Get Started. It's Free
or sign up with your email address

1. Deposit

1.1. Section 31 (1) - If there is no prescribed minimum deposit required of a hirer, an owner entering into a hire purchase agreement must first obtain from the hirer a deposit to a value not less than one tenth (1/10).

1.2. No alterations can be made to the agreement

1.2.1. Section 39 - No alterations, additions, amendments made to agreement after agreement is signed by parties. - Any alterations, additions, amendments will have no effect unless the hirer has consented by signing or initiating the agreement in the margin opposite the change.

2. Statutory Rights of Hirer

2.1. Section 9 : The right to be supplied documents and information Section 10 : The right to require the owner to appropriate payments made in hire-purchase agreement Section 11 : Right to apply to the Magistrate’s court an order approving the removal of the goods to another place. Section 12 : Right to assign his right, title and interest under the hire-purchase agreement. Section 13 : Right to have his rights, title and interest passed on by operation of law. Section 14 : Right to complete the purchase of the goods earlier than due date. Section 15 : Right to terminate the hiring.

3. Contents of Hire Purchase agreement

3.1. Section 4C (1) - The number of installments to be paid under the agreement by the hirer. The amounts of each installment and the person to whom and the place at which payments are to be made. Section 4C (2) - Any agreement which does not comply with this requirement would render the agreement void. Section 4C (3) - Owner enters into agreement without stating the contents, guilty of an offence under S 46.

4. Separate agreement of every item of goods

4.1. Section 4D (1) - If there are more than one goods being hired at one time from the same owner by the same hirer, there must be separate agreements for each goods.

4.2. Copies of the agreement served on the hirer and guarantor

4.2.1. Section 5 (1) : Within 14 days after the making of the agreement, the owner must serve on the hirer and guarantors each with copy of the agreement. Section 5 (1A) : Failure of doing so will make the agreement unenforceable

5. Implied condition and warranties

5.1. Section 7 (1) (a) : There is an implied warranty that the hirer shall have and enjoy quiet possession of the goods. Section 7 (1) (b) : There is an implied condition that the owner shall the right to sell the goods at the time when the property is to pass - Case: Karflex Ltd v Poole Section 7 (1) (c) : There is an implied warranty that the goods is free from any encumbrances. Section 7 (2) : There is an implied condition that the goods shall be of merchantable quality unless the goods are second hand good. Section 7 (3) : There is an implied condition that the goods shall be reasonably fit for particular purpose for which they are required by the hirer unless that goods are second hand goods.

6. Effects of Breach

6.1. Breach of condition – The contract is rescinded or terminated. Breach of warranty – The hirer are entitled to damages but cannot rescind the contract.

7. Repossession

7.1. Rights of Hirers after repossession

7.1.1. Section 18(1) (a) - Hirer is entitled to ask the owner to:- -Redeliver the goods to him or -To sell the goods to a person introduced by him for cash. Section 19 (1) - These rights only applicable if the hirer within 21 days after receiving 5th schedule notice.

7.2. Selling off repossessed goods

7.2.1. Section 17 - Owner cannot sell or dispose off the repossessed goods without written consent hirer until the expiration of the 21 days after the date of service of the 5th schedule notice to hirer. Section 18 (4) - If owner intends to sell the goods in public auction, he must send the auction notice to the hirer not less than 14 days from the auction sale.

7.3. Section 16 (1) (a) : There must be at least 2 successive defaults in payment of the monthly installment Section 16 (2) : Where owner believes that the hirer would abscond or conceal the hire purchase goods if the 4th schedule notice is served, the notice need not be given. Section 16 A : If within 21 days of the service of the 4th schedule, the hirer return the goods, hirer would not be liable for costs of repossession and costs of storage. Section 16 (4) : Immediately upon repossession, an owner must serve on the hirer personally a document acknowledging receipt of the goods or if the hirer is not present at that time, send the hirer immediately after taking possession of the goods Section 16 (5) : Such document must contain a short description of the goods and the date, time and place where the owner took possession. Section 16 (3) : Owner within 21 days after repossession of the goods must serve the hirer and guarantor a written notice in the form set out in the 5th Schedule.

8. Guarantor

8.1. - The right to secure discharge by paying the amount due to the owner - Right to be indemnified by the hirer against claims by the owner.

9. Definition of Hire Purchase

9.1. Section 2 defines hire purchase agreement includes a letting of goods with an option to purchase and an agreement for the purchase by installments.

10. Terminologies Section 2 of Hire Purchase Act

10.1. Owner – Person who lets or has let goods to hirer under a hire-purchase agreement.

10.2. Hirer – Person who takes or has taken goods from an owner under hire-purchase agreement.

10.3. Dealer – A person not the hirer or the owner makes negotiations that leads to the making of hirer purchase agreement.

11. Price

11.1. Definition - The total sum payable by the hirer under a hire purchase agreement in order to complete the purchase of goods. Hire purchase price includes deposit, monthly installments and monthly interest.

12. Goods

12.1. The Hire–Purchase Act 1967 can still be applied to goods not included in the schedule, if the parties have agreed to be bound by the provisions of the Act. Case: Kesang Leasing Sdn Bhd v Mohd Yusof b. Ismail.

13. Formation

13.1. Section 4(1)(a) & (b) (i) (ii) - Purpose – To inform intending hirer concerning the financial obligations which may be incurred by the intending hirer under hire purchase agreement Section 4 (2) - Notice must be served by delivering it in person to the intending hirer and hirer must acknowledge receipt. Section 4 (4) - Hire purchase contract made without serving or giving the notice required by section 4 (1), the agreement shall be void.

14. Agreement must be in Writing

14.1. Section 4A (1) : Agreement shall be in writing Section 4A (2) : Failure to do so will render the agreement as void. Section 4A (3) : Owner would be guilty of an offence under the Act as provide under S46.

15. Agreement must be signed

15.1. Section 4B (1) - A hire purchase agreement shall be signed by or on behalf of all parties to the agreement. Section 4B (2) - Agreement can only be signed when all the forms, documents or agreements have been fully completed. Owner or dealer cannot signed incomplete hire purchase agreement. Section 4B (3) - If agreement is not signed or is signed without having being completed, the agreement shall be void. Section4B (4) - Owner/dealer who fails to sign the agreement or who requires the hirer to sign an incomplete agreement shall be guilty of an offence under S 46

16. Other information in hire purchase agreement. (1.) Cash price for the goods (2.) The deposit (3.) Delivery (4.) Vehicle registration (5.) Insurance