23 January 2018

Legal considerations when investing in new equipment

The BPIF understands that the decision to invest in new kit is a big step for most of our members, so to help our members make informed decisions we've put together the BPIF Investment Report. With over 100+ companies surveyed it provides an insight into how we're currently investing as an industry.

However once you've done your research and decided on a particular piece of machinery all that is left is to sign all those tedious bits of paper and wait for your kit to turn up.

It is at this point that some of you may need to pause and perhaps take some legal advice as to those tedious bits of paper - these are the contract documents for the sale of the kit, the payment of the finance, the transport, installation, insurance and maintenance agreements. It is vitally important that these documents accurately reflect the deal that you have reached, and that you understand any limitations on the liability of the various parties.

Here are a few issues to think about:

- If you are buying second hand kit, you may have negotiated the replacement of some parts or cleaning as part of the deal - does the final contract include everything you have agreed?
- Who is responsible for insuring the kit whilst it is being dismantled and moved?
- Who is responsible for insuring the kit whilst it is being commissioned and tested at your premises? If not you, then is your interest noted on the policy?
- Have you agreed sufficient time for commissioning and testing of the kit before it is deemed accepted or "signed off"?
- If you are borrowing the money to purchase the kit, what have you agreed with the Finance House, does title in the kit vest with them, and if so at what point will it pass to you?
- If you have a greed a maintenance contract, does it cover all of the parts and labour that you are expecting?

Sometimes negotiations can carry on for several months and there may be dozens of emails back and forth between the parties, so that one party can think they have agreed something, but the other party thinks they are still negotiating. It is not uncommon for large sums to change hands without any final written agreement being produced. In some cases that will be fine, but it is when things go wrong that you need to be able to consult an agreement to decide who is responsible for putting them right.

We can help by reviewing the documents and explaining things in straight forward language, and by drafting a binding contract for you to reflect the deal you have reached. Or we can be a "sounding board" to talk over the terms with you and help spot anything you may have missed.

If you want more information on how the industry is investing download The BPIF's Investment Report here, or ask your Regional Director for a hard copy.