This equipment lease is between , an individuala(n) (the "Owner") and , an individuala(n) (the "Renter").

The Owner is the owner of the equipment described in Exhibit A (the "Equipment").

The Renter wishes to lease the Equipment from the Owner.

The parties agree as follows:


Effective as of the effective date set forth in section 25242423, the Owner shall lease and deliver to the Renter, and the Renter shall lease and accept delivery from the Owner, all of its interest in the Equipment. From time to time, the Renter may lease additional items of equipment from the Owner under this lease by attaching a new Exhibit A. This exhibit shall list such additional items of equipment, and shall be initialed or signed by both parties. That equipment will then be subject to the terms of this lease and considered "Equipment" for all purposes. 


  • (a) Delivery. The Owner shall coordinate with the Renter to have the Equipment delivered to , , (the "Site") on or before .
  • (b) Site. The Renter shall provide a safe, convenient Site for the Equipment in accordance with the Owner's guidelines, specifications, and site planning criteria. The Owner has approved the location of the Site and the dedicated location for the Equipment on the Site.


  • (a) Timing. The Renter shall pay to the Owner, in advance, $ each month (the "Rent") to rent the Equipment, starting on . The Renter shall pay the Rent on the first day of each succeeding month after the effective date to the Owner at the address set forth in section 21202019 below. 
  • (b) Security Deposit. Before taking possession of the Equipment, the Renter shall pay a security deposit to the Owner in the amount of $, which shall be returned to the Renter at the end of the Term. The Owner may deduct any amounts from this deposit required to repair or replace the Equipment, ordinary wear and tear excepted.
  • (c)(b) Interest on Late Payments. If the Renter fails to pay Rent when it is due, or any other charges or amounts payable by the Renter to the Owner under this lease, the Renter shall be charged interest on those unpaid sums at the rate of % per month. Interest will be calculated from the due date of the amount to the actual payment date.


Except for the Renter's rights of use under this Lease, the Equipment is and will remain the exclusive personal property of the Owner, even if installed in or attached to real property by the Renter. Payment of the Rent does not give the Renter any equity interest in the Equipment. The Renter has no interest in the Equipment except as expressly set forth in this Lease.


  • (a) The Renter shall keep the Equipment in good condition and manage all necessary repairs and replacements  at its own cost and expense.
  • (b) The Renter and its employees shall use the Equipment carefully and properly, and in compliance with all federal, state, and local laws. Each item of Equipment is being leased for use in the conduct of the Renter's business.
  • (c) The Renter shall keep and use the Equipment only at the Renter's principal place of businessin the ordinary course of its business. The Renter may not remove the Equipment from this location without the Owner's prior written consent.
  • (d) The Renter shall maintain in full force a service agreement with the Owner to satisfy its obligation to repair and maintain the Equipment.
  •  (e)(d) The Renter may not make any alterations or additions to the Equipment without the Owner's prior written consent.
  •  (f) (e) The Renter may not assign, sublease, or transfer the Equipment without the Owner's prior written consent.


  • (b) The Owner assigns to the Renter any assignable warranty, whether express or implied, affecting the Equipment. 
  • (c) The Renter shall pay Rent to the Owner even if the Equipment's supplier or manufacturer breaches any warranty.


If the Renter fails to pay taxes on, maintain insurance on, or repair the Equipment, or to pay fees, charges, or assessments, or to discharge any other obligations under this Lease, the Owner may make payments or perform acts that the Owner deems necessary. This includes payment of amounts necessary to retain insurance, to repair or maintain the Equipment, or to satisfy fees, charges, or assessments. The Renter shall reimburse the Owner on the next due date for Rent for all amounts paid or incurred by the Owner. The Renter shall pay interest on amounts to the Owner under section 3(c), which shall begin accruing on the date of the Owner's payment, and pay any reasonable attorneys' fees incurred by the Owner in connection with its actions performed under this section.


