Free Contract Hire Agreement

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Contract Hire Agreement


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Your Contract Hire Agreement

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Initials: ___________ Page of


THIS CONTRACT HIRE AGREEMENT (this "Lease") dated this _____ day of _____________, 20____


________________________ of _____________________________________
(the "Hirer")


- AND -

________________________ of _____________________________________
(the "Owner")


IN CONSIDERATION of the mutual covenants and promises in this Lease and other valuable consideration, the sufficiency of which consideration the Parties hereby acknowledge, the Owner leases the Vehicle described in this Lease to the Hirer, and the Hirer leases the Vehicle from the Owner on the following terms:

  1. Vehicle Details
  2. The Owner desires to lease the vehicle described below (the "Vehicle") to the Hirer, and the Hirer desires to lease the Vehicle from the Owner for business use.
    • New/Used: Used
    • Year: _________
    • Make: ____________________
    • Model: ____________________
    • Body Type: Saloon
    • Colour: __________________
    • VIN: _________________________________
  3. The Owner owns the Vehicle that is the subject of this Lease.
  4. Lease Cost Disclosure
  5. The full retail value of the Vehicle as of this date is £1.
  6. The residual value (the "Residual Value") of the Vehicle is £_________________.
  7. The amount to be amortised over the term of the Lease is £1.00.
  8. The Lease interest rate is 0% per annum.
  9. The term of the Lease is none month (the "Term").
  10. This Lease includes unlimited miles. The Hirer will not be required to pay any fees for miles used.
  11. The Hirer will provide a down payment of £_________________, which will be subtracted from the amount to be amortised over the Term.
  12. The total amount payable by the Hirer upon signing this Lease is £1.00. At the conclusion of the Lease, if all payments are made, this will be the total cost of the Lease, excluding any cost for repairing excess wear and tear to the Vehicle.
  13. The monthly payment under this Lease is £1.00 (the "Monthly Payment"). Any VAT would be allocated over the Term of the Lease and added to that monthly payment. The first payment will be due upon signing and the following payments will continue each month on the same day of the month as the Lease is signed. If a monthly payment is due on the 29th, 30th, or 31st, then it is due on the last day of the month in a month that does not have a 29th, 30th, or 31st.
  14. Monthly Payments may be made by bank transfer, cheque, post-dated cheque, money order, bank draft or pre-authorised payment.
  15. Except as expressly provided in this Lease, no warranties, either express or implied, statutory or otherwise, as to any matter whatsoever, have been given by the Owner.
  16. Hirer Obligations
  17. The Hirer will assume all risk of loss and damage to the Vehicle. The Hirer is responsible for insuring the Vehicle based on its full value, with the following coverage:
    1. bodily injury and property damage coverage in the minimum amount of £1,000,000.00;
    2. comprehensive fire and theft insurance with a maximum excess of £250.00; and
    3. collision insurance with a maximum excess of £250.00.

    The Hirer will ensure that the Owner is named as registered owner, and as "additional insured" and loss payee in the insurance policy (the "Insurance Policy").

