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The world is full of equipment that can be rented or sold to consumers or business interests, from medical and construction equipment to golf carts and water sports vehicles. Even dumpsters, scaffolding, and party equipment.
As an entrepreneur, you can use your knowledge and interests to launch a business that offers equipment rental booking, outright sales, or both.
With that being said, when you sell equipment, you want to make sure everyone understands the terms associated with the transfer of ownership, especially since something like a medical ventilator machine could go for $30,000 to $50,000, while a Caterpillar Excavator could cost anywhere from about $100,000 to $850,000.
These large sums are why you need an equipment sales contract in place. What are equipment purchase agreements, and what should you include in yours?
What Are Equipment Purchase Agreements?
As a business owner, you’ll turn to all kinds of targeted software solutions to run your operation, from QuickBooks for managing your finances to Google Analytics for tracking the success of your online efforts and gaining insights that help you improve.
You can also find a range of templates to help you do everything from sending out email blasts to creating professional invoices.
An equipment purchase agreement is a legal contract that spells out the terms of a sale, as agreed upon by the seller and the purchaser. It serves to protect both parties in different ways.
The agreement protects the seller from claims that the equipment is not what the buyer agreed to purchase. However, it also protects the buyer if they actually receive the wrong piece of equipment or the condition is not as stated.
A proper equipment purchase agreement template will include everything you need to ensure that both parties understand the terms of a sale, but you may have to tweak it a bit to make it suit your particular needs.
Free Equipment Purchase Agreement Template
Need to create a standardized purchase agreement for selling used equipment? We’ve created a free downloadable PDF template you can start using today!
Need a rental purchase agreement? Click here to download your free template!
*Consult with your lawyer to ensure this template correctly applies to your location, county and contains the proper terms and conditions before use.
The easiest way to get started when it comes to making your own sales contract is with a simple equipment purchase agreement template. After all, why start from scratch when someone has already done the heavy lifting for you?
Even if it’s not exactly what you need for your business, it acts as a blueprint from which you can create a customized contract.
Download your free equipment purchase agreement template here.
What Should an Equipment Sales Contract Include?
If you’ve offered equipment rental for a while, you probably already have some idea of what should go into your equipment sales agreement template. However, since you’re not booking rentals temporarily but instead turning over equipment ownership outright, there will be a few differences. A standard sales contract should include:
- Names and contact information for all involved parties
- Description of the equipment
- Payment terms
- Delivery terms
- Warranties and guarantees
While you might choose to include additional information or terms, either as part of your regular contract or for individual sales, these elements are the basics that will serve to protect you in the event of a dispute after the fact.
Names and Contact Information for All Involved Parties
The legitimacy of contracts can turn on a misspelled name, so it’s really important to make sure you nail down the correct names and contact information for all parties involved in your equipment purchase agreement.
Description of the Equipment
A major part of equipment sales management is making sure everyone knows exactly what pieces are being purchased. A generic equipment name such as “ventilator,” “excavator,” or “jet ski” won’t do the trick. What information do you need to include in the equipment description portion of your contract?
Naturally, a basic equipment purchase agreement template won’t include the specifics, so for each individual sales contract, prepare to fill in details like:
- Manufacturer
- Model name and/or number
- Serial number
- Visual description of the equipment
You might also include the condition of the equipment at the time of sale. This wording could include terms like “new,” “used,” “as is,” “excellent,” “good,” “fair,” or “poor.” If there are known issues, you may want to spell them out, so everyone is aware of what they’re agreeing to. This approach could help to prevent disputes and legal action later on.
Payment Terms
Before you jump right into scheduling delivery, you need to make sure the payment terms are understood by the purchaser. Payment terms are relatively simple to add to a contract. Include the total amount to be paid for the purchase, as well as acceptable forms of payment and the due date.
If you offer payment plans, you will have to stipulate them, as well as any penalties for late or missed payments. Don’t forget to include that the buyer is also responsible for sales tax or other taxes associated with the sale.
Need help nailing down your equipment pricing? Here’s a handy guide on rental equipment values.
Delivery Terms
Whether you offer delivery as part of the purchase price or you charge extra for this service, it’s best to include your terms as part of the equipment purchase agreement so the buyer knows what to expect.
In some cases, you may expect the buyer to arrange for pick-up from a storage location. You can make any arrangements you like where equipment delivery is concerned. Just make sure the buyer is aware and agrees to your terms.