  • (a) Requirement. During the Term, the Renter shall procure and continuously maintain and pay for insurance in such form and with such company satisfactory to the Owner. At a minimum, the insurance must include:
    • (i) risk insurance against loss of and damage to the Equipment for not less than the full replacement value of the Equipment, naming the Owner as loss payee; and
    • (ii) combined public liability and property damage insurance, with limits approved by the Owner, naming the Owner as an additionally named insured and a loss payee.
  • (b) Contents. This insurance shall provide primary coverage for the protection of the parties without regard to any other coverage carried by either party protecting against similar risks.
  • (c) Certificate. The Renter shall provide the Owner with an original policy or certificate evidencing the insurance and shall provide at least 30 days' advance written notice to the Owner about any cancellation, change, or modification of the insurance coverage.


During the Term, the Owner shall pay all applicable taxes, assessments, and license and registration fees on the Equipment. The Owner shall, on request, provide the Owner with proof of those payments and copies of any tax returns and reports filed or prepared concerning the Equipment.


  • (a) Liability for Damage. If the Equipment is damaged, the Renter shall immediately repair the Equipment to a state of good working orderthe Renter shall immediately notify the Owner of the damage, and pay for any repairs the Owner coordinates to get the Equipment to a state of good working order.
  • (b) Liability for Loss or Destruction. If the Equipment is lost, stolen, destroyed, or damaged beyond repair, the Renter shall notify the Owner promptly of that loss, theft, or destruction of the Equipment, or of any damage beyond repair to the Equipment and, at the Owner's option:
    • (i) replace the Equipment with like equipment in good working order; or
    • (ii) pay the Owner in cash all of the following:
      • A. all amounts owed by the Renter to the Owner under this lease on the date of the loss, theft, damage, or destruction;
      • B. 100% of the actual cost of that Equipment, less any net proceeds of insurance received by the Owner for the loss or
      • damage; and
      • C. the unpaid balance of the total Rent for the Term attributable to that Equipment.
  • (c) Assignment of Interest. On receipt of this payment, the Owner shall assign to the Renter whatever interest the Owner has in the Equipment, without warranty, express or implied. For purposes of calculating amounts under subsection (b)(ii)(B), the actual cost of an item is its fair market value on the date of its loss, theft, damage, or destruction.


  • (a) Term. The rental term (the "Term") shall be for a period of monthsyears, starting on the later of the following:
    • (i) the Effective Date; or
    • (ii) the date the Renter receives the Equipment, as acknowledged in writing by the Renter to the Owner, a copy of which shall be attached to this agreement.
  • (b) End-of-Term Options. At the end of the Term, the Renter shall, at its election:
    • (i) sign a new lease with the Owner;  or 
    • (ii) surrender the Equipment to the Owner at the Renter'sOwner's expense; or.
    • (iii) purchase the Equipment as provided in section 14 below.
  • (c) No Action. If the Renter takes none of the actions listed in subsection (b) above, the Term will automatically be extended for a period of a month at a % Rent increase.


  • (a) Default. The occurrence of any of the following events will constitute a default (each an "Event of Default"):
    • (i) the failure to make a required payment under this Lease as and when due, including Rent, interest charges, sums due as an indemnity, excess item expenses, or other charges;
    • (ii) the breach or violation by the Renter of this Lease;
    • (iii) the insolvency or bankruptcy of the Renter;
    • (iv) any default, breach, or violation of or under any debenture, bond, or evidence of indebtedness of the Renter; or
    • (v) subjection of any of the Renter's property to levy, seizure, assignment, application, or sale for or by any creditor or government agency.
  • (b) Rights on Default. On the occurrence of any Event of Default under subsection (a), the Owner may, without notice or demand, terminate this lease, and take possession of the Equipment, in addition to any other rights afforded to the Owner by law. The Renter is not released from paying damages sustained by the Owner if the Owner terminates under this section. If on any termination of this lease the Renter fails or refuses to deliver the Equipment to the Owner, the Owner may enter the Renter's premises and retake possession of the Equipment without legal process. The Renter releases any claim or right of action for trespass or damages caused by the Owner's entry and repossession. The Renter expressly waives all further rights to possession of the Equipment and all claims for injury suffered through or loss caused by the repossession. The Renter shall pay all expenses, including attorneys' fees, the Owner incurs to enforce this lease. All of the Owner's remedies are cumulative and may be exercised concurrently or separately. The Owner shall release the Equipment or otherwise mitigate the damages arising out of or otherwise related to the Event of Default.


