A non-cancellable lease agreement is a document that is typically signed when leasing business equipment and does not include a termination clause. Non-cancellable components are typical in financial and full payout leases.
These long-term leases are non-cancellable in nature because they allow for businesses to acquire equipment for an extended period of time on a rental basis. Businesses are typically required to maintain and insure the equipment during the length of the non-cancellable lease.
Renting business equipment through a non-cancellable lease frees up working capital and can allow businesses to furnish their locations with top-of-the-line pieces without obtaining financing approval through a banking institution.
It is important for business owners to carefully evaluate their options and read through their non-cancellable leases thoroughly prior to lease execution, as the lack of an escape clause will limit their legal options in the event of an early lease termination.