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What is a lease agreement? What are its contents?
Lease agreement is a written agreement and also known as lease deed which starts the legal relationship between the owner of the assets, called lessor and user of the assets, called lessee. Under the leasing agreements, the company acquires the right to use the asset without holding the title to it.
Contents of lease agreement are:
1)Description and cost of equipment
2)Commencement date for lease contract.
3)Amount of lease rentals
4)Mode of Payments
5)Fixed period of lease, renewal options and the terms during secondary period as to the amount of lease rentals or purchase option.
6)Guarantee for payment of lease rental by lessee.
7)Variation of lease rentals.
8)Termination of lease agreement in the event of certain occurrences.
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