HIRE PURCHASE

1. Hire Purchase Agreement

1.1. Section 2 -Hire Purchase agreement

1.1.1. option to purchase

1.1.2. purchase by installments

1.1.3. Goods is not transferred to hirer

1.1.4. Hirer only obtains possession over the goods but not ownership

1.1.5. ownership will be transferred after the full payment is made by the hirer

1.2. Terminologies- Section 2 of Hire Purchase Act

1.2.1. Owner

1.2.2. Hirer

1.2.3. Dealer

1.2.4. Hire Purchase Price

1.2.4.1. Total sum payable

1.2.4.2. deposit, monthly installments, monthly interest

1.2.5. Goods- 1st Schedule of HP Act 1967

1.2.5.1. All consumer goods

1.2.5.2. Motor vehicles

1.2.5.3. applied to goods not included in the schedule, if the parties have agreed to bound by the provisions of the Act.

1.2.5.3.1. Case: Kesang Leasing Sdn Bhd v Mohd Yusof b. Ismail

2. Nature of HP

2.1. contract of bailment of goods

2.2. hirer may not dispose of goods

2.3. owner may terminate agreement if goods pass into possession of 3rd party

2.4. not govern by SGA until option is exercised

3. Remedies to parties

3.1. hirer's remedies

3.1.1. depending on the nature of breach

3.1.2. renunciation

3.1.3. breach leading to total failure of consideration

3.1.4. failure of performance

4. Terms of contract

4.1. 1. Deliverly

4.2. 2. Quiet posession

4.3. 3. Freedom from encumbrance

4.4. 4. Tittle

4.5. 5. Description

4.6. 6. Merchantable quality

4.7. 7. Fitness for purpose

5. Duties of hirer

5.1. A. Acceptance of delivery

5.2. B. Payment to owner

5.3. C. Care of goods and repairs

5.4. D. Insurance

5.5. E. Re-delivery at termination of hiring

5.6. F. Supply of information by hirer

6. Formation

6.1. SEC 4 (1) (a) & (b) (i) (ii) -Duty by owner and/or dealer to give notice of the 2nd Schedule to hirer before entering the agreement.

6.2. Purpose -> To inform hirer concerning the financial obligation which incurred by intending hirer under HPA

6.3. SEC 4 (2) - Notice delivered to hirer and hirer must acknowledge receipt

6.4. SEC 4 (4) -Contract made without serving or giving the notice required by section 4 (1), the agreement shall be void.

6.5. SEC 4 (5) - Owner also guilty of an offence under the act as provided under Section 46

6.6. Requirement of HPA

6.6.1. SEC 4A (1) -Writing form

6.6.1.1. SEC 4A (2) - other than writing form, consider void

6.6.1.1.1. SEC 4A (3) - owner guilty of an offence under the Act as provided under Section 46

6.6.2. SEC 4B (1) -must be signed

6.6.2.1. SEC 4B (2) -signed when the agreement fully completed -cannot insist on the hirer to sign an imcomplete HPA

6.6.2.1.1. SEC 4B (3) - not signed/ signed without completed agreement shall be void

7. Contents

7.1. SEC 4C(1)(a) -specify

7.1.1. 1. Date of hiring starts

7.1.2. 2. No. of installments to be paid under the agreement by the hirer

7.1.3. 3. Amount of each installment & the person & place which payments are to be made.

7.1.4. 4. Time for the payment of each installment.

7.1.5. 5. description of goods sufficient to identify.

7.1.6. 6. Address where the goods are to be kept

7.2. SEC 4C(1)(c) - in a tabular form

7.2.1. 1. Cash price of goods

7.2.2. 2. Deposit

7.2.3. 3. Delivery

7.2.4. 4. Vehicle registration

7.2.5. 5. Insurance

7.3. SEC 4C (2)

7.3.1. Any agreement which does not comply with this requirement would render the agreement void

7.4. SEC 4C (3)

7.4.1. Owner enters into agreement without stating the contents, guilty of an offence under Section 46

8. Separate Agreement of every item of goods

8.1. SEC 4D (1)

8.1.1. >1 goods hire at 1 time from same owner by the same hirer, must be separate agreement for each goods.

8.2. SEC 4D (2)

8.2.1. a HPA that does not comply with the requirement shall be void

9. Alternation of HPA

9.1. SEC 39

9.1.1. 1. × alternation, addition, amendments made to agreement after agreement is signed by parties.

