Hire Purchase

Prepared by Rohani Sahak

Formation of Hire Purchase
Definition
Section 2 HPA
Hire purchase letting of goods with an option to purchase and an agreement for
the purchase of goods by instalments.
Hirer; the person who takes or has taken goods from an owner under a hire
purchase agreement
Owner a person who lets or has let goods to a hirer under a hire-purchase
agreement.
Subtitle
Formation of hire purchase
Before
During
after
Before
Write here Section 4(1)HPA
Before any hire purchase agreement is entered into the owner must served a an
intended hirer a notice a written statement duly completed and signed by him in
accordance with the form set out in Part I of the second schedule.
Section 4(4) a Hire- purchase agreement entered into in contravention of section
4(1) shall be void. (pamphlet ,eg Hirer wants to entered into a contract to HP a
car)
Affin Credit (Malaysia) Sdn Bhd v Yap Yuen Fui (1984) 1 MLJ 169
During
Goods, under hp act the goods must fall under the list in the First schedule. There are two category of goods
Consumer goods
Motor vehicle
Section 2(1) consumer goods is defined as
Goods purchased for personal, family and household purposes
Motor vehicle
a)Invalid carriage, b)motorcycles, c)motor cars including taxi cabs and hire cars
d)Goods vehicles
e)Buses, including stage buses
Hire purchase agreement to be in writing
1) A hire purchase agreement in respect of any goods specified in the First
Schedule shall be in writing.
ia) A hire purchase agreement shall be in the national language or English
language
2) A hire purchase agreement that does not comply with subsections 1) and 1a)
shall be void.
3) An owner who enters into a hire purchase agreement that does not comply
with subsections 1 and 1a) shall, notwithstanding that the hire-purchase
agreement is void, be guilty of an offence under this act
4b Hire-purchase agreement to be signed, etc
1) Every a hire purchase agreement shall be signed by or on behalf of all
parties to the agreement.
2) No owner, dealer, agent or person acting on behalf of the owner shall require
or cause any intending hirer or his agent to sign a hire purchase agreement
or any other form or document relating to a hire purchase agreement unless
such hire purchase agreement, form or document has been duly completed.
2A) No owner shall deliver or cause to be delivered to any agent or dealer a
hire purchase agreement which has not completed.
Hire purchase agreement which contravene subsection (1),(2) and 2A shall
be void.
Contents of Hire-purchase agreement
Section 4c
The agreement must contain the following provision
I. date when hiring starts
Ii the number of instalments to be paid by the hirer
iii.The amount of each instalments and the person to whom the payment are to be made
and the place aaaaaaat which the payment atre to be made
Iv the time for the payment of each of the instalments
V the description of the goods sufficient to identify them
Vi the address where the goods are kept.
A hire purchase agreement must also provide a tablecontaining these information

