HIRE PURCHASE
by Yee CY
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.