ARA-New to Rental Guide (Contracts Only)

Day-to-day Store Operations: The Basics

Rental Contract: You can’t move forward without a sound rental contract that protects you and your business. According to ARA’s Business Management: Contracts and Legal Guidelines, written by attorney James Waite, the purpose of the contract is to: “dictate virtually all of the rules (subject to applicable laws) that govern the relationship between a rental company and its customers.” The primary objective of the contract is to: “create an agreement that is directed at the specific type(s) of customers and that deals appropriately with the types of equipment and merchandise offered by the rental company, given its unique mix of equipment, customers, environment and circumstances.” ARA’s Business Management: Contracts and Legal Guidelines hits at the heart of a rental contract. It includes sample clauses and addenda you should consider for your rental business contract, depending on your type of business. This is a guide to review and share with your attorney.

Insurance: As important as a rental contract is to your business, so is insurance. Rental businesses are unique and require specific coverages. When shopping for insurance, you need to understand how your business looks to an insurance company. An insurance company is not only selling a policy, but it also is buying a risk. The better the company understands the risk, the better the coverages as well as the pricing. (Find out more about insurance coverage later in this guide.)

Operating a Rental Store: A Deeper Look

Let’s look deeper into the key steps outlined in the previous section. Below are the areas you must have in place to operate a successful rental business.

The Rental Contract

As mentioned earlier, the rental contract is the heart of your operation. As noted by attorney James Waite in the Business Management: Contracts and Legal Guidelines, the purposes of the rental contract are as follows: “Purposes of the Rental Contract: The rental contract provides the foundation for the rental transaction. Without it, there would be no evidence of whether the customer rented your equipment or, by paying a small amount of money (typically a fraction of what the equipment is worth), purchased it. But the rental contract does much more than merely identify the type of transaction. Among other things, a well-drafted rental contract should, at a minimum:

  • Identify the parties (the rental company and the customer).
  • Identify the transaction as a rental.
  • Identify the equipment rented.
  • Specify the duration of the rental.
  • Set forth the amount of the basic rental charge.
  • Set forth the rental period for which basic rent will be charged (e.g., day, week, month, etc.).
  • Identify where the equipment may be used.
  • Identify which parties are permitted to use it.
  • Identify the owner of the equipment (the rental company).
  • Set forth guidelines and limitations on uses that may be made of the equipment (e.g., only as permitted by the manufacturer, not for illegal purposes, no double-shifting, etc.).
  • Specify the required return condition.

“ARA’s contract guide was very helpful, especially in providing the language that should be used in our rental contract. The sample clauses provided excellent information that we have incorporated into our rental contract.”

— Jill Holt, BES Rentals & Sales, Carlsbad, N.M

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