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Hire purchase by Mind Map: Hire purchase

1. Definition

1.1. An Act to regulate the form and contents of hire-purchase agreements, the rights and duties of parties to such agreements and to make provisions for other matters connected therewith and incidental thereto.

2. Formation of hire purchase

2.1. Requirements relating to hire-purchase agreements

2.1.1. Before any hire-purchase agreement is entered into in respect of any goods— (a) in a case where negotiations leading to the making of the hire-purchase agreement is carried out by any person who would be the owner under the hire-purchase agreement to be entered into, or by any person, other than the dealer, acting on his behalf, such person shall serve on the intending hirer a written statement duly completed and signed by him in accordance with the form set out in Part I of the Second Schedule

2.1.2. Hire-purchase agreement to be in writing (1) A hire-purchase agreement in respect of any goods specified in the First Schedule shall be in writing.

2.1.3. Hire-purchase agreement to be signed, etc. Every hire-purchase agreement shall be signed by or on behalf of all parties to the agreement.

2.1.4. Contents of hire-purchase agreement 4C. (1) Every hire-purchase agreement— shall— (i) specify a date on which the hiring shall be deemed to have commenced; (ii) specify the number of instalments to be paid under the agreement by the hirer; (iii) specify the amounts of each of these instalments and the person to whom and the place at which

2.2. Motor vehicle registration certificate

2.2.1. Where the goods comprised in a hire-purchase agreement is a motor vehicle, a hirer may make a request in writing to an owner to keep the registration certificate of the motor vehicle.

2.3. Altered or modified motor vehicle

2.3.1. A hire-purchase agreement shall not be entered into where the goods comprised in the hire-purchase agreement is a motor vehicle which has been altered or modified in its construction and structure.

3. Protection for hirers and guarantors

3.1. Legal obligation imposed on the owner Owner responsible to deliver possession of the goods from himself to the hirer and hiring does not commence until such delivery Implied term that the owner delivers the goods in as good a state as they were at the time the agreement as made The owner must accept payment offered except for reasonable cause.

3.2. Hirers and their guarantors are protected by way of several implied conditions and warranties. Implied warranty the hirer shall have and enjoy quiet possession of the goods without any interference by the owner or person claiming through him or third party- sec. 7 (1) (a) Implied condition that the owner shall have the right to sell the goods at the time when the property is to pass - sec. 7(1) (B)

4. Statutory rights of hirer

4.1. Following statutory rights to a hirer 1. Right to a copy of statement relating to his financial position (sec. 9) 2. Right to appropriation of payment (sec. 10) 3. Right to apply for an order for goods to be removed (sec. 11) 4. Right to assign (sec. 12) 5. Right to operation of law ( sec. 13) 6. Right to early completion of agreement (sec. 14) 7. Right to terminate agreement (Sec.15)

5. Procedures of repossession

5.1. The main duty of a hirer under HP agreement is to make the payment of monthly installment without fail. When the hirer fails to pay the monthly installments, the owner can repossess the hire-purchase goods as the goods belong to the owner In order to repossess the goods, the HP act 1967 lays down the procedures which must be complied with by the owner

5.2. 1. Default in payment 2. Service of 4th schedule notice 3. Repossession 4. Service of 5th schedule notice and procedures after repossession 5. Selling off repossessed goods

6. Rights of hirers after repossession

6.1. Where the owner has taken possession of the goods under sec. 16, sec. 18 (1) (a) gives the right to the hirer to ask the owner to a) redeliver the goods that has been repossessed to him or to his order b) To sell the goods to a person introduced by him for cash at a price not less than the estimated value of the goods set out in the notice. When the goods are returned to the hirer and the goods shall be received and held by the hirer pursuant to the terms of the HP agreement as if the breach had not occurred and the owner had not taken possession thereof Sec. 18 (1) (b) provides that the hirer may recover from the owner