  18. The Hirer agrees to co-operate with the Owner and the insurance company in pursuing or defending any claim or action resulting from the use of the Vehicle. Any award or money the Hirer receives as a result of a claim or action is to be assigned to the Owner. If the Hirer fails to maintain insurance or if a claim is denied by the Hirer's insurance company for any reason, the Hirer remains responsible to pay the total cost of the Lease.
  19. The Hirer agrees to indemnify the Owner from any loss, and in order to prevent such loss, the Hirer will do the following:
    1. keep the Vehicle free of encumbrances, such as fines and liens;
    2. indemnify the Owner from all claims and expenses resulting from the maintenance and use of the Vehicle; and
    3. pay all amounts owed under this Lease without deducting any amounts the Hirer claims to be owed by the Owner.
  20. The Hirer is prohibited from using, transferring, or altering the Vehicle, as follows:
    1. the Vehicle is not to be used by drivers without an appropriate licence or those restricted under the Insurance Policy;
    2. the Vehicle is not to be used illegally, in a manner contrary to the Insurance Policy, or as a vehicle for hire or public transport;
    3. the Hirer will not transfer or assign this Lease, or ownership of the Vehicle, to a third party, except with the Owner's prior written consent. The Hirer will also ensure that the Vehicle is not seised, confiscated, or involuntarily transferred, even if the Vehicle is the subject of judicial or administrative proceedings;
    4. the Hirer will not remove the Vehicle from the country in which this Lease is signed without the Owner's prior written consent, with the exception of trips within continental Europe of less than 60 days; and
    5. the Hirer will not install accessories in the Vehicle, or alter the Vehicle in any way, without the Owner's prior written consent.
  21. During the Term of the Lease, the Hirer will be responsible for paying all fees required for registration, licensing, testing, and any inspection of the Vehicle requested by a government or other authority. The initial cost of registration must be paid prior to removing the Vehicle from the Owner's possession.
  22. Inspections
  23. The Hirer acknowledges that the Vehicle has been inspected and the Hirer accepts the Vehicle as being in a good state of repair, not including manufacturer's defects which would not have been visible upon inspection.
  24. The Owner has the right to inspect the Vehicle, without prior notice, at all reasonable times during the Term of this Lease.
  25. Event Of Default
  26. The Hirer will be in default under this Lease if:
    1. the Hirer fails to make a Monthly Payment on the due date;
    2. a bankruptcy, receivership, or insolvency proceeding is initiated by the Hirer or against the Hirer;
    3. a creditor or a government authority seises the Vehicle;
    4. the Hirer has misrepresented personal or financial information;
    5. the Hirer is no longer living;
    6. the Vehicle is stolen or damaged beyond repair;
    7. the Vehicle is not returned at the end of the Term; or
    8. the Hirer breaches any other term of this Lease.
  27. In the event that the Hirer defaults under this Lease, the Hirer will be required to immediately pay all amounts owing applicable to the Vehicle for the remainder of the Term.
  28. If the Hirer defaults under this Lease, the Owner will pursue the remedies outlined in this Lease, in addition to any other remedies allowed by law. If the Hirer defaults, the Owner may terminate this Lease, and may recover the Vehicle and sue the Hirer for damages.
  29. Excessive Wear and Tear
  30. The Hirer is responsible for ensuring that the Vehicle is regularly maintained and is kept in good repair. Regular maintenance and repair includes, but is not limited to, the excessive wear and tear provisions below. The Hirer is to pay the costs of regular maintenance and any costs for repairs not covered by warranty.
  31. Excessive wear and tear will include, but is not limited to, the following, even if covered by the Hirer's Insurance Policy:
    1. cracked, damaged, or tinted glass;
    2. dented or damaged body panels, wings, lights, or paint;
    3. missing equipment or accessories that were provided with the Vehicle, including but not limited to wheel covers, jack, wheel wrench, and spare tyre or regular tyres;
    4. tyres with less than 3mm of tread remaining at the lowest point;
    5. damage to the interior of the Vehicle, including but not limited to dash, seats, floor covering, upholstery, truck liner, and center console (if applicable); or
    6. mechanical damage that affects the safe, proper, or lawful operation of the Vehicle, which would include damage that causes the Vehicle to fail a safety inspection in the country where this Lease is signed.
  32. If the Vehicle has excess wear and tear, there will be a charge to the Hirer for the excess wear and tear.
  33. During the Term, damaged or lost parts, equipment, or accessories may be replaced with items of equal or better quality and construction, and replacement items that meet this standard will be accepted as original items, upon return of the Vehicle.
  34. Returning the Vehicle
  35. When the Hirer returns the Vehicle at the end of the Lease, the Hirer must pay the following amount:
    1. the cost of repairs needed as a result of excess wear and tear.
  36. The Hirer may return the Vehicle at any time during the Lease, by paying the following amounts:
    1. the Monthly Payment multiplied by the number of months remaining in the Term;
    2. the cost of repairs needed as a result of excess wear and tear; and
    3. any outstanding amounts under this Lease.
  37. After the Hirer has returned the Vehicle and paid any required costs and fees, the Owner will return the following amounts, or the remaining portions of these amounts, to the Hirer:
    1. any money received from an insurance claim or action that is not used to repair or replace the Vehicle.
  38. Realised Value
  39. In this Lease, Realised Value is understood to mean any of:
    1. the price received by the Owner for the Vehicle at disposition;
    2. the highest offer for disposition of the Vehicle; or
    3. the fair market value of the Vehicle at the end of the Term.
  40. The Hirer will not be held liable for the difference between the Residual Value of the vehicle and its Realised Value.
  41. General Provisions
  42. This Lease may not be assigned to a third party without the Owner's prior written consent and approval.
  43. This Lease will pass to the benefit of and be binding upon the Hirer's respective heirs, executors, administrators, successors and assigns.
  44. This Lease may only be amended or modified by a written instrument executed by both parties to this Lease.
  45. All costs, expenses and expenditures including, and without limitation, the complete legal costs incurred by enforcing this Lease as a result of any default by the Hirer, will be added to the amount then outstanding and will immediately be paid by the Hirer.
  46. The clauses and paragraphs contained in this Lease are intended to be read and construed independently of each other. If any part of this Lease is held to be invalid, this invalidity will not affect the operation of any other part of this Lease.
  47. If there is a conflict between any provision of this Lease and any form of lease prescribed by applicable legislation of England (the "Act"), that prescribed form from the Act will prevail and such provisions of the Lease will be amended or deleted as necessary in order to comply with that prescribed form. Further, any provisions that are required by the Act are incorporated into this Lease.
  48. Headings are inserted for the convenience of the parties to this Lease only and are not to be considered when interpreting this Lease. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
  49. This Lease constitutes the entire agreement between the parties to this Lease and there are no further items or provisions, either oral or otherwise.
  50. The Hirer is entitled to a complete copy of this Lease. This Lease should not be signed until all terms have been set out and the Hirer has read it entirely.
  51. This Lease will be governed by the laws of England.

