Reviewing an equipment lease or hire purchase agreement

An equipment lease or hire purchase agreement pays for machinery, vehicles, IT or fit-out in instalments, and the finance company's document decides who owns the equipment at the end, what the hirer can do if it does not work, what it costs to get out early and who bears the risk in between. The document is a standard form that the finance company will not redraft but will sometimes vary. I review the agreement from the hirer's side and return it marked up with a written explanation of what it commits the business to and the terms worth asking to change, for a fixed fee of £495 in three working days.

Who this is for

Businesses in England and Wales acquiring equipment on a finance lease, an operating lease, a contract hire agreement or a hire purchase agreement from a finance company, a dealer's finance arm or a supplier, and want to know what they are signing before they commit for the term. The hirer is a business; where it is a sole trader or a small partnership the agreement may nonetheless be regulated.

What to look for in an equipment lease or hire purchase agreement

Lease or hire purchase: who owns the equipment and when

Under hire purchase the hirer has an option to buy the equipment at the end of the term for a nominal sum and owns it then; under a lease the finance company owns the equipment throughout and the hirer returns it or continues to pay a secondary rental. The review checks which the document is, what happens at the end of the primary period, whether the hirer may buy or must return, and, for hire purchase, that the option is exercisable on payment of the final instalment. Property in leased equipment does not pass to the hirer, so the hirer cannot sell it, and the finance company's title is protected against the hirer's insolvency.

The implied terms about the equipment and the finance company's exclusions

In a hire purchase agreement the Supply of Goods (Implied Terms) Act 1973 implies terms that the goods are of satisfactory quality and fit for purpose; in a hire agreement section 9 of the Supply of Goods and Services Act 1982 implies the same. Finance company documents exclude those terms and direct the hirer to claim against the supplier instead. Against a business hirer the exclusion is valid only if reasonable under section 6 and section 7 of the Unfair Contract Terms Act 1977, and the review checks the exclusion, the assignment of the supplier's warranties to the hirer, and whether the hirer must keep paying while the equipment does not work.

Payments, interest, early termination and the settlement figure

The agreement sets the rentals, the rate, the term and what the hirer pays to end the agreement early, and the early termination sum in finance company documents can be the whole of the remaining rentals with a small discount. The review checks the settlement calculation, whether the finance company must give credit for the equipment's value on early termination, the default charges and interest, which must reflect the finance company's legitimate interest to be enforceable under Cavendish Square Holding BV v Makdessi [2015] UKSC 67, and any guarantee the directors are asked to give, which must be in writing and signed under section 4 of the Statute of Frauds 1677.

Risk, insurance, maintenance and return condition

The hirer bears the risk of loss and damage from delivery, must insure the equipment for its full value with the finance company's interest noted, and must maintain it to the manufacturer's standard and return it in that condition. The review checks the insurance and maintenance obligations against the equipment's use, the return condition standard and the finance company's right to charge for refurbishment, the treatment of total loss and the insurance proceeds, and who bears the cost of the finance company's inspection rights.

Whether the Consumer Credit Act applies to your business

The Consumer Credit Act 1974 regulates credit and hire agreements with individuals, and that includes sole traders and partnerships of two or three partners, so a business hirer that is not a company may have a regulated agreement with the protections the Act gives on form, termination and enforcement. The review confirms whether the agreement is regulated or is exempt as a business-purpose agreement above the Act's limit, and what that means for the hirer's rights to terminate and the finance company's right to repossess.

Default, repossession and the equipment fixed to the premises

On default the finance company may terminate, repossess the equipment and claim the balance. The review checks the events of default, which should require a missed payment to remain unpaid after notice rather than any breach, the finance company's right to enter the premises, and the position where the equipment has been fixed to the building, since a fixture may become the landlord's property and the finance company will require a waiver from the landlord. The Late Payment of Commercial Debts (Interest) Act 1998 governs interest on sums the finance company owes the hirer, such as a rebate on early settlement.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

The equipment does not work and the finance company says it is not their problem. Is that right?

Finance company documents exclude the implied terms about the equipment and send you to the supplier, and against a business that exclusion may be valid if reasonable. The review checks the exclusion, whether the supplier's warranties have been assigned to you, and whether you can withhold rentals while the equipment is out of use.

What will it cost to end the lease early?

The settlement clause decides, and it can be the whole of the remaining rentals with a small discount. The review calculates what the clause produces, checks whether you get credit for the equipment's value, and asks for a settlement figure that reflects the finance company's real loss.

We are a partnership. Does the Consumer Credit Act protect us?

It may. The Act regulates agreements with individuals, which include sole traders and partnerships of two or three partners, unless the agreement is exempt as a business-purpose agreement above the Act's limit. The review confirms whether yours is regulated and what protections follow.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.