Articles > Construction

What Is A Dry Hire Agreement?

January 12, 2021   Daniel KatzPhilip Evangelou

When a company hires out equipment or machinery to third parties, they will enter into a dry hire agreement. In essence, a dry hire agreement sets out the terms and conditions of such a transaction. It is important to note that this agreement differs from a wet hire agreement. In a wet hire agreement, both the equipment and an operator are hired out.

This article will explain the benefits of a dry hire agreement, and what needs to be included.

Benefits of a Dry Hire Agreement

There are several benefits to pursuing a dry hire agreement:

  • Greater efficiency: There is no need to teach new employees. This would allow project managers to allocate their time more efficiently.
  • Fewer people and cheaper: There is no overall wage increase. Additionally, as there would be no new employees, site safety would simultaneously enhance. The reason for this is two-fold. Firstly, new equipment would decrease the amount of workers on site. Secondly, existing employees would already know safety protocols, and would be more efficient in cases of emergency, 
  • Mitigate accountability: A dry hire agreement does not mean that a project manager is free of accountability. The manager must still show due care and diligence to the existing employees. However, the fact that there is no contractor means that the project manager can have trust in existing employees. Therefore, there is no increase in accountability as third parties or contractors are not working on site. 

What Should Be Included In A Dry Hire Agreement?

Project managers should be aware of the following provisions generally seen in dry hire agreements:

  • Hire period of equipment: It is important to set out the commencement and ending date of the equipment. This section generally provides the hirer’s entitlements to use the machine and when they are to return it. Additionally, there may be a ‘No Refund’ clause. This stipulates that the owner will not refund the hirer, if they decide to return the equipment early.
  • Payment: The hiring fee must be specified, both in amount, and due date. This section will also specify any relevant GST information.
  • Use, operation and maintenance: This section will make the hirer liable for the use, operation and maintenance of the equipment. This will make the hirer aware of the consequences for not taking care of the equipment.
  • Hirer’s warranties: Warranties will essentially solidify the terms and conditions. By including this section, the hirer is agreeing to use the equipment in accordance with the terms and conditions. 
  • Liability: The hirer must assume all risks and liabilities associated with the equipment. This also includes any injuries or deaths to persons that the equipment may cause. 

To Sum Up

There are several benefits for the hirer when signing a dry hire agreement. In fact, such an agreement may see immense benefits in both cost and general efficiency. With that being said, both parties should be aware of the terms and conditions commonly seen in these agreements. 

If you need any assistance, our construction lawyers are here to help! Just contract us via 1300 337 997 or by filling out the contact form. 

About Daniel Katz

Daniel KatzDaniel is a legal intern at OpenLegal, placed in our legal content team. He is currently studying a Bachelor of Laws at the University of Technology Sydney. Daniel's interest lies in economics and media/startup law.

About Philip Evangelou

phillipPhil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.