IN WITNESS WHEREOF the Parties have executed this Lease dated this _____ day of _____________, 20____.






(1)  This is a lease. You are not buying the motor vehicle previously described;

(2)  Do not sign this Lease before you read it or if it contains any blank spaces to be filled in;

(3)  You are entitled to a completely filled in copy of this Lease when you sign it;

(4)  Warning -- unless a charge is included in this Lease for public liability or property damage insurance, payment for that coverage is not provided by this Lease.

I do hereby acknowledge receipt of a completed and signed copy of this Lease. ________

Hirer Initials

I do hereby acknowledge receipt of a completed and signed copy of this Lease. ________

Owner Initials

Itemisation of Gross Capitalised Cost

(A) Value of the vehicle as equipped at the time of entering into the Lease ............................................................................................................



(B) Values and descriptions of accessories and optional equipment the Owner agrees to add to the vehicle after entering into the Lease ...............



(C) Premium to be paid for each policy of insurance ................................



(D) Charge for each service contract ..........................................................



(E) Outstanding Lease balance or prior credit balance  .............................



(F) Itemisation of any other good or service not included above ..............




(G) Total Gross Capitalised Cost .............................................................



Monthly Payment Calculation

The remainder of this document will be available when you have purchased a licence.

Last Updated February 15, 2024

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What is a Contract Hire Agreement?

A Contract Hire Agreement is a document that outlines the terms and conditions between a vehicle owner and a hirer

Documenting the lease terms helps prevent misunderstandings between the two parties and provides proof in the event of a legal dispute. Use a Contract Hire Agreement to lease new or used cars, vans, trucks, and more. 

A Contract Hire Agreement is also known as a:

  • Vehicle contract hire
  • Car hire contract
  • Vehicle lease agreement
  • Car rental agreement

Please note that a Contract Hire Agreement is not the same as a finance lease and does not include an option to purchase the vehicle at the end of the term.

How do I write a lease agreement for a vehicle?

Simply answer our user-friendly questionnaire to customise the Contract Hire Agreement template. 

Step 1: Provide information about the vehicle

A clear and specific vehicle description typically includes:

  • Whether its use is primarily for business or personal purposes
  • Whether it’s new or used
  • Body type (e.g., van, saloon, semi-truck, etc.)
  • Year (e.g., 2022, 2023)
  • Make (e.g., Ford)
  • Model (e.g., Transit)
  • Colour (e.g., white)
  • Vehicle Identification Number (VIN)

What’s a VIN?

All vehicles are assigned a unique 17-character VIN when they're manufactured. To find this number, check your driver’s side door, accident reports, insurance records, or repair work orders. 

