Chapter 5: hire purchase

Warranties and Conditions

• „ There are certain terms, which are implied in a hire-purchase agreement, these terms may be warranties or conditions.

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•        The basic difference between of warranty and a breach of condition is as follows:

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•       A breach of condition is a serious breach and it goes to the “root of the contract” thus entitling the party not in breach to repudiate the contract and sue for damages

     

•           A breach of warranty is a less serious breach and it does not entitle the party not in breach to repudiate the contract but to sue for damages only

Liability of Owner and Dealer for Misrepresentation

• „If the owner made a misrepresentation in the course of negotiations leading to the hire-purchase agreement, the hirer has the right to rescind the agreement and sue for damages, section 8(1)(a), Hire-Purchase Act.

• „It is common for hirers to obtain goods from dealers who are not financial institutions.

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• In such cases, the dealer “sells” the goods to the finance company, which will in turn enter into a hire-purchase agreement.

• „In event that the dealer has made a misrepresentation, the hirer cannot repudiate the agreement.

• „He can only sue for damages, section 8(1)(b), Hire-Purchase Act.

Statutory rights of Hires

„Section to 15 of the Hire-Purchase Act provide for the rights of hirers. The hirer has the following rights:

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To be supplied documents and information, section 9, Hire-Purchase Act.

„To require the owner to appropriate payments made in hire purchase agreements, section 10, Hire-Purchase Act.

„To assign his right , title and interest under the hire-purchase agreement, section 12, Hire-Purchase Act.

To have his right, title and interest passed on by operation of law, section 13, Hire-Purchase Act.

To complete the purchase of the goods earlier than due date, section 14, Hire-Purchase Act.

„To terminate the hiring, section 15, Hire-Purchase Act.

„To apply to the Magistrate’s Court for an order approving the removal of the goods to another place, section 11, Hire-Purchase Act.

Repossession by Owner

„At common, the owner has the right to recover possession of the goods if the hirer commits a breach of his obligations under the hire-purchase agreement.

The hire-purchase act lays down various restrictions on the power of the owner as means of protecting the hirer, section 16 to 19.

The restrictions are as follows:

     Notice must be given to the hirer when goods are to be repossessed, section 16.

After possession the owner must not sell or dispose of the goods for twenty one days, section 17.

Hire’s rights and immunities when goods are repossessed, section 18.

Hirer can regain possession of the goods in certain circumstances, section 19.

Insurance

An owner shall cause to be insured in the name of the hirer against any risks he think fit in respect of the following:

Motor vehicles comprised in a hire-purchase agreement, for the first year only.

All other goods comprised in a hire-purchase agreement, for the duration of time that the goods remain under hire-purchase, section 26(1), Hire-Purchase Act, 1967.

Fraudulent Sale of Goods by hirer

„If the hirer fraudulently disposes of or sells any goods comprised in a hire

purchase agreement or attempts to defraud the owner by such means, he will

guilty of an offence.

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Punishable on conviction to a fine up to RM10 000 or imprisonment for a term

not exceeding three years or both, section 38, Hire-Purchase Act.

finally,

„Hire Purchase is a system of acquiring goods on credit whereby the seller of the goods is regarded as the dealer, the purchaser is regarded as the hirer and the finance company as the owner.

„The ownership of the goods bought on hire purchase does not pass to the hirer at the time of the hire purchase agreement or upon delivery of the goods.