Just because your business could be categorized as a “small business” doesn’t mean that it can’t handle big tasks. Small businesses routinely use heavy equipment and machinery to increase output, to aid in construction, or to otherwise make their operations more efficient. In the modern world, software can even sometimes be the heavy lifter in an operation. There is only one problem with these types of tools. They can be expensive; perhaps more expensive than a small business can afford.
Nonetheless, small businesses all over California march on with the aid of these specialized pieces of equipment. How do they do it? They lease them.
Equipment leasing is an industry unto itself. Leasing companies will use their considerable capital to invest in pieces of heavy equipment to be used in construction. Manufacturers of special machinery or software will also set aside some of their units to be used in future leases. Those with more modest capital, the small business owners, will contact these sources and inquire about an equipment lease.
A large percentage of these lease transactions are designed for the short term. For instance, a small construction company may need to lease a jackhammer and mobile air compressor for a day to demolish a concrete porch. The company may use a jackhammer and air compressor too infrequently for it to make sense to purchase their own. These types of leases are typically done with form contracts prepared by the lessor, the equipment leasing company. Lessees in this type of short term transaction ordinarily would not have the leverage or the need to negotiate special terms in the contract.
However, equipment leases are not limited to these short-term transactions. Companies routinely lease equipment, machinery, or software for a period of months or years. In some cases, the lease may be designed to endure for the working life of the piece of equipment. This is especially true in the case of software, where it would not make sense to purchase the software outright when it could be obsolete in a matter of years. For these cases, small business are highly encouraged to consult a California small business lawyer for their expertise in negotiating and drafting long term lease contracts.
Small business lawyers know that the contract should contain things that the ordinary person would not think to include. For instance, which party is to pay taxes and fees on the item? Who is responsible for obtaining any applicable licenses? Whose insurance will cover damage to the item or personal injuries related to the operation of the item? What is the duration of the lease term, and who has the right to terminate, and why? Are there any restrictions on the lessee’s use of the item? Who pays for delivery or installation? Who maintains the equipment, and are there any warranties associated with it?
These are questions best left to someone who is skilled in contract negotiation and drafting. After all, the equipment lessor is likely to contact an attorney to negotiate for them. Shouldn’t you?