Equipment Lease Agreement Template and How to Draft One (2026)

What is an equipment lease agreement? An equipment lease agreement lets one party (the lessee) use equipment owned by another party (the lessor) for a fixed period in return for rent, while the lessor keeps ownership throughout. It is used for machinery, IT hardware, medical devices, construction plant, vehicles and office equipment. The lessee gets the use of the asset without buying it; the lessor earns rent and keeps title. In law, leasing movable equipment is a bailment under the Indian Contract Act, 1872: possession passes, ownership does not. That single fact shapes every important clause, from maintenance to return condition to what happens on default. This is general information, not legal advice. For high-value or long-term leases, have the final document reviewed by a lawyer. ### Operating lease or finance lease? The distinction drives the drafting and the accounting: - Operating lease: short to medium term, the lessor carries most of the asset risk, and the lessee returns the equipment at the end. Think of renting a forklift for a year.

• Finance (or capital) lease: long term, close to the useful life of the asset, the lessee carries most of the risk and reward, and there is often a nominal or bargain purchase option at the end. It is closer to financing a purchase. Decide which you are writing before you draft, because the maintenance, insurance, risk and end-of-term clauses differ. ### The law and tax that apply in India Equipment leasing is governed by the Indian Contract Act, 1872 (bailment, ss.148 onwards) and general contract law. A lease of equipment is a supply of a service for GST, so GST applies on the rent at the applicable rate; confirm the current rate and input credit position with your accountant. Stamp duty on a lease deed is set by the State Stamp Act, so it varies by state. This template is India-first and adapts to the UK, Ireland, Singapore, Australia and the US, but tax treatment differs by country, so confirm locally. ## Equipment lease agreement template ``` EQUIPMENT LEASE AGREEMENT This Agreement is made on [DATE] Between [LESSOR NAME], [address] ("the Lessor") and [LESSEE NAME], [address] ("the Lessee"). 1. EQUIPMENT The Lessor leases to the Lessee the following equipment: [description, make, model, serial no., quantity, condition] ("the Equipment"). 2. TERM The lease runs for [period] from [commencement date] to [end date], [renewable by mutual agreement / on notice of [n] days]. 3. RENT AND PAYMENT Rent: Rs. [amount] per [month], plus applicable GST. Payable in advance on the [day] of each [month] to [account]. Security deposit: Rs. [amount], refundable on return of the Equipment in the agreed condition, less any deductions. 4. DELIVERY, INSTALLATION AND ACCEPTANCE The Lessor delivers the Equipment to [site] by [date]. The Lessee inspects and signs an acceptance note confirming working condition. 5. USE AND CARE The Lessee shall use the Equipment only for [permitted use], follow the manufacturer's instructions, and keep it at [location]. The Lessee shall not move, sub-let, sell or encumber the Equipment. 6. MAINTENANCE AND REPAIRS [Operating lease: the Lessor maintains and services the Equipment.] [Finance lease: the Lessee maintains, services and repairs at its own cost and keeps a service record.] 7. OWNERSHIP The Lessor owns the Equipment at all times. The Lessee has only the right to use it. The Lessee shall affix and keep any ownership label. 8. INSURANCE AND RISK The Lessee insures the Equipment for its full value against loss and damage, noting the Lessor's interest, and bears the risk of loss from delivery until return, fair wear and tear excepted. 9. DEFAULT If the Lessee fails to pay rent for [n] days after it is due, or breaches a material term and does not cure within [n] days of written notice, the Lessor may terminate and recover the Equipment. 10. RETURN On expiry or termination, the Lessee returns the Equipment to the Lessor at [place] in good working order, fair wear and tear excepted. The Lessee pays for damage beyond fair wear and tear. 11. PURCHASE OPTION [finance lease only] At the end of the term the Lessee may purchase the Equipment for Rs. [amount]. 12. TAXES Rent is exclusive of GST, which the Lessee pays in addition. Stamp duty on this Agreement is borne by [party] under the [State] Stamp Act. 13. LIABILITY AND INDEMNITY The Lessee indemnifies the Lessor against claims arising from the Lessee's use of the Equipment, save for the Lessor's own default. 14. GOVERNING LAW AND DISPUTES Governed by the laws of India. Disputes go to the courts at [city] or to arbitration seated at [city] under the Arbitration and Conciliation Act, 1996. Signed by the Lessor: ____________ Witness: ____________ Signed by the Lessee: ____________ Witness: ____________

- **Clause 3 (rent and deposit):** state rent exclusive of GST and set a clear basis for deducting from the deposit, so a return dispute has a rule to follow.
- **Clause 4 (acceptance):** an acceptance note protects both sides. It fixes the date risk passes and confirms the equipment arrived working.
- **Clause 6 (maintenance):** choose the version that matches your lease type. In an operating lease the lessor usually maintains; in a finance lease the lessee does. Do not leave it blank.
- **Clause 8 (insurance and risk):** match the insurance to who carries the risk. The lessee holding risk with no insurance duty is a gap that hurts both parties after a loss.
- **Clause 10 (return):** define "fair wear and tear" by example for the asset in question, so the end-of-lease inspection is not a fight.
- **Clause 11 (purchase option):** include this only for a finance lease, and keep the option price clear. ## GST, stamp duty and registration Treat equipment rent as a taxable supply of service and add GST at the applicable rate; confirm the rate and input-credit position with your accountant. Stamp the lease under your State Stamp Act, where the rate varies by state. A lease of movable equipment is generally not compulsorily registrable, unlike a long lease of immovable property, but confirm for your state. Rates and rules change, so verify the current position. ## Where a contract workspace helps A template gets you one clean equipment lease. The ongoing work is harder: tracking rent due dates and renewals across a fleet of assets, knowing when each lease expires and whether to renew or return, keeping maintenance and insurance obligations current, and making sure a return condition dispute has the original acceptance note to point to. One AI workspace tuned to how your company leases equipment can carry the whole load: drafting a lease from your standard terms, reviewing a counterparty's draft for a one-sided return or indemnity clause, and tracking rent, renewal and expiry dates across every asset so none lapses by surprise. [Adira](https://adiralaw.com) is one tool that puts a whole leasing portfolio on that footing. This template is enough to document a single lease well; a workspace simply keeps every equipment lease, its payments and its dates together.