The importance of a signed contract with clear terms and conditions

In plant hire, never underestimate the importance of a signed contract with clear terms and conditions. If something goes wrong with a customer, as it often can, a signed contract will protect you from potential losses.

As a member of the Scottish Plant Owners Association (SPOA), you have access to terms and conditions that have been specifically developed for the plant industry. They do not apply automatically and we strongly recommend that you ensure they are incorporated into any hire contract.

Graham Bell, Secretary at the SPOA and Corporate and Commercial Solicitor with Wright Johnston & Mackenzie, gives his perspective: “As a solicitor, my advice is obviously to have everything in writing and signed by all parties before hiring out any equipment. This includes the conditions of hire which the SPOA has developed for you.

“Here are my top tips:

• Accept phone orders ‘subject to contract’
• Get customers to sign a Hire Agreement (a contract which incorporates the standard conditions – use the SPOA ones!)
• Email the Hire Agreement right away and ensure its signed by the customer - or use an electronic signing process (like Docusign)
• Don’t deliver the equipment until a contract is in place

“If you follow this guidance, you will make your life a lot easier!”

To conclude, here are some frequently asked questions and answers to provide further clarification for members. All the answers assume that the SPOA terms and conditions are incorporated into the hire contract and the answers would be very different if that was not the case:

• Q: Our customer has called to tell us that a breaker on hire to them with a mini digger has been stolen from the site. Who is liable for the loss and should the replacement be invoiced new for old or at market value?

A: Risk is with the customer during the period of hire. The claim for loss will be dealt with as part of the insurance claim. Insurers rarely overcompensate.

• Q: We operate across Scotland and into England, can SPOA terms be used across the UK?

A: Yes. Scots law applies but the dispute could be heard in the English Courts.

• Q: A machine we have on hire to a customer has broken down on site, the customer wants to off hire it immediately or if they give us the time to fix it on site they want us to pay their downtime whilst we repair our machine, where do we stand?

A: The owner can repair or supply substitute plant, failing which the contract is at an end. The customer is not entitled to compensation.

• Q: Our customer cancelled an operated hire with us the evening before the hire was due to commence at 7:30am, where do we stand with charging for the cancellation?

A: If a contract is breached, the customer could be liable to the owner for “loss”- subject to the duty for that loss to be mitigated.

Members can access the SPOA terms and conditions here and read further guidance here.

If you still need advice, contact us directly at info@spoa.org.uk.

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