Warranties and Guarantees
Any time someone purchases an expensive piece of equipment, whether it’s for business or personal use, they’re going to want some kind of guarantee that it’s not going to fall apart or fail immediately. They’ll also want to make sure they’re not buying something that “fell off a truck.”
The average equipment sales contract template should include some standard language to the effect that you are the rightful owner of the equipment and that when it is delivered to the buyer, legal ownership will be transferred.
It should also stipulate that the buyer agrees to take the equipment in its current condition and that the buyer indemnifies you against damages that may occur later.
If the equipment includes any transferrable manufacturer warranties or if you offer a warranty through your business, you should also include the information in the agreement.
Consider Lease-to-Own Options
Many equipment rental businesses are discovering the benefits of offering lease-to-own arrangements, where renters have the option to purchase equipment after a certain rental period. This approach can provide additional revenue streams while giving customers flexibility in their equipment acquisition.
Lease-to-own agreements typically work by applying a portion of rental payments toward the eventual purchase price. This arrangement benefits customers who want to “test drive” equipment before committing to a full purchase, while providing rental businesses with extended revenue opportunities and potential sales conversions.
When structuring lease-to-own options, consider factors such as the rental period before purchase eligibility, what percentage of rental payments apply to the purchase price, and how equipment condition assessments will be handled. These arrangements require careful documentation to ensure both the rental terms and eventual purchase conditions are clearly understood by all parties.
How to Integrate Purchase Options into Your Equipment Rental Business
Modern equipment rental management software can streamline the process of offering purchase options to your customers. Platforms like Quipli provide automated solutions for managing both rental and sales transactions, making it easier to track equipment throughout its lifecycle from rental to potential sale.
Integration capabilities allow you to automatically calculate purchase prices based on current market values and depreciation, track which rental customers might be good candidates for purchase offers, and generate purchase agreements directly from existing rental contracts.
The software can also help you manage inventory across both rental and sales operations, ensuring you have the right equipment available for either purpose and can make informed decisions about when to transition equipment from rental fleet to sales inventory based on age, condition, and demand patterns.
Other Best Practices for Your Equipment Purchase Agreements
Beyond the essential elements, implementing additional best practices can help protect your business and improve customer relationships.
Keep Contracts Up to Date
Equipment markets, regulations, and business practices evolve constantly. Review and update your purchase agreement templates regularly to ensure they reflect current legal requirements, industry standards, and your business needs. Consider annual reviews or updates whenever significant business changes occur.
Organize and Remove Manual Document Collection
Digital document management systems can eliminate the hassle of paper-based agreements and reduce the risk of lost contracts. Electronic signatures, cloud storage, and automated filing systems help ensure all purchase agreements are properly executed, stored, and easily accessible when needed.
Establish Clear Inspection Procedures
Implement standardized equipment inspection processes that occur before any sale. Document equipment condition thoroughly with photos, maintenance records, and detailed condition reports. This documentation protects both you and the buyer by establishing a clear baseline for the equipment’s state at the time of sale.
Maintain Comprehensive Records
Keep detailed records of all equipment sales, including maintenance history, previous rental usage, and any modifications or repairs. This information can be valuable for warranty claims, future sales reference, and helping customers understand exactly what they’re purchasing.
Download SAMPLE PURCHASE AGREEMENT TEMPLATE.
Other Important Equipment Rental Documents & Templates
Equipment purchase agreements are just one part of a comprehensive documentation system for equipment rental businesses. Consider these additional templates that may be valuable for your operations:
Heavy Equipment Inspection Checklist – Standardized inspection forms help maintain equipment quality and provide documentation for condition assessments.
Equipment Rental Agreement Terms & Conditions – Formal agreements for ongoing equipment maintenance can add value to both rental and purchase transactions.
Insurance and Liability Waivers – Protect your business with proper insurance documentation and liability waivers for both rental and sales transactions.
The Value of Equipment Purchase Agreements
Equipment purchase agreements are an important part of any business operation that sells new or used equipment. With careful planning and attention to detail, these documents help to protect both your company and your clients while facilitating smooth equipment transactions.
Whether you’re transitioning rental equipment to sales or operating a dedicated equipment sales business, having comprehensive purchase agreements in place provides the legal protection and clarity both parties need for successful transactions.
If you’re looking for a platform that gives you the tools to better manage rental business inventory, orders, and streamline both rental and sales operations, book a demo today to learn more about Quipli and what it can do for you.
