

For example, you may set a minimum age or require a driver’s licence if the client will be driving machinery.

You also may want to include specific instructions on how to use your piece of equipment. 

For example, your forklift may only take diesel fuel. If this is the case, you should ensure the client is aware of this and any other aspects that may be unique to your equipment. 

Limitation of Liability and Indemnities

You do not want to be responsible for any loss, theft or damage that occurs while the client is in possession of the equipment. Therefore, you should require the client to indemnify you for any loss or damage to the equipment. 

For example, if you hire out a jukebox and a patron at a bar falls into it and breaks it, you want to ensure your client is liable for the damage and not your business. It is important to outline specific risks that relate to your business in the contract, to ensure that the indemnities cover your risks.

Minimum Hire Periods 

You may want to impose minimum hire periods regardless of how long the person intends to hire the equipment for. This may be commercially sensible, as doing so: 

  • protects your business; and 
  • ensures the equipment does not sit unused for periods of time. 

You need to make sure that you identify and disclose any minimum hire periods to your client before they sign the equipment hire agreement.

Cancellations and Refunds

You cannot charge unreasonable penalties for cancellations or refunds. You are also legally required to mitigate any losses you suffer as a result of a client’s actions. For example, if someone cancels, you should try to find another person to hire the goods rather than expecting the person cancelling to pay the entire amount. Also, you should not make the customer who has cancelled pay the full amount and then charge a new customer the same amount for the same piece of equipment. 

In your agreement, you may want to set out: 

  • a certain mandatory notice period for both cancellations and refunds; and 
  • Whether you will charge a fee.

Key Takeaways

It is important for you to have a clear and accurate equipment hire agreement to ensure your clients understand and agree to the details of your service. Some key terms include:

  • delivery, pickup and returns;
  • security bond;
  • requirements and conditions for using the equipment;
  • limitation of liability and indemnities;
  • minimum hire periods; and
  • cancellations and refunds.

If you need help with drafting your equipment hire agreement, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

Webinars

Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

Online
If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Online
Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Online
Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Online
Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Online
Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Online
Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Online
Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

Online
As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Rowan O'Neill
Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards