If you are a party hire business, you should protect yourself from any risks or maintenance costs that arise from equipment like jumping castles, ball pits and water dunk pools. A hire agreement can help manage those risks and set out your customers’ obligations when hiring equipment. This article explains the purpose of a hire agreement and what you should include in such a contract to ensure a drama-free party experience.
What is a Hire Agreement?
A hire agreement is a written contract that governs the hire and use of equipment between a business and the person who hires equipment. A hire agreement provides a guide as to what customers can expect from hiring the equipment, as well as a dispute resolution process.
Your agreement should cover five key areas of potential risk, such as:
- use of hire equipment;
- delivery and pick-up;
- cancellation terms;
- security deposit; and
- limitation of liability.
1. Use of Hire Equipment
Your hire agreement should reflect the risks associated with the equipment’s set-up, use and maintenance needs, as well as customer expectations for using the equipment.
You can provide written instructions to your customers when they book the equipment. Alternatively, you can provide a hard copy on the day of pick-up or delivery. Your hire agreement can then state that your customers should follow all instructions, such as your provided written instructions.
Your instructions, depending on the type of equipment used, may provide details such as:
- what type of power outlet is required to operate the equipment (for example, you may need 240 volts to inflate a jumping castle);
- how customers can access the equipment at an agreed delivery location;
- the need for customers to provide a flat surface;
- the requirement for a safe and clean environment, such as banning food or drinks on or around the equipment;
- whether children will be supervised around the equipment by responsible adults;
- whether the customer must independently assess the safety of equipment because of adverse weather conditions; and
- when customers should stop using the equipment because the weather conditions impair visibility or increase the risk of injury.
Delivery and Pick-Up
Consider what you will offer your customers concerning delivery and pick-up. Pick- up may not be suitable for large and heavy hire items. However, pick-up can work for smaller equipment. Customers may also appreciate the greater flexibility of making personal arrangements. Your delivery terms should consider:
- what your delivery window will be. For example, will you deliver within a four-hour window in either the morning or afternoon as indicated by the customer;
- what your delivery area is and whether you will deliver outside that area for a fee;
- whether delivery can be requested for a specific time and outside of business hours, including weekends, and whether you charge an additional fee for delivery outside business hours;
- what happens if the customer is not available to receive the equipment at the agreed delivery time. For example, will your customers authorise you to leave the equipment at the agreed delivery location;
- what will happen if you cannot access the delivery location at the agreed time; and
- if you will charge extra fees to re-deliver the equipment?
Cancellation Fees
You should also anticipate what will happen when things don’t go to plan, such as customers cancelling their order. You may want to consider how much notice is required for customers to cancel an order and what fees are payable. Your cancellation fee should depend on the opportunity cost. Can you rehire the goods at short notice? If not, you may consider not providing any refunds in your hire agreement. Alternatively, you can provide a sliding scale of cancellation fees.
You may want to allow for refunds because of adverse weather, especially if your party hire equipment is for outdoor use only. You can also cancel the hire if adverse weather would damage the equipment or make it dangerous to use.
Security Deposit
A security deposit usually involves a hold on a credit card for a specified sum or a cash amount. Your customers will pay the deposit when hiring the equipment. You can have a clause that allows you to hold onto the deposit if the customer damages, dirties or fails to return the equipment.
A security deposit can allow you to recover some out-of-pocket costs if anything goes wrong with the hire. However, you have to balance your potential risk against customer satisfaction, as a substantial security deposit may turn off potential customers. Alternatively, you may consider taking out an insurance policy to cover your costs and forgo the need for a security deposit.
If you require a security deposit, your hire agreement should specify:
- the cost of the security deposit;
- how the customer will provide the deposit;
- how long you will hold onto the deposit and when you will return it; and
- when can you use the security deposit.
Limitation of Liability
Hiring out equipment for a party comes with risks. Some risks may be obvious to any reasonable customer, while you may be aware of risks based on your experience running a party hire business. You should limit your liability wherever you can (especially for any events that occur beyond your control) without breaking any laws.
Running a party hire business comes with risks. If you do not actively manage these risks, you will struggle to remain profitable despite delivering an excellent service. Therefore, your hire agreement should include an indemnity clause that limits your business’ liability. The clause should reflect your business’ risks as well as the particular risks of the equipment.
An indemnity clause does not mean you can ignore the Australian Consumer Law where you must provide services with care and professionalism. Furthermore,the clause does not waive any duty of care you owe to customers for ensuring they are aware of the risks when they hire your equipment.
Key Takeaways
If you run a party hire business, you should have a hire agreement that reflects the nuances of your business, protects your interests and limits your losses in case something goes wrong.
A properly drafted hire agreement should address:
- use of party equipment;
- delivery and pick-up terms;
- cancellation fees;
- security deposit; and
- limitation of liability.
If you have questions or you need a hire agreement drafted or reviewed, get in touch with LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.
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