Equipment Lease Agreement (Problem with Solution)

Equipment Lease Agreement
Equipment Lease Agreement


Client: Suave

Work details: We were approached by Suave with a requirement for an Equipment Lease Agreement for leasing out their 26ft box truck to a customer.

The customer was to pay $1200 as a refundable deposit and $975 per week for the use of the truck.

Suave wanted to make sure that the agreement covered all the required insurance policies and protected their interests in case of any damages or breach of agreement by the lessee.

Challenges Faced

The challenge was to draft an Equipment Lease Agreement that protected Suave’s interests and covered all the required insurance policies.

Suave needed to ensure that the agreement covered the security deposit Insurance policies, and any potential breach of the agreement by the lessee.

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Since the equipment will be in the hands of someone else, a lot of consideration was given to protect Suave from ANY POSSIBLE instancs that could damage the Equipment of Sutive’s Interests.

This is how we did it!

Solution 1) Security Deposit Coverage

To protect Suave’s interests, we made sure to cover the security deposit in the agreement. This included specifying that the deposit would cover any damages done to the equipment or in case the lessee breaches the agreement.

Why it’s Important?

It was important to cover the security deposit in the agreement to protect Suave’s interests and make sure that they are adequately compensated in case of any damages or breach of the agreement by the lessee.

Clause in Question

Prior to taking possession of the Equipment, Lessee shall deposit with Owner, in trust, a refundable security deposit of Twelve Hundred ($1200) Dollars as security for the performance by Lessee of the terms under this Agreement and for any damages caused by Lessee or Lessee’s agents to the Equipment during the Lease Term.

Owner may use part or all of the security deposit to repair any damage to Equipment caused by Lessee or Lessee’s agents. In addition, the Security Deposit may be applied to any amount owed by the Lessee to the Owner.

Solution 2) Insurance Policy Coverage

We covered the Required Insurance policies and also stated that the Lessee/Customer will hold the Owner/Suave harmless and indemnify them in case of any injury or damage to the property. Additionally, if the lessee fails to maintain the insurance, the owner would procure the insurance, and the lessee would have to pay for it.

Why it’s Important?

Including the insurance policy coverage in the agreement was crucial to protect Suave’s interests in case of any accidents or damage to property during the lease term. The clause regarding the lessee holding the owner harmless and indemnifying them added an extra layer of protection for Suave.

Clause in Question

11.3. If Lessee fails to procure and maintain liability insurance or fails to furnish Owner the required evidence of insurance, Owner, without prejudice to any other remedy it may have, is authorized, but not obligated, to procure such liability insurance, and Lessee shall pay Owner, as additional rental, the amount of all premiums paid by Owner.

Solution 3) Rules and Regulations Compliance

During the term of the lease, we made sure to include a clause stating that the lessee shall follow all the state and federal rules, and regulations, and not do any reckless driving.

Why it’s Important?

Including this clause was important to make sure that the lessee abides by all the rules and regulations while using the equipment and protects Suave’s interests by avoiding any reckless driving.

Clause in Question

The Lessee shall not operate the Equipment: (i) in violation of any federal, state, or local rules, laws or regulations (including weight and size limits); (ii) in a reckless or abusive manner (iii) in violation of the manufacturer’s recommendations, off an improved road, on a flat tire, with warning lights on, with gauges showing dangerous or excessive readings, or improperly loaded. Lessee is not permitted to use the Equipment to carry passengers, except as required in the ordinary course of business.


In conclusion, our legal team was able to successfully draft an Equipment Lease Agreement for Suave that protected their interests and covered all the required insurance policies.

By covering the security deposit, insurance policies, and rules and regulations compliance, Suave can now lease out their equipment with peace of mind.

It’s important to think about and cover every possible scenario in an agreement to protect the interests of both parties involved.

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