Operation process of container leasing contract

A container leasing contract is an agreement and contract text that specifies the rights, obligations, and expenses of both the lessee and the leasing company. Before signing the contract, the lessee generally needs to negotiate with the leasing company (or its agent) on the leasing method, quantity, rent, delivery and return time, location, rental and return fees, damage repair liability, and insurance. The main terms of a container rental contract generally include four aspects.

Delivery terms

The delivery clause is mainly a clause that restricts the leasing company, which refers to the fact that the leasing company should deliver containers that meet the contract conditions to the lessee at the time and place specified in the contract. The main contents include:

(1) Delivery date. It refers to the time when the leasing company hands over the box to the lessee. In order to provide some convenience for both parties, the delivery period is usually set as a period of 7-30 days.

(2) Delivery quantity. In order to adapt to the changes in the supply and demand relationship between containers and goods in the market, there are two methods for specifying the delivery quantity in the contract. One is the specified delivery quantity (or minimum delivery quantity); The other is the actual delivery quantity (which can be higher or lower than the former).

(3) The condition of the box at the time of delivery. The boxes handed over by the leasing company to the lessee should comply with relevant international conventions and standards, and the lessee should ensure that the boxes remain in and close to their original condition when returning them. To ensure this, the condition of the boxes during pick-up is reflected in the equipment handover form signed by both parties. In specific operations, it is stipulated that the driver hired by the lessee and the container manager in the yard where the box is located, as well as the gatekeeper, can act as representatives of both parties to sign the equipment handover form.

Return clause

The return clause in the rental contract is mainly a clause that restricts the lessee. It refers to the lessee returning the box in good condition to the leasing company at the time and location specified in the contract after the lease term expires. Its main content is:

(1) Return time. Refers to the specified return date. If the container is returned on time, the contract is generally resolved by charging rent for the overdue days; If it is possible to return the container in advance, it is required to establish an early termination clause in advance. When such a clause is established, the lessee may return the container in advance; If this clause is not established, even if the container is returned in advance, the lessee still needs to pay an additional rent for the number of days in advance.

(2) Return location. The lessee shall return the container to the specific location specified in the contract or confirmed in writing by the leasing company. When entering into a contract, the lessee should try to ensure that the return location is consistent or close to the final use location of the box, which can reduce the transportation cost of empty boxes.

(3) The condition of the box when returning it. The lessee should ensure that the appearance of the box is in good condition when returning it, that is, to ensure that the box remains in the condition stated on the equipment handover form signed by both parties when picking it up. This clause generally stipulates that if there is damage to the appearance during the return of the container, the lessee shall bear the responsibility and cost of repair.

In the rental contract, it is generally stipulated that if the lessee still fails to return the box after a certain number of days (some are 30 days), the rental company will handle it as a total loss of the box. The lessee shall pay compensation in accordance with the amount specified in the contract. Before the leasing company receives the compensation, the lessee shall still pay the rent based on the actual number of days.

Damage Repair Liability Clause

When the lessee returns the box, they should return it according to the condition recorded on the equipment handover form. If there is any damage, they should be responsible for repairing the box and returning it, or bear the cost of repair. If a Damage Protection Plan (DPP) clause is established in the contract when renting a box and payment is made according to regulations, the lessee shall not be responsible for repairing the damage caused during the rental period to a certain extent, and may return the unrepaired box to the leasing company. Regardless of whether the box is damaged during the rental period, the DPP fee will not be refunded.

In a certain sense, the DPP clause is equivalent to the lessee insuring the container against damage during the leasing period (but not from the insurance company). However, the lessee must understand that DPP fees generally only cover partial damage to the box and do not assume liability for total loss or general average. Traditionally, only one reason with a lower value than the box at the time is covered by the rental company within the designated limit; If the limit is exceeded, the excess still needs to be borne by the lessee. DPP fees are generally charged based on the number of rental days.

Rent and Fee Payment Terms

The lessee shall pay the various fees and rent stipulated in the contract on time, which is a prerequisite for free use of the container and certain rights and reduced responsibilities. Failure to pay the fees and rent on time constitutes a breach of contract, and the leasing company has the right to take appropriate action until the container is recovered. The rent and fee payment terms of the container rental contract mainly include the following contents:

(1) Lease term. The lease term is generally understood as a period of time from the date of delivery to the date of return.

(2) Rent calculation method. Rent is charged on the day of shipment. The calculation of rental days generally starts from the day of delivery and ends on the day after the rental company accepts the return of the container. In the case of overdue container return, the overdue days will be paid separately according to the contract rent (usually twice the normal rent). If there is a clause for early termination in the contract, the lessee shall pay the early termination fee (usually equivalent to 5-7 days of rent) and the lease term shall terminate on the day when the container enters the container return yard.

(3) Rent payment method. There are two general rental payment methods, monthly or quarterly. The lessee shall make the payment within the specified time (usually 30 days) after receiving the rent payment notice. If delayed, interest shall be paid at the rate specified in the contract.

(4) Handling fees for delivery and return of containers. The lessee shall pay the handling fees for delivery and return of the container in accordance with the contract. This fee is mainly used to offset the expenses incurred for delivering and returning containers at the storage yard (such as loading and unloading fees, document fees, etc.), and its amount may be determined by the contract or based on the cost of the storage yard where the containers are delivered or returned. In addition to the above clauses, there are generally clauses on equipment marking changes and other related leasing responsibilities, obligations, insurance, and sublease clauses in the leasing contract.