For many, if not all, it makes sense to rent a forklift. There are simply too many benefits not to ignore in renting. It might be clear to you by this time that’s why you’ve finally made a decision.
And there’s one important document that you need to be cautious of – that’s the forklift rental agreement.
It is a contract the binds the two parties: the lessee and the lessor. It specifies the terms by which the lessee can rent the forklift from the lessor.
This rental agreement is not just a piece of paper for formality, it is rather an important memo of the transaction so that when the relation of the two parties got awry, it can be used as a legal reference against the other party.
If you are a lessee, it is therefore important to read thoroughly what conditions are in the agreement before sitting down to sign it.
- Allow yourself to spend ample time reviewing the rental agreement thus reducing the likelihood of committing a mistake or missing a provision that would in turn be not in favor to you that could cause misunderstanding between you and the lessor.
- If you have a prior verbal agreement with lessor, make sure to put that in writing. This is to ensure that pertinent deals have been incorporated as conditions or terms. Do not make an assumption that some deals are agreed to if they are not stated in the document.
- The taxes to pay and the principal rental fee should be separately specified. In as much as possible, split those two and they should be clearly expressed in the document so that you would not get confused if the rental amount is tax-included or not before signing.
- Know the number of hours you are allowed to use the forklift. Normally, if you, the lessee, go beyond the number of hours the forklift can be used in a day or week, you will pay additional rent charges.
Provisions in the Rental Agreement to Give Importance To
Although you may find many provisions of the rental agreement to be customary, there are things you need to know to get the most benefits out of it:
- There are circumstances the lessee wants to buy the forklift when the term ends. If you think you will be in that situation and want to have that option, you can negotiate that with the lessor, and when they agree, state that in the rental agreement. The amount may depend on what both of you agreed upon – the fair market value or capital lease.
- The security deposit may be included in the agreement. As its name implies, it is a deposit that the lessee agrees to pay to the lessor to guarantee the condition of the rental forklift. This is optional, if you see this provision in the agreement you may or may not remove this.
- As a lessee, you want to rent equipment that performs in the ideal operating condition you expect it to be. While breakdowns are inevitable, immediate repair should be done to not cause work delays. Repairs usually at the expense of the lessee, but manufacturer warranties can cover it. Ask the lessor to transfer any warranties to you. This is one of the provisions you can include in the rental agreement.
- As a lessee, it is your obligation to pay the lessor on time. If you are late on any payment, you will have to pay interest on the unpaid amounts. If you see such a provision in the rental agreement, talk to the lessor to remove it; if the lessor doesn’t agree, negotiate a lower interest rate.
- Well, you might also specify who will be responsible for insuring the forklift should be worked out and include that in the provisions before signing the contract. You and the lessor may arrive at a settlement that will benefit both parties.
- Know who will pay for the transporting of the forklift to your job site. If you are signing a free on board (FOB) shipping point deal, it is you who will shoulder the transportation cost. But again, you can still negotiate this with the lessor.
What To Do When The Forklift Rental Agreement Ends
When you know that the term-end is nearing, be sure to contact the lessor you are renting from and coordinate the return of the forklift so that you are not charged for keeping it past your agreement. Following the related provision of the agreement on return, they will tell you the instruction to make arrangements.
Will that be it? No, the technical personnel of the lessor will inspect the equipment to make sure that it is free from any damage and it is the same condition when it arrived at your job site.
You shall also be responsible for having the rental forklift delivered back to the lessor. That means you will make the shipping arrangement and ensure that the equipment stays undamaged throughout the transporting process.
You always have the option to renew the rental agreement at your own discretion if you think you still need the forklift for a longer period of time.
Do You Need to Write an Equipment Rental Termination Letter
In order to end the forklift rental agreement, you, the lessee will be required to write a letter to the lessor for the request of termination. The purpose of this is to make everything in formal writing.
The letter should specify the date and other conditions under which the agreement will not be continued.
There is an option to send it through email but be careful as there is a certain way to send it. Please coordinate with the lessor on how you are going to submit the termination letter, you would not want to end up having another term for the mere reason you did not submit on time.
To Summarize This
It is of utmost importance to thoroughly browse the terms and conditions of the forklift rental agreement before signing it. You would not want to get in a situation that puts your relation with the lessor at risk.