The Owner shall have the right, on prior written notice to the Renter, to inspect the Equipment during the Renter's normal business hours.


  • (a) If the Renter does not violate this lease, the Renter shall, at the end of the Term, have the option to purchase the Equipment at a price (the "Purchase Price") equal to its fair market value as defined in subsection (b) below. The Renter shall exercise this option by notifying the Owner in writing at least Number days before the end of the Term.
  • (b) The fair market value of the Equipment on the last day of the Term as determined by mutual agreement between the parties will be taken as the "fair market value" of such Equipment.
  • (c) The Renter shall pay the Purchase Price to the Owner within days after the end of the Term. 


  • (a) Of Owner by Renter. At all times after the effective date of this agreement, the Renter shall indemnify the Owner against any award, charge, claim, compensatory damages, cost, damages, exemplary damages, diminution in value, expense, fee, fine, interest, judgment, liability, settlement payment, penalty, or other loss (a "Loss") or any attorney's or other professional's fee and disbursement, court filing fee, court cost, arbitration fee, arbitration cost, witness fee, and each other fee and cost of investigating and defending or asserting a claim for indemnification (a "Litigation Expense") arising out of:
    • (i) the Renter's negligence or willful misconduct arising from the Renter's carrying out of its obligations under this agreement;
    • (ii) the Renter's use or possession of the Equipment; or
    • (iii) the Renter's breach of any of its obligations or representations under this agreement.
  • (b) Of Renter by Owner. The Owner shall at all times indemnify the Renter against a Loss or Litigation Expense caused by any breach of any of the representations or agreements made by the Owner under this agreement.


  • (a) Choice of Law. The laws of the state of govern this agreement (without giving effect to its conflicts of law principles).
  • (b) Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in .


No amendment to this agreement will be effective unless it is in writing and signed by a party or its authorized representative.


  • (a) No Assignment. Neither party may assign any of its rights under this agreement, except with the prior written consent of the other party. All voluntary assignments of rights are limited by this subsection.
  • (b) No Delegation. Neither party may delegate any performance under this agreement, except with the prior written consent of the other party.
  • (c) Enforceability of an Assignment or Delegation. If a purported assignment or purported delegation is made in violation of this section, it is void.


  • (a) Counterparts. The parties may execute this agreement in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
  • (b) Electronic Signatures. This agreement, agreements ancillary to this agreement, and related documents entered into in connection with this agreement are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.


If any one or more of the provisions contained in this agreement is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this agreement, but this agreement will be construed as if those invalid, illegal, or unenforceable provisions had never been contained in it, unless the deletion of those provisions would result in such a material change so as to cause completion of the transactions contemplated by this agreement to be unreasonable.


  • (a) Writing; Permitted Delivery Methods. Each party giving or making any notice, request, demand, or other communication required or permitted by this agreement shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this agreement: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), facsimile, or email.
  • (b) Addresses. A party shall address notices under this section to a party at the following addresses:
  • If to the Owner:
  • If to the Renter:
  • (c) Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.


No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this agreement will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.


This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement about the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.


The descriptive headings of the sections and subsections of this agreement are for convenience only, and do not affect this agreement's construction or interpretation.


This agreement will become effective when all parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this agreement.


Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this agreement contemplates or to evidence or carry out the intent and purposes of this agreement, including signing any documents for purposes of recording or filing to protect the interest of the Owner in the Equipment.


Each party is signing this agreement on the date stated opposite that party's signature.



