A contract general refers to a legally agreement between two or more parties intended to be binging tho the parties. It is a promise enforceable by law the breach of which gives rise to legal remedies. Hire refers to obtaining possession of property that belongs to another party and making payment to that party as consideration. A business contract hire is thus a legal agreement made between a leasing company and an entity.
The two main players in this industry are the lessors and the lessee. The most common forms of businesses under this legal agreement are sole proprietor, partnerships, and limited companies. Sometimes, there are people who link these two sectors. They are called brokers, and are paid brokerage fees for their work.
The terms of this legal agreement may either be explicit or implicit. Either way, the terms usually differ from one leasing company to another or from one firm to another. This is highly dependent on the agreement made between the contraction parties. Terms widely differ in terms of payment, periods of payments and event depth of services to be performed by the parties.
For this industry to run more effectively, there exists an authority charged with the responsibility of overseeing its operations. This authority usually lays down some rules and regulations to govern the operations of all the parties in the industry especially the renting companies and their respective entities.
This legal agreement is beneficial to businesses due to reduced administrative costs, covered depreciation costs, secure insurance, and efficient rescue in case of breakdowns, tax advantages, and availability of pieces of advice and support services. There are also improved budgetary decisions and security for acquiring loans and finances.
The negative side of this agreement is that it is extremely costly to the business in the long run. The enterprise merely possesses the equipment, but the ownership of the property is with the renting company. Besides, in times of technical hitches, the company may incur high maintenance and repair costs.
Important to note is that business contract hire usually covers business organizations. However, leasing companies can also extend their services to individuals. This is commonly referred to as personal contract hire.
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