Mixed Answers to "Is It OK for a Library To Lend a Kindle?"
Norman Oder -- Library Journal, 4/7/2009

Amazon rep tells library OK
Amazon official tells LJ no
Librarian says Kindle well-received

As a few more libraries begin lending the Kindle, the ebook reading device from Amazon, the company continues to offer ambiguous messages regarding its policies. Asked by the Howe Library, Hanover, NH, if it was OK to lend a Kindle, an Amazon support staffer said yes—and the library has proceeded to do so, with much positive response.

However, another support staffer told blogger Rochelle Hartman that the Amazon Terms of Service bar lending of Kindles. Amazon spokesman Drew Herdener confirmed to LJ—as he did last year—that the policy bars library lending, but “we don't talk about our enforcement actions.”
In practice, that apparently means that Amazon doesn’t pursue enforcement, given the negative public relations impact from going after libraries, coupled with the potential ambiguity of the Terms of Service, which bar a user who wishes to "sell, rent, lease, distribute, broadcast, sublicense or otherwise assign any rights to the Digital Content or any portion of it to any third party."

One library's story

Mary White, director of the Howe Library, told LJ that she and a colleague called Amazon Kindle support last August 29 to explain what they wanted to do with the three Kindles that were to be purchased with donated funds. Among the questions: how to deactivate the library’s account so patrons couldn’t add titles to the device. The library was not told its plan was not permitted.
White pointed to the Terms of Service. “I am not an attorney,” she acknowledged, “but it seems to me we are doing none of those things,” suggesting that "distribution" of an ebook is not the same as lending one item to one person--the same as buying a printed book.
(In fact, the Amazon rep told the library could load its 13 titles, which cost $10 each, on each of the three devices, for a total cost of $130, not the expected $390. Hartman points out that this policy does not seem to be on the Kindle 2 page.)

Maybe Amazon didn’t contemplate library lending, White noted, but the Kindle has been on the market for a year and a half now. “Amazon is missing a great opportunity,” White observed. “If Amazon donated Kindles to public libraries, many patrons would discover that they love this newer technology and would then purchase a Kindle for personal use.”

Read the complete story at Library Journal.com