What is hire?

Legally, hire sits alongside bailment and possession. The owner retains title while the hirer gains lawful possession and a right to use the goods on the contract terms. For everyday transactions such as equipment rental, vehicle hire or event furniture hire, the agreement sets out who pays, who insures and what happens if something goes wrong.

As the hirer you pay the hire fees, any deposit or bond and ancillary charges such as delivery or cleaning, take reasonable care of the goods, use them as intended, return them on time in the agreed condition (fair wear and tear excepted), hold insurance where the contract requires it, and report damage or defects promptly. In return you get quiet enjoyment of the goods during the term and goods that are reasonably fit for their described purpose.

The words get used interchangeably, but they differ. A lease usually implies a longer term and can carry obligations that resemble ownership, such as maintenance, although title stays with the lessor. Rent most often refers to land or premises and is regulated under tenancy law.

Credit law is the thing to watch. Hiring goods to an individual wholly or predominantly for personal, domestic or household use for more than four months is a regulated consumer lease under the National Credit Code, even when the hirer has no right to buy, which brings licensing, disclosure and AFCA membership obligations for the provider. Short hires of four months or less, and business hire, sit outside the Code. Where that individual has a right or an obligation to buy the goods, the deal is a hire purchase and is regulated as a credit contract instead; business hire purchase stays outside the Code.

Most disputes about performance, damage, late return and fees are decided by the contract terms. On top of that, the Australian Consumer Law gives consumer guarantees where goods are supplied in trade or commerce to a consumer: either the supply sits under the current monetary threshold, or the goods are of a kind ordinarily acquired for personal, domestic or household use. Goods hired to re-supply, or to be used up in production, are excluded. The goods must then be reasonably fit for purpose and match their description, with remedies of repair, replacement or refund. The ACL is enforced by the ACCC and the state and territory fair trading agencies, and owners cannot contract out of those remedies.

Complaints about a regulated consumer lease go to the Australian Financial Complaints Authority, and ASIC oversees the providers. State and territory fair trading bodies handle complaints about misleading or unfair contract terms and defective hired goods, and safety-critical equipment such as medical devices carries extra industry standards.

The clauses that cause most arguments are the term and any automatic renewal, the rate structure (daily, weekly or monthly rates, minimum charges and late payment penalties), the deposit or bond and when it is refunded, and who insures the goods and for what excess. Check who handles routine servicing and emergency repairs, any use restrictions such as operator qualifications or hour and kilometre caps, and the extent of your indemnity for third-party claims.

Look too at the grounds for termination and whether repossession can happen without notice, whether the owner will register a security interest on the PPSR, and the dispute resolution process. Taking dated photos and getting a written condition report at handover heads off most damage disputes.