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Equipment lease agreement: How-to guide

Your operation needs the latest technology to compete effectively in today’s business world. Buying equipment can use up available funds and may saddle your company with outdated property. Equipment leasing may be an excellent way to update your business without incurring significant upfront costs.

With an equipment lease or equipment rental agreement, almost any kind of property can be leased, from computers and heavy machinery to phone lines and cars. When equipment is leased, the renter can have it and use it for a certain time period. The renter just needs to pay the property owner a rental fee. 

For a business, leasing equipment may be better than buying for many reasons. A lease can provide lower monthly payments, a fixed financing rate, certain tax advantages, conservation of working capital, and immediate access to up-to-date business tools.

On the other hand, long-term leasing may be more expensive than buying the equipment outright. There are many factors that contribute to a decision about whether leasing or buying is right for a given company, including the nature of its industry and the types of equipment it’s interested in.

This article covers everything you need to customize and complete your equipment lease agreement. 

Instructions you need to follow in an equipment rental agreement

Use of the equipment

An equipment lease is an agreement in which one party (the “lessor”) gives the other party (the “lessee”) the right to have and use (but not own) the lessor’s equipment for a certain period of time. 

In exchange, the lessee will make payments to the lessor and be responsible for maintaining and paying taxes on the equipment during the lease period. At the end of that period, depending on the lease, the lessee may be allowed to buy the equipment it has been leasing. In other cases, the lessee may be allowed to renew the lease for another term.

Types of equipment that can be leased

There are many types of equipment that can be leased, from furniture to phones and forklifts to copiers. Generally, items that are valued under a certain amount (usually around $5,000) are purchased, not leased.

Getting the right equipment for your business

There are usually three ways a company can get the business equipment it needs: 

  • Buy with cash
  • Borrow money to buy
  •  Lease 

For new companies, using available capital to make cash payments may not be possible (or wise). Borrowing money may stretch a company’s credit line and be more costly in the long run after calculating interest payments. 

Leasing equipment will let an organization: 

  • Keep cash on hand
  • Save the credit line
  • Obtain certain tax benefits 

In addition, if the equipment needs to be upgraded or changed consistently (e.g., computers), a lease won’t leave the company owning the old property—the lessee can sign a lease for the newer property when the need arises.

Terms and conditions

Before sitting down to sign the lease, decide what your goals are. A good agreement is one that captures the intentions of the parties accurately. Clarify your agreement's terms and conditions before writing them down.

Review the lease properly 

Allow each party to spend time reviewing the lease. Each party must get ample time to understand the terms or how those might affect the lease as a whole.

Both parties should ensure that the agreed terms and conditions are clearly mentioned. It’s always better to be over-explanatory to avoid any doubts and misunderstandings.

Lease renewals

If both parties expect to have an ongoing relationship, use the equipment rental agreement to create a “master lease.” 

This will allow you to keep the same document for a long time, adding or taking out equipment or changing certain terms (e.g., the lease rate, the expiration date, etc.) by writing new exhibits. You won’t have to change or renegotiate other terms of the agreement: most of the text will remain the same.

Warranty of merchantability

As a lessor, you may have concerns about providing a “warranty of merchantability” for the leased equipment. 

A warranty of merchantability is a promise that the property will meet an ordinary buyer’s expectations (in other words, the equipment is what the lessor says it is). If you make the lease a “finance lease,” you may be able to avoid this promise. If this is the case, once the lessee accepts the equipment, it cannot later bring a lawsuit against the lessor, claiming that the goods are defective.

Illegal use of the equipment

If the lessee uses the equipment illegally, the government could confiscate it. Consider including a provision requiring that any use of the equipment be in compliance with all laws.

File for fixture filing

In some states, the lessor can file a “fixture filing” to protect its interest in equipment that is (or will become) a fixture (in other words, permanently attached to the land or other real property). 

