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Preparing a written rental contract

News | August 1, 2012 | By:

Q: What should be included in a rental contract?

A: A written rental contract sets the expectation for the rental relationship. It establishes the terms of each transaction, including the responsibilities of the parties, and provides the basis for legal remedy in the event either party does not perform. A contract also alters many standard legal presumptions that are generally unfavorable to the rental company. In addition to the fundamental issues addressed—rental charges, equipment damage, liability for accidents—a contract can clarify duties and expectations at every step in the tent rental process.

At the outset of a tent rental, reservations are important to ensure the rental company has the equipment and personnel available on the date of the event. Many rental companies counteract the risk of canceled reservations by requiring renters to pay deposits.

If the rental is canceled shortly before the event, reservations are non-refundable. Another option for deterring late-notice cancellations is by charging a cancellation fee. Either way, a contract provision outlining the policy will help the rental company uphold or enforce it in the event it is disputed. Such a provision can include the amount of the deposit or fee, the time frame for canceling a reservation without penalty and authorization for the rental company to charge the renter’s credit card.

During the implementation phase of a tented event, rental companies may require customers to complete certain steps in the process or charge additional fees for those services. For example, a permit provision in a contract might obligate the renter to either obtain the required permits or pay both the additional charge and the permit fee for the rental company to do so. Similarly, a provision regarding subsurface conditions might require that the renter have the site marked for underground utility lines and warn that the tent cannot be installed if the lines are not marked, resulting in either cancellation of the event and forfeiture of the reservation deposit or additional charges for delays.

Contract provisions regarding delivery and installation, site preparation, and setup and breakdown require the renter to ensure the site is accessible (unlocked, clear of vehicles or other obstructions, etc.) or risk a service charge. Such provisions might include time frames for installing and dismantling the tent and requirements to clear the tent of personal property prior to the pickup time.

After the tent is erected, the rental company may need to inspect it periodically to ensure it remains secure. A contract provision regarding weather-related risks can give the company permission to enter the site at any time to re-secure or even dismantle the tent in the case of extreme weather conditions. Further, it can document warnings that the tent is a temporary structure subject to collapse in severe weather and obtain the renter’s agreement to evacuate in that case. In the event the weather is uncooperative at the time of installation, a provision of force majeure relieves the rental company of liability for breach of contract if it is unsafe to erect the tent. This provision also applies to other events beyond the rental company’s control, such as flooding or riots.

The more specific a contract is to the services provided, the better it protects the rental company from risks such as nonpayment, equipment damage, accidents, cancellations and delays.

Maura Paternoster is a risk manager for ARA Insurance Services.

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