A loaner agreement is a contract between two parties, a lender and a borrower, in which the lender agrees to lend an item to the borrower for a specified period of time. The agreement should outline the terms of the loan, including the item being loaned, the length of the loan, the borrower’s responsibilities, and the lender’s recourse in case of default.
Loaner agreements are commonly used in a variety of settings, such as:
- Businesses: Businesses may lend equipment or tools to employees or contractors.
- Schools: Schools may lend laptops, textbooks, or other supplies to students.
- Libraries: Libraries may lend books, DVDs, and other materials to patrons.
- Equipment rental companies: Equipment rental companies rent out a variety of items, such as tools, construction equipment, and party supplies.
- Individuals: Individuals may lend items to friends, family members, or neighbors.
Why is a Loaner Agreement Important?
A loaner agreement is important because it protects both the lender and the borrower. For the lender, the agreement helps to ensure that the borrowed item will be returned in good condition and on time. For the borrower, the agreement helps to clarify their responsibilities and to protect them from liability in case of damage or loss.
What Should a Loaner Agreement Include?
A loaner agreement should include the following information:
- The item being loaned: The agreement should clearly describe the item being loaned, including its make, model, serial number, and any other identifying features.
- The length of the loan: The agreement should specify the start and end dates of the loan period.
- The borrower’s responsibilities: The agreement should outline the borrower’s responsibilities, such as using the item properly, maintaining it in good condition, and returning it on time.
- The lender’s recourse in case of default: The agreement should specify the lender’s recourse in case the borrower defaults on the loan, such as charging late fees, requiring the borrower to replace the item, or taking legal action.
In addition to the above information, a loaner agreement may also include the following provisions:
- Restrictions on use: The lender may include restrictions on how the item can be used, such as prohibiting the borrower from using it for commercial purposes or from lending it to someone else.
- Insurance: The lender may require the borrower to obtain insurance to cover the item in case of damage or loss.
- Dispute resolution: The agreement may include a provision for resolving disputes that arise between the lender and the borrower.
How to Create a Loaner Agreement
To create a loaner agreement, you can use a template or draft your own. If you are drafting your own agreement, be sure to include all of the essential information listed above. You may also want to have an attorney review the agreement before you sign it.
Here are some tips for creating a loaner agreement:
- Be specific and clear in your language.
- Avoid using legal jargon that the borrower may not understand.
- Make sure that the agreement is fair and reasonable to both the lender and the borrower.
- Have both parties sign the agreement before the item is loaned.
Here are some additional things to consider when creating a loaner agreement:
- Security deposit: If you are lending a valuable item, you may want to require the borrower to put down a security deposit. This will help to protect you in case the item is damaged or lost.
- Maintenance and repairs: The agreement should specify who is responsible for maintaining and repairing the item during the loan period. If the borrower is responsible for maintenance and repairs, you may want to require them to provide proof of insurance.
- Returns: The agreement should specify how and when the item must be returned. You may also want to include a provision for late returns.
- Signatures: The agreement should be signed by both the lender and the borrower. This will help to ensure that both parties understand and agree to the terms of the loan.
Here are some additional tips for using a loaner agreement:
- Keep a copy of the agreement: Be sure to keep a copy of the loaner agreement for your records. This will help you to protect yourself in case of a dispute.
- Enforce the terms of the agreement: If the borrower does not comply with the terms of the agreement, you have the right to take action. This may include charging late fees, requiring the borrower to replace the item, or taking legal action.
- Be reasonable: If the borrower has a legitimate reason for not being able to return the item on time, you may want to be willing to extend the loan period.
By following these tips, you can help to ensure that your loaner agreement is fair and effective.
A loaner agreement is an important document that can help to protect both the lender and the borrower. By including all of the essential information and drafting the agreement carefully, you can help to avoid disputes and ensure that the loan goes smoothly.