A hire purchase or equipment hire agreement is a binding contractual arrangement and is enforceable against the parties involved. The same obligations imposed on parties to a general contract will apply. Making a mistake at any stage of the contract could have serious legal consequences for both parties. It is important to consult a lawyer when entering into any major contract for hire purchase or equipment hire.

Not all contracts will require recourse to lawyers. Hiring a DVD from your local video store is an example of a simple hire transaction that is unlikely to require the assistance of a lawyer at any stage. Examples of hire purchase and equipment hire agreements that may benefit from legal assistance include contracts:

• for a business purpose;
• are for a long term or an expensive item;
  • that attract Goods and Services Tax (GST) or stamp duty obligations; or
  • involve an equipment lease that falls under the Personal Properties Securities (PPS) scheme.

In business it is particularly important to get legal advice prior to entering into a contract. You could risk facing significant consequences if you do not understand your rights and obligations. A lawyer can ensure that your rights are protected. They can also negotiate favourable terms and conditions on your behalf. While it may seem expensive to engage a lawyer to draft or review your contract it could save you money in the long term if the advice you receive allows you to:

• operate your business efficiently;
• enforce your rights effectively from the beginning;
• trade profitably; and
• reduce the likelihood of costly disputes in the future.

GST, other taxation and stamp duty obligations might not be immediately apparent to a non-legally trained person. A lawyer can provide professional advice to ensure that your agreement is compliant with all relevant taxation obligations.

Any leases that fall under the Personal Properties Securities scheme are likely to require a lawyer. A lease is a PPS lease if it creates a security interest in the items being leased and if the term of the lease is 90 days or more. Items leased under a PPS lease must be registered on the PPS register. If you fail to register the lease then you may not be able to prove your ownership if it is challenged by another person. Any person with a competing security interest that is registered against the same item will be found to have a better claim to that property than you. A lawyer can help protect your assets by quickly identifying whether or not your items require registration on the PPS register.

The other time you may require a lawyer is in the event that either party breaches the hire purchase or equipment hire agreement. A breach of the contract will occur when one or more parties fail to meet their obligations. This can happen for a number of reasons. For example:

• a person might misunderstand the terms and conditions of the contract; or
• the equipment being hired may become faulty and unsuitable for hire.

In most cases a contractual breach will be resolved between the parties through mutual agreement without legal assistance. Where an agreement cannot be reached the matter can be escalated to formal mediation or civil litigation.

Mediation is a form of alternative dispute resolution. It is less expensive than litigation and if successful can lead to a mutually satisfactory outcome that is delivered faster than a judgement in a civil court. While legal assistance is not strictly required to conduct a successful mediation it can be useful to have a skilled negotiator on your side to help achieve the best possible outcome.

If the matter is escalated to civil litigation it is extremely important that you retain a lawyer to conduct your matter. The civil procedure and evidence rules are extremely strict and often very complex. An expert in the field can help you navigate your way through. Before you commence litigation a lawyer can advise you on:

• whether you have a valid case;
• the likelihood of success;
• whether you will be entitled to any remedies; and
• any available remedies.

Your lawyer will also advise you of the financial costs of litigation so that you can decide whether pursuing the matter is worth the expensive fees and charges that come with it.

If you do not have the resources to hire a lawyer you can make a complaint to the relevant consumer body for your jurisdiction or federally to the Australian Competition and Consumer Commission (ACCC). The regulator will decide whether the complaint is serious enough for them to consider taking action against the seller on your behalf. Usually the regulators are more likely to take action against a seller if the defective product has caused widespread or significant loss. This means that it has placed more than one consumer at risk of harm or causes financial loss that runs into the tens of thousands.