Careful planning is the most important thing to put into any rental business. This planning needs to cover the company from every angle — logistically, technically, and legally. Nothing should be left to chance when it comes to your business.
Developing a formal construction equipment rental contract is a vital task that your rental business needs to start offering equipment rentals. While this might seem like a challenging task, we’ve got some clear guidelines to help you out.
What Is an Equipment Rental Contract?
Just about every kind of business out there relies on some sort of contract to nail down what exactly the service being provided entails. Defining this agreement is important to prevent confusion between companies and customers and to provide evidence of the nature of the contract if legal action ever needs to be taken.
A construction equipment rental contract is similar to the contracts many businesses deal with but covers both customer and business responsibilities. Considering that you have valuable equipment on the line every time you rent it out, you want your equipment rental contract to be ironclad and incredibly clear.
What Should an Equipment Rental Agreement Include?
Your construction equipment rental contract needs to clearly define the terms of the rental or lease in question. It is imperative not to overlook any details when preparing an equipment rental agreement because any ambiguity could end up being decided in favor of the customer if you ever face legal action.
Of course, you also want your equipment rental contract to be clear to make customer relations go smoothly. If a customer understands all of the terms of the rental clearly, they won’t end up disappointed or dissatisfied by any misunderstandings.
To protect yourself legally and keep your customers happy, make sure your construction equipment rental contract includes the following:
The Specific Equipment to Be Rented
Your equipment rental contract needs to specify very clearly what particular equipment is being rented. You don’t want to ever have to deal with a customer returning a similar but different piece of equipment and having only your word against theirs to rely on. Keep in mind that this should include any accessories and attachments as well.
The Length of the Rental
The construction equipment rental contract needs to define how long the rental term will be. Is the user renting your equipment for a day, a month, or indefinitely?
The return deadline should be clearly stated. If you’re arranging without a set end date, you’ll need to define additional terms for billing and what constitutes the end of the lease.
The Rental Rate
Of course, your agreement needs to define what the price is for the rental. This section should include a complete breakdown of the costs, not just a total. The rates should be set for each piece of equipment and be listed as the per day, per hour, or week rate. Don’t forget to be clear about accepted payment methods as well.
Limitations and Liability
Part of running a construction equipment business is dealing with the regular wear and tear and consequent maintenance involved. However, your agreement should have clear limitations defining what is and isn’t allowed, holding the customer liable if they damage the equipment through negligent or inappropriate use.
Insurance is one of the most complex aspects to deal with when defining a rental agreement. The contract must identify who is responsible for equipment insurance. Does the customer need to acquire their own insurance, or does your equipment rental business insure the equipment during rentals?
Every agreement should clearly state who is responsible for transportation. This section is one of the most common sources of disputes between customers and rental businesses, whether the equipment needs to be picked up by the customer or dropped off by the company.
As the owner of the equipment, it’s in your best interests to include some provision for terminating rentals at will. This section will allow you to demand the return of equipment in some extenuating circumstances.
Without these terms, you could find yourself without any recourse if you know that customers are misusing equipment or breaching terms.
With construction equipment, the actual duration that contractors need equipment can vary widely from their initial estimates. This variability means that they could require the rental longer.
Contractors will often look for businesses that provide attractive renewal options. Your agreement should define renewal rates and notice periods for extending the rental.
Most types of construction equipment require regular maintenance that would fall within the typical duration of rental agreements. It’s essential to define these maintenance responsibilities to avoid negligence from customers leading to equipment damage without your rental business having any effective recourse.
The warranties defined in your rental agreement show what the primary expectations for your equipment rentals will be in terms of equipment quality and condition. In general, this protects the customer more so than the business. Many customers will be unwilling to rent without well-defined warranties guaranteeing that equipment works as intended.
Our Downloadable Rental Agreement Template
There’s a lot to keep in mind when setting up rental agreements for your rental business. We can make things a bit easier with this handy downloadable rental agreement. Of course, make sure to look over it carefully and ensure that it’s in line with the terms you want to set for your construction equipment rental contract.
Starting Your Construction Equipment Rental Business Off on the Right Foot
Having a reliable equipment rental agreement is an absolute must for your business, but there’s so much more that goes into running that business well. Reservations and inventory management are two of the most important areas to handle properly if you want to succeed.
Quipli provides rental businesses with a dedicated platform for seamless inventory and rental management, along with other tools for growing your business. Just contact our team today to book a demo and see what we can do for you.