9.1.2. 2. Any (a,a,a) will no effect, unless hirer consented by signing or initiating the agreement in the margin opposite the change.

10. Copy of Doc to be served

10.1. SEC 5(1)

10.1.1. Within 21 days after the making of the agreement, the owner must serve on the hirer and guarantors each with copy of the agreement.

10.2. SEC 5(4)

10.2.1. Failure of doing so be guilty of the offence under Section 46

11. Deposit

11.1. SEC 31 (1)

11.1.1. 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).

12. Condition and Warranties in HPA

12.1. SEC 7 (1)(a)

12.1.1. There is an implied warranty that the hirer shall have and enjoy quiet possession of the goods

12.2. SEC 7 (1)(b)

12.2.1. There is an implied condition that the owner shall the right to sell the goods at the time when the property is to pass

12.2.2. Case: Karflex Ltd v Poole

12.3. SEC 7 (1) (c)

12.3.1. free from any encumbrances

12.4. SEC 7(2)

12.4.1. goods shall be of merchantable quality unless the goods are 2nd hand

12.5. SEC 7 (3)

12.5.1. reasonably fit for particular purpose which required by hirer unless 2nd hand goods

12.6. Effect of breach

12.6.1. Condition

12.6.1.1. contract is rescinded or terminated

12.6.2. Warranty

12.6.2.1. Hirers are entitled to damages but cannot rescind the contract

13. Liability of Owner and Dealer for MISREPRESENTATION

13.1. Hirer has the right to rescind the agreement or sue for damages

13.2. false statement of material fact, commits an offence

13.3. SEC 8 (1) remedies

13.3.1. - Owner, hirer is entitled to rescind the contract

13.3.2. Dealer, hirer is entitled to damages

13.4. SEC 8 (2)

13.4.1. Exemption clause

14. Statutory Right of Hirer

14.1. SEC 9 The right to be supplied documents and information

14.1.1. Written statement

14.1.1.1. 1. amount paid to owner

14.1.1.2. 2. amount due under the agreement but remains unpaid

14.1.1.3. 3. amount payable under the agreement

14.2. SEC 10 The right to require the owner to appropriate payments made in hire-purchase agreements

14.3. SEC 11 Right to apply to the Magistrates’ court for an order approving the removal of the goods to another place

14.4. SEC 12 Right to assign his right, title and interest under the hire-purchase agreement

14.5. SEC 13 Right to have his rights, title and interest passed on by operation of law

14.6. SEC 14 Right to complete the purchase of the goods earlier than due date

14.7. SEC 15 Right to terminate the hiring

15. Procedure for Repossenssion

15.1. 4th Schedule

15.1.1. When there are defaults in payment, the owner has to give notice to the hirer warning him of impending repossession under Section 16.

15.2. 5th Schedule

15.2.1. If there is no response from the hirer after 21 days, repossession will be carried out. The owner can not sell or dispose of the goods for 21 days after repossession under Section 17.

15.3. Hirer can exercise rights under Section 18 and Section 19.

15.3.1. Section 18 confers on the hirer certain rights and immunities when goods are repossessed.

15.3.2. Section 19 lists out the circumstances where the hirer may regain possession of the goods.

16. Guarantor

16.1. a person who guarantees to the owner that he hirer would perform his obligation and normally in HPA undertakes to repay the hirer's debt to the owner should the hirer fail to pay the debt by the due date

16.2. Liability

16.2.1. The guarantor is liable to the owner in the event the hirer defaults in his payments of instalments or breaches the terms of the hire-purchase agreement

16.3. Rights against owner

16.3.1. SEC 23(1)

16.3.1.1. The right to secure discharge by paying the amount due to the owner

16.3.2. SEC 23 (2)

16.3.2.1. a) After paying off the owner, he can sue the hirer in the name of the owner for breach of obligation

16.3.2.2. b) Right to insist that the owner transfer all securities taken from the hirer to secure performance of the hirer’s obligation.

16.4. Right againts hirer

16.4.1. SEC 24 (1)

16.4.1.1. Right to be indemnified by the hirer against claims by the owner.

16.4.2. SEC 24 (2)

16.4.2.1. The guarantor is entitled to compel the hirer to pay the instalments in respect of the hire purchase agreement as and when they fall due & may apply to Magistrates Court for an order to that effect.