Beware Commercial Leasing Agreements for Equipment

Commercial leasing, by itself, is not a scam. The idea behind commercial equipment leasing is that you are leasing or renting computer or electronic equipment from a company for a specified time. Some agreements then contain provisions for you to buy the equipment or return it to the company you are leasing from. That said, contract law is pretty serious in the United States and you will generally be expected to abide by the terms of the contract that you sign with a provider or seller if a matter goes to court. This means you have to be absolutely sure you want to be a part of the agreement you’re signing.

Why beware? A few simple reasons:

  1. Complexity. The likelihood that you need a company to help you pick out equipment is low, and the cost of computer equipment for court reporting is low enough that you can probably figure out a way to buy the equipment outright or cheaper using revolving or personal credit. It does not make sense to have a complex contractual agreement for equipment unless there is something generous you are getting from the contract such as generous tech support provisions, replacement parts, or free repairs/replacements. If you can walk into a store and get it, caveat emptor. If you are entering an agreement for someone else to get it for you, be just as careful.
  2. Third-party bait and switch. Some sellers will say they are helping you pick out the right equipment for you. This can be very tempting because not everyone in our field is comfortable buying computers without advice. So you could be talking to your software manufacturer, who refers you to their “computer specialists,” who are actually a third-party commercial leasing company. So one minute you’re talking about buying a computer, the next minute you’re signing a commercial leasing agreement, and if you’re not careful, your signature could end up on an agreement that you don’t fully understand. This is totally legitimate, legal business, but it could cost a reporter a lot of money unnecessarily.
  3. Predatory practices. Beyond the third-party bait and switch, there are general equipment leasing “tricks” that can end up costing consumers. Evergreen clauses are one example of this, where the buyer has the option to buy the equipment, but the seller is allowed to extend the agreement if the buyer does not notify them of their intent to buy the equipment. There are also instances where sellers attempt to alter the text of the contract just before it is signed. If you see a company employing predatory practices or attempting to confuse you, it may be a good idea to avoid doing business with them altogether.

Protect yourself and your wallet. Always make sure you read, understand, and retain a copy of what you sign or agree to. If you are having trouble understanding the terms of a contract, it may pay to have a lawyer review the contract with you, because monthly payments, fees, or penalties in an agreement can quickly snowball to be several times the cost of the computer equipment you’re leasing — and it’s mostly legal.