Third-party Lease Review

Leases Protect the Supplier

Often the equipment lease is written by the manufacturer’s general counsel with the express purpose of protecting the supplier, locking in the customer and maximizing its revenue streams by whatever legal verbiage possible. Capital equipment manufacturers’ legal departments go to great lengths to fine-tune this expertise.

Other times, equipment manufacturers do not choose to run their own leasing operations. They form joint ventures with international financial institutions, banks and independent leasing companies. These firms have full-time legal, credit, lease and asset management departments whose only business is leasing. These highly skilled lease professionals write iron-clad contracts that maximize financial returns for their benefit and that of their manufacturing partners. It is common knowledge, for example, that the financing arm of General Motors (GMAC) has always made more money on a margin basis than the auto manufacturer itself.

Virtually every printer turns these manufacturers’ lease agreements over to their own general council for edit and review. The first problem is that these lawyers are virtually never experts in equipment lease law verbiage. They are generalists not specialists. And the most important problem is that these attorneys never understand the digital printing needs of their corporation and caveats borne from the dynamic unpredictability of the printing business.

Using an Independent Expert

The pot of gold at the end of the rainbow is finding a third-party leasing expert. This individual should not work for any leasing company, lease broker or equipment vendor. He or she should be able to quickly assess the printer’s digital printing needs from a straightforward, though thorough, needs assessment survey. Then the expert should review the manufacturer’s proposed lease for a multitud/e of phrases that turn out to be untenable “gotchas” that are most certainly not to the printer’s benefit. Quite often the expectant buyer is not even aware of the interest rate, which, believe it or not, is occasionally exorbitant.