Equipment Lease Agreement

What is an Equipment Lease Agreement?

The Equipment Lease Agreement is used when equipment is being rented from a lessor (person or entity who owns the equipment) to a lessee (person or entity intending to use the equipment on rent).

The lessee gets the right to use the equipment and, in return, makes the rent payment. However, the Lessor retains ownership and the option to cancel the Lease agreement in accordance with the terms of the Lease Agreement.

The Equipment Lease Agreement can be used for business or personal use. It can be utilized for renting any type of equipment, including heavy machinery, computers, servers, etc.

Is it mandatory to have an Equipment Lease Agreement?

No, it is not mandatory. However, having a written Equipment Lease Agreement will help both parties understand the clear terms of use and avoid potential legal disputes in the future.

Who can enter into an Equipment Lease Agreement?

Any individual above the age of 18 years, or registered a legal entity can enter into an Equipment Lease Agreement. If the signatory is a business, the person signing the Equipment Lease Agreement must have proper authority in the form of a power of attorney or board resolution.

What has to be done once an Equipment Lease Agreement is ready?

The completed document should be provided to all parties. Each party should be given the opportunity to read the agreement and may need some time to do this given the length of the document.

The Equipment Lease Agreement would need to be printed on non-judicial stamp paper or e-stamp paper, which is available in certain states. The value of the stamp paper would depend on the state in which it is executed as well as the duration of the lease and the lease rent. Each state in India has provisions regarding the amount of stamp duty payable on the lease deed; the same would need to be determined based on the case's specific facts.

After printing the document on stamp paper or e-stamp paper, as applicable, both parties should sign the lease agreement, and each party should keep a copy of it.

What must an Equipment Lease Agreement contain?

The Equipment Lease Agreement must include the following clauses:

• Party Details: Name and details of the party entering into the agreement.
• Equipment Details: Details and condition of the equipment, including serial number, model, company, etc.
• Lease Term: Term or Duration of the lease.
• Delivery Terms: Who will be responsible for the delivery of the machinery.
• Renewal: Whether the lease has the option to renew.
• Sublease: Sublease or assignment option;
• Payment Terms: Rent, security deposit, frequency of payment, tax, etc.;
• Conditions of Use: Accepted uses of the equipment, including maintenance and repairs.
• Insurance: The party responsible for maintaining insurance.
• Termination: Options for termination of the agreement and return of the equipment.

Which laws are applicable to the Equipment Lease Agreement?

The rules and regulations under the Indian Contract Act, 1872 would be applicable to the Equipment Lease Agreement.

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.