Many businesses in New Zealand will have to hire plant, machinery or equipment to complete tasks or services as part of their contractual obligations. Given that large pieces of equipment are expensive and may not be used often enough to justify an expense, hiring equipment makes commercial sense. This article will explain the difference between wet and dry hire and which type of hire would be best for your business.
Dry Hire vs Wet Hire
Dry hire is when you hire equipment, plant or machinery only, and you do not hire anyone to operate it. When you undertake dry hire, you either already have someone who can operate that equipment, or you hire someone separately.
On the other hand, wet hire is when you hire plant, machinery or equipment with the operator involved. It is a full-service package and will generally be more expensive.
An Example
An example of the difference between the two arrangements is when hiring a crusher. If you hire only the crusher, you are undertaking a dry hire arrangement. This means that you will either know how to operate the crusher or will hire someone to do so. However, if you hire a crusher with an operator, you are undertaking a wet hire arrangement.
Deciding Between a Dry or Wet Hire Arrangement
Cost
The main factor you should consider is the cost difference between a wet and dry hire. Obtaining quotes from different companies will allow you to calculate whether it is cheaper to hire the plant, machinery or equipment on its own versus agreeing to a wet hire package.
You should also review your company’s budget to determine whether you have the funds to enter a dry or wet hire arrangement. It is also worth determining whether your workers have the requisite skills to operate certain equipment in a time frame that suits your business. If not, you may have no choice but to choose a wet hire agreement. However, you can still request quotes to hire someone from a separate company who can operate the machinery. In that case, you will only need a dry hire agreement, plus a contractor arrangement for someone else to operate the equipment.
Ultimately, it is a good idea to undertake thorough checks to make the best decision per your business’ budget and resources.
Control
Another factor you should consider when deciding between a wet or dry hire arrangement is the degree of control you will have over the equipment. Even if a wet hire arrangement is cheaper, if you can operate the equipment yourself, you consider undertaking the dry hire arrangement. The result is your business will have control over the equipment, and you will be able to operate it however you want.
Efficiency
A further aspect to consider is the efficiency of a wet hire compared to a dry hire. Even if it is cheaper to undertake a wet hire arrangement, you should assess if it will be more efficient to undertake a dry hire arrangement if you have someone in your business who can operate the equipment. This is because someone in your business will know your goals and objectives better. Alternatively, you might want to hire someone separately who will be able to operate the equipment more efficiently.
Planning
To make a fully informed decision about whether you want to dry or wet hire equipment, you should undertake proper due diligence. This involves scouting all the options and deciding with all the information available. Making a rushed decision may not benefit your business in the long run and could lead to a higher cost that your business could have avoided.
Further, you should ask the hirer if the equipment is in good working condition and clarify how long the hire period will last. Otherwise, you risk not leaving yourself enough time to use the equipment for its intended purpose. Alternatively, you might be subject to additional charges if you need to use the equipment for longer than anticipated or if you damage it. Considering the risks, it might make more sense to enter a wet hire agreement, as you can be sure the owner can use the specialist equipment skillfully and efficiently.
To protect your business, ensure supplier contracts meet your business’ needs. Our free Commercial Contracts Checklist will help.
Key Takeaways
Businesses in New Zealand will often hire plant, machinery and equipment to complete jobs. Dry hire is a situation where equipment is hired without an operator. Conversely, wet hire is when a business hires equipment with an operator. Determining whether a business should undertake a wet or dry hire arrangement depends on cost, control and efficiency factors. A business should ensure that they undertake due diligence to determine the best and most effective arrangement for their business.
If you need any legal assistance with drafting or reviewing a wet and dry hire agreement, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0800 005 570 or visit our membership page.
Frequently Asked Questions
Some businesses may only offer one or the other, so you will have to research other businesses to find an arrangement that works for you.
A decision to buy plant, machinery and equipment will depend on what makes the most commercial sense for your business. If you run a bakery, then purchasing your own oven would likely be a worthy business expense. Ultimately, you need to balance your business’ budget with its goals before making any significant purchase.
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