Equipment Hire Terms Template: What To Include

Hiring out tools, machinery, party equipment or AV gear can be a great business model - until something comes back broken, late or not at all.

You need hire terms that do more than list the equipment and the price. The right clauses make it much easier to recover unpaid hire fees, charge for damage, deal with customer misuse and protect expensive gear while it's out of your hands.

If you're using an equipment hire agreement template, it's worth knowing what to look for before you rely on it. Templates can be a helpful starting point, but they often miss the practical details that matter most for your equipment, customers and delivery process.

Do You Need Written Hire Terms And Conditions?

Yes, you should have written hire terms and conditions if your business rents out equipment. Without them, you may struggle to prove what the customer agreed to, especially around loss, damage, late returns and extra charges.

For equipment hire businesses, the agreement usually does a few jobs at once:

• sets out what equipment is being hired and for how long
• explains what the customer can and can't do with the equipment
• allocates responsibility for loss, theft, damage and misuse
• sets payment terms, deposits, bonds and late fees
• covers delivery, collection and site access
• limits your liability where the law allows
• helps you manage risk under the Australian Consumer Law

Your hire terms can sit in a signed equipment hire agreement, online hire agreement terms, a quote accepted by the customer, or a combination of these documents. What matters is that the customer accepts them before the hire starts.

For example, if you send a quote for a scissor lift hire, then send your terms only after the customer has already paid and collected the equipment, it may be harder to argue those terms formed part of the deal. A better process is to require the customer to tick a box, sign, or clearly accept the terms before pickup or delivery.

If you hire to both businesses and consumers, your terms also need to work for both groups. A clause that might be acceptable in a business-to-business hire may not be enforceable against a consumer under the Australian Consumer Law.

What Should An Equipment Hire Agreement Template Include?

An equipment hire agreement template should cover the commercial deal, the condition of the equipment, the customer's responsibilities and what happens when something goes wrong. It shouldn't be a one-page receipt with fine print added later.

Here is a practical outline you can use to check whether your template is doing enough. A lawyer should tailor it before you use it, especially if your gear is high value, risky to operate or often used off-site.

1. Parties: Write the legal names, ABNs or ACNs, contact details and who is authorised to place orders.
2. Equipment Description: Identify the equipment clearly, including serial numbers, accessories, manuals, batteries, cases or attachments.
3. Hire Period: State the start date, end date, pickup time, return time and how extensions are approved.
4. Hire Fees And Payment: Set out daily, weekly or project rates, deposits, bonds, card pre-authorisations, invoices and payment due dates.
5. Delivery And Collection: Explain who delivers, who pays, what access is needed and what happens if the site isn't ready.
6. Customer Responsibilities: Cover safe use, trained operators, maintenance during hire, security, storage and compliance with laws.
7. Loss, Theft And Damage: Say when risk passes, what counts as damage, how repair or replacement costs are calculated and how deposits may be applied.
8. Late Returns: Set out extra hire charges, admin costs and what happens if you lose another booking because the equipment is late.
9. Misuse And Prohibited Uses: List what the customer can't do, such as modifying equipment, sub-hiring it, moving it interstate or using it outside specifications.
10. Liability And Indemnity: Allocate responsibility for claims, injuries, property damage and third party losses, while respecting the Australian Consumer Law.
11. Insurance: State whether the customer must hold insurance and what evidence you can ask for.
12. PPSR And Ownership: Confirm you keep ownership and include any rights needed to register your interest on the Personal Property Securities Register.
13. Cancellation And No-Show Terms: Explain cancellation fees, weather delays, rescheduling and refunds.
14. Disputes And Recovery: Set out inspection steps, debt recovery costs where allowed and how disputes will be handled.

This kind of structure works for many commercial equipment hire terms, but the details should match your actual operations. A party or venue hire business hiring out marquees has different risks to a tradie hiring out excavators or a supplier hiring out lighting rigs.

How Should You Deal With Loss, Theft And Damage?

You should deal with loss, theft and damage in a clear equipment damage clause that explains who is responsible, when responsibility starts and how costs will be calculated.

This is one of the most important clauses in your hire terms because it often becomes the first thing everyone reads when something goes wrong.

What Your Damage Clause Should Say

A practical damage clause usually covers:

• Risk period: The customer is responsible from pickup or delivery until the equipment is returned and inspected.
• Condition reports: The equipment is supplied in good working order unless noted in a pickup or delivery record.
• Customer checks: The customer must report defects quickly, usually before use or as soon as they notice the issue.
• Repair costs: The customer pays reasonable repair costs for damage beyond fair wear and tear.
• Replacement costs: If equipment is lost, stolen or beyond repair, the customer pays the replacement value or an agreed calculation.
• Lost income: If damaged equipment can't be rehired, your terms may allow you to recover loss of hire, provided the amount is reasonable and not a penalty.

Late fees and damage charges need care. Under Australian law, a fee that's out of proportion to your likely loss can be challenged as a penalty. If the customer is a consumer or small business, unfair contract term laws under the Australian Consumer Law may also apply.

Say Mia runs an event hire business in Adelaide. She hires out a $3,200 speaker system for a weekend event, takes a $500 bond and charges $180 per day. The customer returns it two days late with water damage. Her terms say she can apply the bond to repairs, charge two extra days of hire at $360, and invoice reasonable repair costs once assessed. If the repair quote is $950, Mia applies the $500 bond and invoices $810 for the balance and late hire. Because her process is documented with photos, pickup records and a repair quote, she is in a much stronger position to recover the amount.

Can You Charge Deposits, Bonds And Late Return Fees?

Yes, you can generally charge deposits, bonds and late return fees, but they should be clear, reasonable and explained before the customer agrees to the hire.

