Party Rental Agreements 101
Parties throw lots of parties, weddings and events through actual contracts executed for rental space. Understanding party rental agreements can help event hosts become better hosts and also help venue managers understand what to expect from event hosts.
A type of lease between property owners or managers and an individual or group that will be renting a space for holding an event, party, wedding or other occasion, a party rental agreement can be used for renting out space in homes, offices, banquet halls, tents, catering facilities, and more. Even though the party rental agreement will contain some of the same legal aspects that any other residential or commercial lease would contain, party rental agreements have some important distinctions that both hosts and venue managers should be aware of .
What makes a party rental agreement different than a typical rental or lease agreement is that a party rental agreement is typically much shorter in time than most lease agreements. Parties are held very frequently and need spaces that are available only for a very short time during any given day. Depending on the type of facility that is used for a party, events can be held for only a few hours at a time, which is one reason why party rental agreements are usually for just a few hours. A party rental agreement is only a few pages long and generally does not contain any of the terms associated with longer lease agreements. Some also include other provisions for when there are issues with people invited to an event causing problems or damages in a way that violates the contract.
What a Party Rental Agreement Should Include
The main elements of a party rental agreement include:
Rental Period
The rental period is the amount of time that you will need the equipment for. Both parties can agree upon it, but typically it is charged by the day or the hour. You should also include the pickup and drop-off information.
Item List
The item list is the items you are renting from the rental company and any descriptions that are necessary so there is no confusion about the state of the items. Pictures can be attached to this portion of the contract so both parties are fully aware of the equipment’s quality and completeness. Additionally, you should also describe and detail whether or not you may sublet any of the equipment. If so, the sublessee must meet certain qualifications flat fees, etc.
Payments
Help yourself first, then the rental company. You should receive payment before you choose to release the equipment for use to ensure you are compensated. You should also describe whether any deposits are required, what the payment terms are (in terms of installment plans, sliding scale costs, flat fee, etc.), and the mode of payment (credit card, check, cash, etc.).
Damage Liability
There should be clear explanations of what happens if equipment becomes useless and is damaged while in your possession. Both parties should be clear on how the cost of these repairs, if they can be repaired, will be covered. You should also detail statutory limitations like court costs, attorney fees, and garnish wages, should any issues arise.
How to Draft a Party Rental Agreement
The standard party rental agreement form covers most of what any individual or business that wants to rent out party equipment or space will need. The following is a guide on how to expand that standard rental agreement to include special addendums or conditions that the parties may need to address:
It is worth noting that, with respect to all details in these kinds of contracts, it is possible to leave up any issue that the parties do not want to address in the party rental agreement. The basis for doing so is the principal of freedom of contract. Freedom of contract enables the parties to dictate (within reason) the terms of contracting.
As mentioned above, the party rental agreement can be more inclusive than the standard agreement. For example, the parties can create an addendum to the rental agreement in order to cover additional details not already covered in the rental agreement. In the addendum, the parties can address specific issues about how payment is due and what other financial obligations the renter has if party supplies are returned damages or if the space rented becomes damaged, etc.
The parties can also address special conditions they want included in the rental agreement. For example, the parties can include a clause about what happens in the case of a natural disaster rendering the contract impossible to perform or that the agreement does not constitute a lease for the space or room, just to name two.
By increasing details in the rental agreement, the parties remove room for interpretation by a judge or jury who may want to interpret the agreement to fit their view of what should happen in the event of a dispute.
Pitfalls to Avoid in Party Rental Agreements
Common mistakes when drafting, revising or signing a party rental agreement include: 1) a misunderstanding of the terms 2) signing an incorrect agreement 3) failing to read the fine print 4) using the wrong agreement (the wrong year). For example, if an entertainment agency sends you an agreement that is 3 years old and requires them to get approval for all advertisements after the party has taken place because that is what they used last time – there are other options available to the licensee to avoid this obligation in the case that there is a need for a longer approval process. A lot of companies have sample/old contracts, and they may try to give you an outdated agreement. There’s a chance that it will be a bad deal for you; a lot of times you can negotiate the fee, and they will happily draft a new contract if you ask. If they refuse, you should be concerned. Sometimes, people will add language when there are already pre-existing terms; if you are given this, you should familiarize yourself with the underlying document. You should never hand write on any pre-existing document, and the same goes for your contract.
Legal Considerations in Party Rental Agreements
A party rental agreement is a legally binding arrangement between the lessor and the lessee. It provides written documentation of the party rental equipment, its costs, and when the equipment must be returned. It also states whether equipment may be used outside the home or venue the equipment is being rented for. It provides protection from false claims of damage or theft by dictating who is responsible for the equipment, what is allowed and not allowed and when the equipment must be returned. In the event the equipment is lost, stolen or damaged, the rental agreement sets forth who is responsible to pay for the damage or cost of replacement.