In other states, however, the lessor should get documentation from the landlord showing that the lessor’s interest in the equipment has top priority if the lessee defaults or at the end of the lease term.

Unless its equipment is or will become a fixture, the lessor is usually not required to file any lease documents with the state to protect its interests. However, it may be a good idea to make such filings to prevent the deal from being seen as a secured transaction.

Equipment warranties and disclaimers

The lease should disclaim all equipment warranties. Implied warranties can be avoided using expressions like “as is,” “with all faults,” or any similar language. 

All disclaimers must be clear and prominent (capitalized, in bold type, or highlighted). To disclaim or change a warranty of merchantability, use language that refers specifically to merchantability.

Illinois court process

In Illinois, courts do not like disclaimers of implied warranties. These clauses are read in a way that does not favor sellers. In other words, if there is any way to read the provision to benefit the buyer, that’s how it will be read. 

If you want to disclaim an implied warranty in Illinois, you should make this clear and prominent in your agreement.

Tax regulations

The equipment lease agreement prevents the lessee from changing or adding to the equipment without the lessor’s consent. Additions to equipment are considered income for the lessor, which can have immediate and significant tax implications. Talk to a tax professional if you have questions about how this regulation may affect you.

Signature requirements

Sign two copies of the lease agreement. One copy is kept with the lessor, and the other is given to the lessee.

Witness and notary’s presence

It’s a good idea to get the agreement witnessed or notarized. This will limit later challenges to the validity of a party’s signature.

Attorney help

If your agreement is complicated, contact an attorney to help you draft a document that meets your specific needs.

Key aspects of an equipment lease agreement

The following instructions will help you understand the terms of your lease agreement:

Introduction of parties

This section identifies the parties involved in the agreement and, if applicable, what type of entities they are. 

In an equipment rental agreement, the party leasing the equipment is called the lessor, and the party renting it out is the lessee. You also need to write the date on which the document is effective (usually when it is signed). 


The “whereas” clauses, referred to as recitals, define the world of the agreement and offer key background information about the parties (i.e., the lessor and lessee). 

In this agreement, this section includes a simple statement of the intent to lease the equipment. In other words, the lessor agrees to lease the equipment on certain conditions.

Description of the equipment

In this part, provide the full description of the equipment. For instance, you can include details like:

  • The manufacturer’s name and year of manufacture (include any serial numbers that may be available.)
  • Include any identifying features and additional specifications 
  • Ownership rights
  • Requirements that the property must meet
  • Information on any additional tools that may be required by the lessee

You must be comprehensive and clear when describing the equipment being leased. 

Lease of equipment

This section acknowledges and accepts the lease of the equipment. It includes all the equipment, including any additional items that the receiving party leases from the lessor. The terms of the lease are applicable for all the equipment and tools taken on the lease.


The time period during which the equipment is leased is called the “term.” Mention the agreed-on rental period here. 

This period will start on the later of the following dates: the effective date or the date on which the lessee receives the equipment. If the equipment is received after the effective date, you must also clarify that. 

At the end of the term, the lessee can renew the lease or return the equipment to the owner. 

Additionally, the agreement gives the lessee the opportunity to buy the equipment at the end of the term. If you include such provisions, you must mention the conditions for purchasing the equipment.

Rental payments

In most agreements, each party is expected to do something. This obligation may be to perform a service, transfer property ownership, or pay money. In this case, the lessee gives the lessor money each month to pay for the right to use the equipment. 

You’ve to write the amount that the lessee will pay as rent. The lessee also makes an advance payment (generally a month’s rent) to the lessor.

Security deposit

In this provision, the lessee agrees to pay a deposit to the lessor at the beginning of the lease to guarantee the condition of the equipment. Enter the amount to be paid. This money will be returned to the lessee at the end of the term if the equipment is still in good condition.


States that the equipment is still the lessor’s personal property, even though the lessee has the right to use it for their business. There is no transfer of title to the equipment, even if it’s attached to or installed on the lessee’s property.

