Hire-Purchase Agreements

Hire Purchase agreements are agreements for the bailment of goods under which the bailee may buy the goods or under which the property in the goods may pass to the bailee. Every hire-purchase agreement should be registered within thirty days after its execution but the registrar may extend the time for registration in cases where the failure to register the agreement was accidental or due to inadvertence or some other sufficient cause. On registration, the registrar issues a certificate of registration.

Unless a hire-purchase agreement has been registered:-

  • No person shall be entitled to enforce the agreement against the hirer or to enforce any contract of guarantee relating to the agreement, and the owner shall not be entitled to enforce any right to recover the goods from the hirer.
  • No security given by the hirer in respect of money payable under the agreement, or given by a guarantor in respect of money payable under a contract of guarantee relating to the agreement, shall be enforceable against the hirer or the guarantor by any holder.

Any person may inspect the register of hire-purchase agreements during the prescribed hours, and may obtain from the registrar a certified copy of any entry in the register.

Before a hire-purchase agreement is entered into in respect of any goods, the owner shall state in writing to the prospective hirer a price at which the goods may be purchased by him/her for cash. The hirer also ought to have:-

  • Inspected the goods and at the time of inspection, tickets or labels were attached to or displayed with the goods clearly stating the cash price, either of the goods as a whole or of all the different articles.
  • Selected the goods by reference to a catalogue, price list or advertisement which clearly stated the cash price, either of the goods as a whole or of all the different articles.

This  agreement ought to have been made and signed by the hirer or on behalf of all other parties to the agreement. The agreement should contain a statement of:-

  • The hire-purchase price and the cash price of the goods to which the agreement relates
  • The amount of each of the instalments by which the hire-purchase price is to be paid and the date upon which each instalment is payable.
  • A description of the goods sufficient to identify them.

The agreement should contain a notice relating to the rights of the hirer and a copy of the agreement ought to have been delivered or sent by registered post by the owner to the hirer within twenty-one days of the date of the agreement.

Implied Conditions and Warranties

  1. A condition that the owner will have a right to sell the goods at the time when the property is to pass
  2. A warranty that the hirer shall have and enjoy quiet possession of goods
  3. A warranty that the goods will be free from any charge or encumbrance in favour of a third party at the time when the property is to pass
  4. A condition that the goods will be of merchantable quality except where the goods are second-hand goods and the agreement contains a statement to that effect.
  5. A condition that the legal ownership of and title to the goods shall automatically be vested on the hirer upon payment by him of the hire-purchase price in full.

 

Leave a Comment