It's not always wise or cost-efficient for businesses to buy equipment outright. Fortunately, you can lease the equipment instead.

Find out how this process works and how to finalize the terms of the arrangement in this guide to equipment lease agreements.

We've even got a free equipment lease agreement template for you to use as a starting point.

How does an Equipment Lease Agreement work?

An Equipment Lease Agreement is a formal document between two parties: the "Lessor," who owns the equipment, and the "Lessee," who rents the equipment for a certain period.

This agreement serves as the foundation for this relationship, outlining details such as how long the equipment will be rented, the cost of rent, and the responsibilities of each party.

What is the purpose of an Equipment Lease Agreement?

The primary objective of an Equipment Lease Agreement is to provide clarity and protection for both the Lessor and the Lessee.

It helps to ensure that both parties know their roles and responsibilities. It's a roadmap of sorts, guiding the lease relationship and defining how potential issues will be resolved.

It also specifies what happens at the end of the lease term - whether the equipment will be returned or purchased.

Who is responsible for managing an Equipment Lease Agreement?

Usually, the Lessor, or their agent, is tasked with creating and managing the Equipment Lease Agreement.

However, the Lessee also plays an important role in this process. Both parties must understand and agree to the terms laid out in the agreement.

It's often beneficial for the Lessee to seek legal advice to ensure they fully understand their obligations and rights under the agreement.

What are the elements of an Equipment Lease Agreement?

An Equipment Lease Agreement generally includes:

• Identification of Parties: The names and addresses of the Lessor and Lessee.

• Equipment Description: A clear and comprehensive description of the leased equipment.

• Lease Duration: The lease's start and end dates.

• Payment Details: Information about lease payments such as the amount, due dates, and payment frequency.

• Maintenance and Repair: Specifies who is responsible for the upkeep and repair of the equipment.

• Default Provisions: Outlines the steps to be taken if either party fails to uphold their part of the agreement.

What is the traditional workflow for managing Equipment Lease Agreements?

In a traditional contract workflow, Equipment Lease Agreements are drafted, reviewed by all parties involved, signed, and then filed for future reference.

But the process isn't always smooth sailing.

Managing Equipment Lease Agreements through a traditional, manual workflow often involves a series of tools and processes that can prove time-consuming, error-prone, and inefficient.

Here's a deeper look at these elements and how they cause friction.

The manual process

1. Drafting: This is the first step and often involves using word processors or text editors. The Lessor or their legal team must manually input all the terms and conditions, which can be a tedious process, especially if dealing with multiple leases simultaneously.

2. Reviewing: Once the agreement is drafted, it's reviewed by multiple parties, including the Lessor, Lessee, and potentially legal advisors. This process is often conducted via email or printed documents, making tracking changes and consolidating feedback a complex and chaotic task.

3. Signature Collection: In a traditional workflow, collecting signatures might require printing the agreement, physically signing it, and then scanning the signed document. This is time-consuming and delays the finalization of the agreement.

4. Filing and Storage: Once signed, the agreement must be physically or digitally stored. Physical storage requires space and can make retrieval difficult. Digital storage, such as saving files on a computer or server, may lead to disorganized file naming and folders, making specific agreements hard to find when needed.

5. Amendments: If any changes need to be made to the agreement, an addendum must be drafted, reviewed, signed, and stored just like the original agreement, adding to the administrative burden.

6. Compliance Tracking: Regular checks are necessary to ensure both parties adhere to the agreement terms. In a manual system, this often requires setting reminders, conducting reviews, and potentially dealing with disputes or issues, which can be stressful and time-consuming.

7. Renewals: As the lease end date approaches, a new agreement or extension must be drafted, reviewed, signed, and stored, repeating the entire process.

All these steps require significant manual effort, making the process prone to human error and miscommunication. The administrative burden can lead to delays, inefficiencies, and increased costs.

Can you automate Equipment Lease Agreements?

Automating an Equipment Lease Agreement can revolutionize the way you manage your leases, making the process more efficient, reliable, and user-friendly.

This can be achieved by using a contract management platform like Juro. Here's how it works:

1. Template Creation

‍With automation, you can create standardized templates for your Equipment Lease Agreements. These templates can be customized to suit your unique needs, ensuring all essential elements are included.

2. Real-time Collaboration and Review

‍The review process becomes a breeze with automation. Parties can collaborate in real-time, directly within the document. This feature minimizes back-and-forths, reduces the risk of miscommunication, and ensures everyone is on the same page.

3. Electronic signatures

‍No more printing, signing, scanning, and emailing. With eSignature capabilities,  parties can securely sign the agreement digitally, from anywhere in the world.

This accelerates the finalization process and makes it more convenient for everyone involved.

4. Centralized Storage

Juro also provides a centralized place to store all your agreements, including equipment lease contracts. All contracts created in Juro are stored in the contract repository automatically, providing easy access and retrieval whenever needed.

5. Compliance Tracking and Alerts

‍Juro's contract analytics functionality give you full visibility into your equipment lease contracts. You can also set reminders for key dates and obligations, ensuring you never miss an important deadline again.

Automate equipment lease agreements in Juro

Juro's flexible, collaborative and data-rich contract management solution makes it quicker and easier to manage commercial contracts. To join the 6000+ companies already using Juro to power their contracts and reduce routine admin work, hit the button below.