Lessee’s responsibility for care, use, and maintenance of equipment

The lessee must:

  • Keep the equipment in good condition, and make any repairs and replacements at its own expense.
  • Use the equipment carefully and properly.
  • Make sure the equipment is used only by competent employees
  • Keep the equipment at the agreed-upon location, and it shouldn’t be removed without the lessor’s prior written consent. This location will usually be the lessee’s place of business.
  • Not change or upgrade the equipment. For example, this applies if you are leasing computers. The lessee will often need to make upgrades or changes in such instances. If such changes and upgrades are needed, mention them clearly. 
  • Inform the lessor about any loss, theft, or destruction of the property. 
  • Not assign or transfer the ownership rights of the equipment.

Lessor’s representations and warranties

The lessor’s promise about the property that is being leased. More specifically, the lessor is swearing that:

  • It has the ability to lease the equipment but doesn’t claim that the equipment is guaranteed to be a certain way or useful to the lessee’s business.
  • It will transfer any warranty that can be transferred (e.g., manufacturer’s warranty) to the lessee. 

Lessee’s representations and warranties

The Lessee’s promise about the property that is being leased. More specifically, the lessee is swearing that: 

  • The equipment is in good condition, and they will maintain it properly.
  • Use the equipment only for their business.
  • If the equipment isn’t working after the effective date, it can only raise the issue with the manufacturer, seller, or installer (i.e., not the lessor).
  • Any expenses incurred by the lessee to bring a warranty claim are not reimbursable. However, if the lessee receives any money under the warranty, it must turn it over to the lessor. The lessor will use the money to repair or replace the equipment.
  • Even if the equipment supplier or manufacturer breaches a warranty or representation, the lessee still has to pay rent.
  • Lessee promises not to violate any law by signing or performing its activities under the lease.

The lessor’s performance of the lessee’s obligations 

This section states that the lessor can pay or do anything it thinks is required if the lessee doesn’t keep insurance coverage, pay taxes or fees, or repair the equipment. If the lessor does this, the lessee must reimburse the lessor for its expenses and pay interest and legal fees for any amounts paid.


During the term, the lessee must get insurance on the equipment and give a copy of any proof of that insurance to the lessor. The insurance should cover any loss or damage to the equipment and also any risk of harm to the general public by the equipment.

Even if the parties already have similar insurance, the policy required in this section will be the primary one. The lessee is allowed to change its coverage only after giving the lessor an advance notice.

Taxes and fees

This clause requires the lessee to pay all applicable taxes and fees during the term, and they should provide any relevant paperwork about these payments to the lessor.

Liability for loss and damage

This section states that the lessee has to pay for any loss or damage to the equipment. If the equipment is totally damaged or stolen, the lessee needs to pay for its repair or need to replace the equipment with a new one.

The lessee also needs to pay any outstanding fees, part of the cost of the item, and the total amount the lessor would have received as rent on that equipment during the term


Lists the events that are considered “Events of Default” by the lessee. In other words, if the lessee does any of the things that are mentioned in the list, the lessor can walk away from the lease and demand payment or action as required under the lease. The next section explains what the lessor can do if the lessee defaults.

Rights of lessor on default

This section mentions the rights of the lessor when the lessee defaults. The lessor has the full right to end the lease and take back the equipment if they see any breach in the agreement. For instance, if the lessee doesn’t deliver the equipment at the end of the lease term, the lessor can go to the lessee’s property and retake it without having to get a court order or police assistance.


This section is to write down all the interest-related clauses. 

For example, if the lessee is late on any of its payments, it will have to pay interest on the unpaid amounts until the payment is made. You need to provide the interest rate you want to levy from the lessee. The interest will start adding up on the date the payment is due.

Before you choose this rate, make sure you know what the legal limits are for interest rates in your state. If you select a rate that is too high, you may not get any interest at all.


This is an optional section explaining that the lessee will pay the lessor back for any costs the lessor incurs relating to the lessee’s use of the equipment.