Deposits and bonds are especially useful where equipment is expensive, portable or often returned dirty or damaged. Your terms should explain:

• how much the deposit or bond is
• whether it's refundable
• when it will be returned
• what you can deduct from it
• whether you can charge the customer's card if the bond doesn't cover the loss

Be careful with wording like all deposits are non-refundable in every case. If you hire to consumers, the Australian Consumer Law may affect whether you can keep money when you haven't suffered a loss. Your terms should be more precise, such as allowing you to keep a reasonable cancellation fee or deduct actual costs you incur.

Late return fees should also be tied to a sensible calculation. For example, charging the ordinary daily hire rate for each day late is easier to justify than charging a very high fixed penalty. If a late return causes you to miss another booking, your terms can say the customer may be responsible for your reasonable losses, but you'll still need evidence.

For card pre-authorisations, make sure the customer consents to the amount, timing and reasons you may charge the card. You should also keep records showing the customer agreed to those terms, especially for online bookings.

Who Is Responsible For Delivery, Setup And Site Access?

Your hire terms should make responsibility for delivery, setup and site access very clear, because many disputes start when the equipment arrives and the site isn't ready.

If you deliver equipment, your terms should explain whether delivery is kerbside, to a loading dock, into a venue, upstairs, or fully installed. These details matter. A delivery fee that works for a ground-floor warehouse may not cover carrying AV gear up three flights of stairs at a heritage venue.

You may want to include terms covering:

• delivery windows and whether exact times are guaranteed
• extra fees for waiting time, failed delivery or difficult access
• who is responsible for permits, loading zones, lift bookings or venue approvals
• whether your team will assemble, install or test the equipment as part of a wet hire, or merely drop it off
• what happens if weather affects outdoor equipment, such as marquees, staging or lighting
• who signs off on delivery and condition

If the customer collects equipment, your terms should cover vehicle suitability, loading, tie-downs and risk during transport. For machinery or heavy items, you may need extra procedures around licences, training and safe operation. Work health and safety duties can apply under state and territory WHS laws or occupational health and safety laws, depending on where your business operates.

A simple sign-off process can save a lot of trouble. Photos at pickup, delivery and return are often worth more than a long argument later. Keep copies of inspection reports, messages, delivery notes and any customer acknowledgements.

What Customer Misuse Clauses Should You Include?

You should include misuse clauses that tell the customer exactly what they can't do with the equipment and what happens if they ignore those rules.

A general clause saying use the equipment properly is usually not enough. The clearer you are, the easier it's to enforce.

Common Misuse Rules

Depending on your equipment, you may want to stop customers from:

• using equipment outside the manufacturer's instructions or rated capacity
• removing safety guards, labels, tracking devices or serial number plates
• altering, repairing or modifying equipment without approval
• using equipment while unlicensed, untrained or under the influence of alcohol or drugs
• sub-hiring, lending or giving equipment to another person
• moving equipment to a different site, state or territory without written approval
• using equipment for illegal, unsafe or unusually risky activities
• leaving equipment unsecured, exposed to weather or unattended in a public area

Your terms should also give you practical remedies. For example, you may be able to end the hire early, collect the equipment, charge for damage, recover extra costs and refuse future hires.

If your customer base includes consumers or small businesses, avoid one-sided clauses that go further than reasonably needed to protect your interests. Since 9 November 2023, unfair contract terms in standard form consumer and small business contracts can attract penalties under the Australian Consumer Law. A small business contract can be covered where a party has fewer than 100 employees or annual turnover under $10 million.

That doesn't mean you can't protect your business. It just means your terms should be balanced, transparent and connected to a real business risk.

Do PPSR Rules Matter For Equipment Hire?

Yes, PPSR rules can matter for equipment hire, especially if you hire valuable equipment for longer periods or your customer might become insolvent.

The Personal Property Securities Register, often called the PPSR, is a national register for security interests in personal property. Equipment, vehicles, machinery and many business assets can fall within these rules.

You might think, we own the equipment, so we're fine. Unfortunately, ownership alone isn't always enough. Under the Personal Property Securities Act 2009, some hire or lease arrangements can be treated as security interests. If you don't register when you should, you could lose priority to another creditor or have difficulty recovering your equipment if the customer enters external administration.

PPSR issues are more likely to come up where:

• the hire is for more than two years
• the hire is indefinite or can be extended beyond two years
• the equipment is high value or essential to the customer's operations
• the arrangement looks like hire purchase or finance
• the customer keeps the equipment at their premises for a long period

For many short weekend party hires, PPSR registration won't be the main issue. For long-term dry hire of machinery, fleet hire, specialised tools, generators, trailers or commercial equipment, it should be on your checklist.

Your terms should confirm you retain ownership, the customer must not sell or encumber the equipment, and the customer agrees to do anything reasonably needed for you to protect your interest on the PPSR. The registration details and timing can be technical, so it's worth getting advice before the equipment goes out.

Key Takeaways

• An equipment hire agreement template should cover more than price and dates. Loss, damage, late returns, delivery and misuse clauses are essential.
• Damage charges, deposits and late fees should be clear and reasonable, with records to support what you charge.
• If you hire to consumers or small businesses, your terms need to work with the Australian Consumer Law and unfair contract term rules.
• Delivery, setup, access and return procedures should be written down so there are fewer surprises on the day.
• PPSR registration may matter for long-term or high-value equipment hire, even if you own the equipment.
• Templates are a useful starting point, but your terms should be tailored to your equipment, customers and booking process.

If you'd like help with your equipment hire terms, damage and late return clauses, PPSR wording or customer booking process, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.