Step 2: Add party details

Your document must include information about the hirer and owner:

  • Whether they’re an individual or an organisation
  • Full names 
  • Addresses

Step 3: State any warranty and insurance terms

If needed, you can apply two types of warranties to the lease:

  1. A manufacturer’s warranty comes with the original purchase of a vehicle. If there’s still coverage, state how many years are left on the warranty. 
  2. A supplementary warranty (i.e., extended warranty) may be available when the owner (or a third party) provides a warranty for repairs. This warranty may take effect when the manufacturer’s warranty expires, and it may last until the end of the lease term. If your agreement includes a supplementary warranty, you should state how much it will cost the hirer.

All drivers in the UK must have insurance, regardless of whether they own or hire their vehicle. As such, it’s important that your Contract Hire Agreement states the:

  • Minimum insurance coverage
  • Maximum deductible on fire, theft, and collision
  • Gap coverage (if applicable)

What’s gap coverage?

It covers the difference between what the insurance company says the car is worth, and what the hirer would have to pay under the lease if the vehicle is destroyed. This stops the hirer from having to pay further charges. 

Step 4: Customise your lease terms

Consider how these key terms may (or may not) apply to your situation:

  • The lease length (e.g., one year)
  • The allowable mileage (e.g., unlimited or a specified amount)
  • Pricing information such as the vehicle’s value, any added fees (e.g., late fees, cleaning fees, etc.), a down payment (optional), the lease rate, payment schedules, pre-authorised payments, security deposits, and the VAT
  • Obligations should either party end the lease early

Can you claim VAT on a contract hire car?

Depending on your situation, you may be able to recover the VAT on your leased vehicle. Legal requirements state which cars qualify for recovering the VAT charged, and there are limits to how much you can recover (e.g., 50% for cars leased for business purposes). 

Step 5: Prepare to sign

You can use the “Additional Clauses” section to write a unique term that wasn’t already addressed in the questionnaire. In most cases, this isn’t necessary. Consult a solicitor if you need more support about applying terms and conditions to your contract. 

When you’re ready, execute your Contract Hire Agreement by having the owner and hirer sign the document.

When leasing a vehicle, what am I responsible for?

You are responsible for obtaining the necessary insurance coverage and maintaining the vehicle. If you return the leased vehicle with excessive interior wear, dents or scratches, or any significant mechanical damage, the vehicle owner may charge you for the repairs.

Some owners may limit the miles the hirer can drive. In this case, you’re responsible for keeping track of your mileage. If you exceed this limit, the owner may charge a mileage fee at the end of the lease.

Does a contract hire show on a credit report?

Yes, if the owner performs a credit history check and reports lease payments to a credit bureau, the hirer will see an impact on their credit report. 

Whether that impact is negative or positive depends on the hirer’s ability to make timely payments. By taking on a vehicle lease, the hirer accepts responsibility for their personal credit score.

Can I cancel a Contract Hire Agreement?

The ability to end a lease early depends on the contract and the other party’s willingness to accommodate your request. 

If the other party consents to early termination without penalty, you can end your lease without any problems. However, a Contract Hire Agreement often outlines consequences for ending the agreement early. 

For example, the hirer may need to pay for the difference between the residual value and the realised value. The realised value is the actual sale price that the owner can sell the leased vehicle for after the hirer terminates the lease early.

What happens at the end of a vehicle lease?

At the end of the vehicle lease term, the hirer returns the vehicle to the owner. If the hirer paid a security deposit at the beginning of the contract, the owner will inspect the vehicle and determine if the hirer will receive their deposit back. 

Related Documents:

  • Amortisation Schedule: Create a schedule to help break down the costs of a loan and budget accordingly.
  • Assignment: Transfer all (or part) of one’s interest or rights in a contract to another person.
  • Bill of Sale: If you need to buy or sell a car, use a Bill of Sale to transfer ownership rights from one party to another.
  • Demand Letter: Send a formal letter to request payment of an outstanding bill or to request an action from another party.
  • Equipment Hire Agreement: Rent out equipment such as appliances or heavy machinery, tools, electronics, appliances, and more.
  • Termination Agreement: If all parties agree, they can use this document to discontinue or cancel an existing contract.
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Contract Hire Agreement

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