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§ 6 of 15

Baler and equipment

The equipment clause covers any baler, compactor, cart or trailer the buyer supplies: the rent or charge, who maintains and repairs it, who is liable if it injures someone, and what happens to it at the end of the term. Equipment is often how a buyer ties you to a long contract, so read it with the term and exclusivity clauses.

Updated · Not legal advice

6.1

How is equipment usually paid for?

  • Monthly rent deducted from the rebate, whatever you ship.
  • A wider spread that pays for the equipment over the term.
  • A buy-out at the end, or a charge if you end early.

A fixed monthly charge is the one to watch: in a month with a low index, it can exceed the rebate.

6.2

What about maintenance and safety?

Balers and compactors are dangerous machines, and safety rules apply to the people who use them. The contract should say who services the machine, how fast a breakdown is answered, who pays for repairs caused by wear versus misuse, and who trains your staff. If the buyer owns the machine but your staff run it, the insurance and indemnity terms need to match that split. Have your safety lead and insurer read this clause.

6.3

What happens at the end of the contract?

Look for the removal date, any removal charge, and whether an early-termination fee covers unrecovered equipment cost. An equipment cost that is "recovered through the spread" should mean no extra charge once the term has run.

6.4

Sample wording

Illustrative wording to adapt. Brackets are choices to make.

6.1 Equipment. Buyer shall supply one [vertical baler, model ___] at a charge of $[___] per month, deducted from amounts due under section 3.

6.2 Service. Buyer shall maintain the equipment and respond to a breakdown within [24] hours. Charges under 6.1 abate for each full day the equipment is out of service.

6.3 Removal. On expiry or termination Buyer shall remove the equipment within [30] days at its cost.

6.5

What to negotiate

  • Convert the monthly charge to a cost per ton at your low-season volume, and compare it with the spread.
  • Ask for rent to stop while the machine is broken.
  • Make removal at the end of the term free if the equipment cost was built into the price.
  • Keep the equipment term no longer than the supply term.

Red flags in a draft

  • Rent that continues after the supply agreement ends.
  • An early-termination fee equal to all remaining rent.
  • Your company named as responsible for all repairs to equipment it does not own.

Add a monthly baler charge →

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Questions

Is a free baler really free?
Usually its cost is in the spread or in the term length. Compare the offer with and without the equipment to see what it costs you.