Return of equipment

At the end of the term, the lessee must return the equipment at its own expense unless it renews the lease or buys the equipment.

Lessor’s right of inspection

In this section, the lessor is given the right to examine the equipment during normal business hours. 

Successors and assigns

States that the parties’ rights and obligations will be passed on to successor organizations (if any) or other organizations to which rights and obligations may be permissibly assigned. 

No implied waiver

Explains that even if one party allows the other to ignore or break an obligation under the lease, it does not mean that the party waives any future rights to require the other to fulfill those (or any other) obligations.

Option to renew

This provision gives the lessee the option to renew the lease at the end of the term. The terms pertaining to renewal will be decided after discussion with the involved parties.

Option to purchase

This section gives the lessee the option to buy the equipment.

  • The lessee can buy the equipment at the end of the term at its fair market value if it performs all its responsibilities under the lease. If the lessee wants to do this, he or she needs to give written notice to the lessor before the end of the term. 
  • The “fair market value” of the equipment will be decided by both parties. It will be evaluated on the last day of the term. 
  • The lessee will pay the purchase price within a stipulated time period. Enter the number of days that the lessee has to make this payment.

Additional documents

This provision indicates that the lessee will fill out any additional documents that the lessor thinks are necessary to show that the lessor is still the owner of the equipment. 


Lists the addresses to which all official or legal correspondence should be delivered. Provide a registered mail address for both the lessor and the lessee.

Governing law

Allows the parties to choose the state laws that will be used to interpret the document.

Counterparts; electronic signatures

This provision states that even if the parties sign the agreement in different locations or use electronic devices to transmit signatures (e.g., fax machines or computers), all of the separate pieces will be considered part of the same agreement. In a modern world where signing parties are often not in the same city—much less the same room—this provision ensures that business can be transacted efficiently without sacrificing the validity of the agreement as a whole. 


Protects the terms of the lease as a whole, even if one part is later invalidated. For example, if a state law is passed prohibiting interest on unpaid rent, it will not undo the entire lease. Instead, only the section dealing with interest on unpaid rent would be invalidated, leaving the remainder of the lease enforceable. 

Entire agreement

In this part, the parties agree to sign the equipment lease for the terms and conditions mentioned in the agreement. Unfortunately, including this provision will not prevent a party from arguing that other enforceable promises exist, but it will provide you some protection from these claims.


It states that the headings at the beginning of each section are meant to organize the document and should not be considered essential parts of the agreement. In other words, anyone looking at the lease should pay attention to the content of the clauses, not to the titles.

An equipment lease agreement or equipment rental agreement is really a long and exhaustive document with many legal clauses involved. Writing a rental agreement on your own is daunting and tiresome. Moreover, you should be careful not to make any errors that can lead to misrepresentation.

To prevent such experiences it is better to have an equipment lease agreement template as your key reference point. LegalZoom offers a professional and comprehensive lease agreement template that can be customized to suit your needs. You can pay a nominal fee and edit our template with the rich editor.

Frequently asked questions

What's an equipment lease agreement?

If your current equipment is damaged or needs repairing before you can use it, then you can upgrade your equipment with a new one—but maybe not buy it when you have the option to lease it.

An equipment lease agreement ensures the equipment owner and the renter know what's expected of them—and the equipment itself—during the duration of the lease and beyond.

What are the key elements required to draft an equipment lease agreement?

Leasing equipment can help keep businesses stay competitive without the upfront costs and commitments of purchasing. 

To complete an equipment rental agreement you’ll need the following details:

  • Who owns the equipment: Name and contact details of the owner of the equipment.
  • Who's renting: Information about the renter who will take the equipment on rent.
  • What happens when the lease is up: Know what options the renter has and what they must do when the lease term ends.
  • Details about the equipment: Keep the details of the rented equipment, the model and serial number, and the manufacturer’s name. 
  • Lease payments: Provide details on how the rent will be paid, whether it will be periodic payments or one-time payments. 
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