5 things you
need to know
about
Equipment Leasing in Australia
- Many businesses lease equipment, from smaller items such as photocopiers, to expensive and complex products such as cranes and earth movers. Equipment leasing is a specialist legal area, so it is important to work with a lawyer with expertise in the field.
- There are two main forms of equipment leasing arrangements: an operating lease; and a finance lease/hire purchase arrangement. An operating lease arrangement enables the lessee to lease the equipment for a set period of time before returning it. A finance lease/hire purchase arrangement either requires, or gives the lessee the opportunity, to purchase the equipment when the lease expires.
- One of the most important issues when leasing equipment is determining which party will be liable to pay for damages to the equipment. It is vital that the clause relating to repairs is drafted in a way which makes it absolutely clear which party is responsible. That party will then usually purchase insurance to manage the risk.
- An equipment lease may be a security interest for the purposes of the PPSA. If so, it should be registered with the federal government’s Personal Property Securities Register (PPSR). Registration will give the lessor protection, for example in the event the lessee becomes insolvent.
- A specialised leasing lawyer will be able to determine whether your lease covers all the areas that should be addressed or whether there are significant gaps. A leasing lawyer will also advise you on whether the terms are market-standard or unusual and unfair.
