Typical Terms in a Generator Rental Agreement
There’s no escaping the truth: We’re totally dependent on electricity.
Without access to instant, reliable power, our worlds go dark. Our wireless devices won’t fire up, we can’t heat or cool our homes, and our food goes bad.
These woes are inconvenient for homeowners, but the situation could be downright detrimental to a business owner.
Depending on power requirements, location, budget, and other considerations unique to each business, either buying or renting a generator will offer the best solution to deal with outages.
If you go the rental route it’s important to do your homework (and ask these 8 questions) before you sign on the bottom line of a generator rental agreement.
Today, we’re sharing a few components that characterize a typical rental agreement of this kind. Ready to learn more? Let’s get started!
Defining Your Rental Duration
One of the first things to establish is how long you intend to rent the generator. While you’ll find different types of agreements that allow myriad rental terms, make sure you’re aware of the timeline before you move forward.
Does it make sense for your company to pursue a rent-to-own contract? With this setup, you’ll still make monthly payments, but your lender will apply them toward the purchase of the generator when the rental agreement closes.
What about the option to renew at the end of the term? While your needs might be short-term at the moment, they can easily shift to long-term, especially if you take on new work or expand your operations.
Your rental agreement should include a clause that explicitly states the terms or duration of the rental so there’s no second-guessing.
Setting Payment Terms
Next, your contract should clearly state all the specifics surrounding your payment terms. It’s critical to understand these so you aren’t slapped with penalties for missing an important due date.
Is your monthly rental payment due on a certain date each month, such as the 15th? If not, what terms are in place to dictate when and how you should pay? Never sign a contract that doesn’t explain these terms in transparent detail.
This is also the place where the lessor will define any discounts you’ll receive if you don’t use up all of the agreed-upon number of operating hours during a given month. At the same time, you should expect to pay additional rent if you exceed those hours.
The Type of Equipment You Need
Not all industrial generators are alike. There are different power ratings that define each model. You’ll also find different sizes and capacities designed to facilitate a variety of tasks.
Your contract will list the exact kind of generator you’re renting, and unless extenuating circumstances occur, you’ll be required to use that model for the duration of the agreement. That’s why it’s important to choose the right one.
Understanding Power Ratings
At their core, power ratings help reveal how much power the generator is capable of producing. They also help you understand the types of applications that the generator is best suited to support. The three rating types include:
Consider the kind of environment you plan to use your generator within, and which tasks you expect it to power. This can help guide you toward the kind of model that fits your needs.
If you’re using the equipment as the primary source of power for your workspace, you’ll need a prime generator. These provide a variable power load that’s drawn over time. Designed to work for the long term, they’re ideal for powering a location that can’t draw power from the grid, such as a remote building site.
If you need a steady supply of invariable power, a continuous generator will fit the bill. While it works long term like a prime generator, this model maintains the same power load for the entire duration of use.
Or, if you only intend to use yours to supply backup power in case of an emergency, you’ll need a standby model. These are designed to function as your primary power source for a short period of time until your main power source is up and running again.
Accessories and Ancillaries to Consider
In addition to the generator itself, the rental contract should also include a clause that defines the accessory parts you’ll receive.
These usually include cables and other spare parts required to operate the equipment. When you hand over the materials at the end of the rental period, the lender will inspect them and note any damage incurred.
In addition to these components, there should also be verbiage around the fuel provided. In some cases, your lender will provide fuel for the generator for a set period of time. After that, you’ll be responsible for refueling as required.
Specific Work Terms
Industrial generators are substantial investments that include many high-priced parts. As such, it’s rare to find a lender that lets you walk away with one without defining strict work terms.
In most cases, you’ll only be able to use the generator for specific types of work at a specified location. If you go outside of these realms, you risk losing protection if any damage occurs, leaving you personally liable.
Your contract will define these terms. As the lessee, it’s your duty to secure insurance for the generator.
Installation or Repair Services
Are you just renting the generator? If so, the rental agreement might be the only paperwork you sign.
On the other hand, if you intend to procure any installation or repair services, you’ll need to fill out additional, separate contracts that define that scope.
In these documents, you’ll agree to follow all of the lender’s operating and service instructions. Rather than working on the equipment yourself, you’ll leave it to their designated personnel who have the necessary skills and knowledge to handle the job.
The contract will define how soon the lessor will arrive on-site to provide service (e.g. eight hours). In most cases, the lessee will be responsible for the following:
- Procuring maintenance, care, and services
- Paying for travel time, mileage, labor, and parts required for service
- Reporting any service issues, damages, or instances of overuse
There may also be additional forms to fill out concerning any permits, licenses or transportation services that you require during the contract period.
Under most industrial generator rental agreements, the lessor is permitted to stop by during normal business hours to inspect the equipment.
Within your contract, you will also find clauses that dictate why and how the contract can terminate prior to the end of your rental agreement.
Your lessor will retain the right to terminate the contract at any time if he or she feels that the terms of the agreement aren’t being met. As an experienced rental provider, some of the most common reasons for termination we’ve witnessed in the industry include:
- Non-payment by the lessee
- Misuse or neglect of the generator
- Using the generator at a different site than the ones specified
- Failing to insure the generator, or reaching the end of the insurance term
In most cases, if the contract terminates early, you’ll pay the remaining rent at a discounted price. The same terms apply if you cease to use the generator for a set period of time. For instance, if your company closes down for two weeks during the rental agreement period, you’ll pay a discounted rental rate during those days of non-use.
Whether the contract agreement ends at the time specified or it terminates early, most lessors will enforce a penalty payment if you return the generator late.
Find the Perfect Generator Rental for Your Needs
Whether you need a short-term rental or a long-term solution, having access to a high-quality generator can make the difference between a thriving operation and a stagnant one.
We understand that navigating a generator rental agreement can be challenging. That’s why we’ve set out to make the process as simple and straightforward as possible.
We are a leading supplier of power generation products and services, focused on serving the commercial, industrial, and oil and gas industries. Whether you want to buy a new generator, rent one, or have one of our certified technicians come out to work on yours, we’re here. You can also sell your equipment to us for a fair price.
Contact us for more information and we’ll put the power back in your hands.