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Whatever kind of rental equipment you offer, providing exemplary and trustworthy customer service is crucial to your business. By outlining all rental terms and restrictions in detail in an equipment rental agreement terms and conditions, you can build trust with your clients and protect your business against legal headaches.
It can seem overwhelming to draft a contract for your rental business. There are countless possibilities to cover, and you may not be sure which ones to include or exclude.
In our experience, below are the 7 crucial elements that must be included in a quality equipment rental agreement.
Sometimes customers could not understand what they’re paying for without a contract, and the extent of what you’re providing might not be evident.
All of this could result in fraud and create uncertainty around deadlines for deposits, cancellations, returns, and other crucial dates.
According to the research of Statista,
“The global equipment rental industry generated almost 87.5 billion U.S. dollars in 2019. I generated around 93 billion U.S. dollars in revenue during 2021.”
As you start your rental business, it’s important to know these tips to start and run your equipment rental business smoothly.
Remember that not all of these tips are relevant for your business, so apply only those that seem appropriate for your company.
So, let’s take a look.
Give a brief description of the parties to the agreement. Include the names and addresses of the companies, as well as the specifics of the agreement.
Your business should be identified as the lessor and your client as the lessee in an equipment leasing agreement. Also, the parties’ names should be accompanied by such contact information as may be necessary to ascertain the identity of the parties.
Moreover, the full name, address, and phone number of each client or business should be included in the details. You have to make sure the customer’s real name is on the agreement for it to be valid.
The things that were rented out in a transaction are listed in this section. It may also include details about the rental goods, such as their name, number, cost, and equipment vendor.
An agreed-upon rental period governs each rental transaction. This spans the time between when a piece of equipment is rented to a customer and when the customer is required to return it. Moreover, the customer is required to return the equipment by the defined dates stated in the agreement.
Most significantly, if the customer needs to rent the equipment for a longer period of time than originally negotiated, the contract is renewed with new dates.
Include a section describing who is liable for transportation, staging, and pickup costs when your business delivers rental equipment to clients. Establish the boundaries of deliveries and pickups.
For example, you have to clearly define the delivery, pickup, and return points. You don’t want consumers to request additional work without paying for it simply because the delivery process’s parameters were unclear.
Even though 99% of rentals go off without a hitch, a well-written contract can help make your business’ terms clear and resolve payment problems more quickly.
Give details regarding any retainer or non-refundable deposit requirements. State that a signed contract permits you to charge the customer’s debit or credit card on file for any payments.
Also, you can include security deposit and fees due under the agreement and, if applicable, include your security deposit. Include specific payment terms; otherwise, you risk having to wait weeks to get paid.
The sum of money that a customer is required to pay as compensation for the rented equipment is specified in this section.
Moreover, you can establish the rental fees for your equipment rental business on an hourly, daily, weekly, or monthly basis depending on the sort of equipment you rent out and your customer’s workflow.
Customers that return equipment after the deadline have an adverse effect on inventory levels and upcoming orders. The rental agreement should include a late fee to avoid this from happening.
An upfront, predetermined cost is often charged as a security deposit to protect your company. Depending on the damage and if it makes up for the loss, you may be able to deduct some or all of the amount in the event of damage.
If the rented items are returned on time and undamaged, the security deposit may be immediately and fully refunded. The security deposit amount and terms must be specified in the rental agreement.
By ensuring your rental equipment, you can reduce your company’s and your client’s obligations.
The insurance might cover injuries sustained while using the equipment as well as loss or damage to property, equipment, or both. So, you have to clearly define the insurance policies for the rental business.
In the event that the customer decides to purchase coverage, the insurance charge may be added to the rental price.
The amount that a client will pay in the event that they damage the rented equipment is specified in this clause of the rental agreement.
Therefore, the value of the equipment after the rental time is typically used to calculate this. This section mostly deals with broken equipment that can’t be repaired and returned to service.
The guidelines for proper usage and handling are described in this section of the rental agreement. Numerous regulatory agencies demand that specific things be used and preserved in accordance with the rules they have established
To ensure that users of the equipment operate it appropriately, it might contain some important operating advice. These requirements for compliance by both parties during the storage of rental equipment are normally laid out in this section on care instructions.
Repair and replacement terms should be specified in detail in an equipment rental agreement to prevent misunderstandings. Rental businesses rely on their clients to use their tools with care.
However, if a customer damages the property while it is rented out, they are responsible for paying for any necessary repairs.
Before signing the equipment rental agreement, all parties must be aware of its terms and conditions.
Each party’s signature, name, date, and position must be entered in the signature boxes provided at the bottom of the agreement to verify that the terms of the agreement are followed.
The parties may also elect to electronic signature in the agreement in order to expedite the renting-out process. Having a digital signature option in place makes filing, searching and recovering rental agreements that much easier in the event a dispute arises.
Inform your Customers the degree of flexibility they have after you’ve processed their reservation. You need to give clear instructions on what will happen if an order is canceled before the final balance due or after the final balance is due.
In this regard, if the order is canceled before the final balance is due, the down payment will be forfeited. If the order is canceled after the final balance is due, all payments may be forfeited. As the business operator, you can determine your refund policy and clearly state the policy in the order completion process.
We recommend your review your rental agreement with a Legal professional. Given our years of experience in the equipment rental industry, we are happy to share best practices for rental agreements, but as stated previously, not all of this advice may be suitable for your business.
RentMy offers the flexibility to add and modify your equipment rental agreements as needed, and the available digital signature function not only cuts down on back-and-forth paperwork shuffling, but also helps to protect your business against any disputes from Customers.
The equipment rental agreement terms and conditions for the equipment serve as a binding contract between the parties. It is a crucial document that outlines the parties involved, the rental conditions and prices, as well as their respective rights and obligations.
Clear terms and conditions can be stated in well-written agreements, which can also help you prevent disagreements that could cost you time, money, and value.
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