Equipment lease and hire

Contract of hire

Equipment leasing, or equipment hiring, is an expression applied to various agreements which involve a contract of simple hire or bailment of goods.

The lease or hire of goods or equipment is an alternative way to access and use such goods or equipment aside from the traditional purchasing route. The essential difference between a contract of sale and a contract of hire is that a sale provides for the express or implied transfer of ownership of assets to the purchaser, whereas hiring assets does not.

Terms such as ‘lessor’, ‘lessee’, ‘hirer’, and other similar terms, do seem to cause a lot of confusion within these types of arrangements. For the purposes of clarity, ‘hirer’ or ‘lessee’ is the party who is taking the equipment on lease and the ‘supplier’ or ‘lessor’ is the party who supplies the equipment and in turn is paid a rental fee.

There are many reasons why parties may consider leasing or hiring assets since it provides a form of financing whereby payments are made in instalments over an agreed period of time. Asset finance is increasingly popular as