If either party breaches the rental agreement by not abiding by the terms, the aggrieved party may claim damages. A breach of a rental agreement may be minor or material. A minor breach of a rental agreement may occur if you bring the rental party equipment back a few hours late , while a material breach would involve a major part of the rental agreement terms not being performed. For example, if the party rental equipment were lost, stolen or broken. If the rental agreement does not specify that the party rental equipment should be used only inside the home or venue, and the home use equipment is taken to a backyard without prior approval, that will likely be considered material. If the terms are breached, the aggrieved party may express their desire to 1) require performance of the lease, 2) withhold payments, or 3) terminate the lease. Whether or not the aggrieved party chooses to terminate the lease or ask for performance depends on the specific situation, including the degree of which each party is at fault for not complying with the rental agreement.
Negotiating the Best Terms for Your Party Rental
Negotiating Better Terms for Your Party Rental Agreement
As with any other contract, you are able to negotiate the terms of the rental agreement before you rent a large amount of party equipment. As a renter, you have some degree of leverage when it comes to potential negotiation. Whether it will be successful or not, however, often relies on how much party equipment you plan to rent, how competitive the rental market is and how much notice you provide to the rental company. So if you will only be renting a few decorations, it is unlikely they will budge on the terms to suit you, but if you are renting chairs, tables, tents, tablecloths, centerpieces and a whole host of other equipment, they certainly would be open to discussion.
First and foremost, begin by discussing whether you can be flexible on your party dates. Rental companies do not want to miss out on potential income by holding party equipment just in case you return. If you can plan your party dates to fall outside of what they already have booked, you should be able to negotiate additional accommodation.
Another possibility is adding a clause where you can get a partial or full refund if some or all of the equipment you chose cannot be delivered. You can explain that sometimes due to circumstances that are out of your control, such as an emergency or illness, you would be unable to hold your party or trim down the amount of equipment needed. It is unlikely that they will say no to your offer to receive a portion back if your plans shift.
A potential success story is an agreement to supply your own setup for the party, whether it be putting together the tables and chairs or creating the table decorations yourself. This could help the rental company cut down on work and expenses and could save you money from hiring them for setup.
Does Insurance Cover Party Rental Transactions
As with almost any agreement, party rental agreements are a) an agreement between two (or more) parties and b) a risk-sharing device. How parties share risks, particularly those associated with providing and using a product, should be addressed through insurance. Both parties should consider the type and necessary amount of insurance coverage required for the duration of their relationship.
For example, what happens if your rental tables are damaged in transit (say, a box tipped over)? Will you cover the cost or will the rental company?
It is common for rental agreements to provide that the rental company will maintain liability insurance for damage due to its negligence of the rented goods. For example, if those tables tip over at a beach wedding and injure someone, and the rental company was negligent with respect to placing the tables properly, it would be the rental company’s liability to compensate the injured party. Such liability is covered by general liability insurance. Similarly, if the beans and rice you rented for your wedding reception spoil due to the negligence of the rental company in providing refrigeration, that liability would be covered by the rental company’s general liability insurance.
However, what if the beans and rice spoiled because you left them out too long? Or you lit a fire on the chatoyere patio furniture you rented causing a fire in the tree overhead? Or one of your guests tipped a table over and injured themselves or your property? In these cases, even if the rental agreement provides that the renter is fully liable for the negligence of the user and specifies that the party is assumed to have all risk of loss of the item, the rental company probably has no obligation to insure the property, because they are not liable for the damages . However, none of these risks is excluded from a general liability policy — however, you may choose (and probably should) extend coverage to the rental company by adding them as additional insured.
A general liability policy normally will exclude any damage caused by the affirmative act (negligence) of the additional insured. However, it will also typically cover any negligence of the additional insured. In situations where the general liability policy is primary and it covers the negligence of the additional insured, the rental company will not be obligated to indemnify the renter for any liability that arises. Conversely, if the general liability policy does not respond to a third party claim due to an exclusion, the loss will be deducted from the rental company’s limit.
A good rental company knows the risks associated with the items they rent and may carry more types of insurance than just general liability — such as equipment coverage and inland marine policies. Like general liability, equipment protection is not fault based; it covers theft and damage (not physical harm to a person). It invites the renter to identify itself as an "additional insured" under the policy and sets forth a $5,000 limit of insurance for all parties with an aggregate annual limit of $1,000,000. Because the rental company is the owner and has "care custody and control" over the goods, when the customer rents the good, that customer is named as an additional insured for its liability, not the property damage to its goods due to the negligence of the rental company.