I cash price of the goods

ii. the amount paid provided by way of deposit showing the amount paid in cas and the amount provided by consideration other than
cash
iii.freight charges, if any
iv, vehicle registration
V. insurance
vi.The total amount referred to above less the deposit
vii.Term charges
viii.The annual percentage rate for term charges
ix.The annual percentage rate term charges total amount payable
X total amount payable
S4c(2) a hire purchase agreement that contravenes this section shall be void. And the owner will be guilty of offence under this Act (3)
Separate agreement for every items of goods.
1) There shall be a separate hire-purchase agreement in respect of every item of
goods purchased under this Act.
2) A hire purchase agreement that does not comply with subsection (1) shall be
void.
3) An owner who enters into a hire-purchase agreement that does not comply
with subsection (1) shall, notwithstanding that the hire-purchase agreement is
void, be guilty of an offence under this Act.
4) For the purposes of this section, any goods which are essentially similar or
complementary to each other and sold as a set shall be regarded as an item.
After the hire purchase agreement
Section 5(1)
Within twenty one days after the making of a hire-purchase agreement, the owner shall
serve or cause to be served on the hirer and the guarantors a copy of the agreement
each.
2) At any time before the final payment has been made under a hire purchase
agreement the owner shall, within twenty one after he has received a request in writing
from the hirer, supply the hirer a copy of any memorandum or note of the agreement--
a) On payment by the hirer of the prescribed fee: or
b) Where no fee is prescribed shall be charged for the supply of a second or
subsequent copy thereof.
After the hire purchase agreement
3) Where any part of the total amount payable consists of an amount paid or to be
paid under a policy of insurance in respect of the goods, the owner shall serve or
cause to be served on the hirer forthwith a copy of the insurance payment receipt
and, within seven days of receipt of the policy, a copy of the policy or statement in
writing setting out the terms, conditions and exclusions of the policy that affect the
rights of the hirer.
4) ANy person who contravenes this section shall be guilty of an offence under this
Act.
Implied Condition
Conditions and warranties to be implied in every hire purchase agreement
1) In every hire purchase agreement there shall be--
a) An implied warranty that the hirer shall have and enjoy quiet possession of the goods;
b) An implied condition on the part of the owner that he shall have a right to sell the goods at the time when the property
is to pass;
c) An implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party at the
time when the property is to pass.
2) In every hire-purchase agreement there shall be an implied condition that the goods shall be of merchantable quality, but
such a condition shall not be implied-
d) Where the hirer has examined the goods or a sample thereof, as regards defects which the examination ought to have
revealed; or
e) If the goods are second hand goods and the agreement contains a statement to the effect that-
i) the goods are second-hand; and
ii) all conditions and warranties as to quality are expressly negatived, and the owner proves that the hirer has
acknowledged in writing that the statement was brought to his notice.
Implied Condition
3) Where the hirer expressly or by implication makes known to the owner or the dealer the
particular purpose for which the goods are required, there shall be implied in the hire
purchase agreement a condition that the goods shall be reasonably fit for that purpose,
but such a condition shall not be implied if the goods are second-hand goods and the
agreement contains a statement to the effect-
a) That the goods are second-hand; and
b) That all conditions and warranties of fitness and suitability are expressly negatived,
and the owner proves that the hirer has acknowledged in writing that the statement
was brought to his notice.
4) Nothing in this section shall prejudice the operation of any other written law or rule of
law whereby any condition or warranty is to be implied in any hire-purchase agreement.
Misrepresentation
1) Every representation, warranty or statement made to the hirer or prospective hirer, whether
orally or in writing, by the owner or the dealer or any person acting on behalf of the owner
or the dealer or any person acting on behalf of the owner or dealer in connection with or in
the course of negotiations leading to the entering into of a hire-purchase agreement shall
confer on the hirer-
a) As against the owner- the same right to rescind the agreement as the hirer would have had
if the representation, warranty or statement had been by an agent of the owner; and
b) As against the person who made the representation, warranty or statement, and any
person whose behalf the person who made the representation, warranty or statement was
acting in making it- the same right of action in damages as the hirer would have had
against them or either of them if the hirer had purchased the goods from the person who
made the representation, warranty or statement was acting (as the case may be) as a
result of the negotiations.
Misrepresentation
2) Every covenant, condition or term in any hire-purchase agreement or other
document purporting to exclude, limit or modify the operation of subsection (1) or
to preclude any right of action or any defence based on or arising out of any such
representation, warranty or statement shall be void.
3) Without prejudice to any other rights or remedies to which an owner may be
entitled, an owner shall be entitled to be indemnified by the person who made the
representation, warranty or statement, and by any person on whose behalf the
representation, warranty or statement was made against any damage suffered by
the owner as a result of any such representation, warranty or statement.
Appropriation of payments
A hirer who is liable to make payments in respect of two or more hire-purchase
agreement to the same owner shall, notwithstanding any agreement to the
contrary, be entitled on making any payment in respect of the agreements which is
not sufficient to discharge the total amount then due under all the agreements, to
require the owner to appropriate the sum so paid by him in or towards the
satisfaction of the sum due under any of the agreements, or in or towards the
satisfaction of the sums due under any two or more of the agreements in such
proportions as he thinks fit, and, if he fails to make any such appropriation as
aforesaid, the payment shall by virtue of this section be appropriated towards the
satisfaction of the sums due under the respective hire-purchase agreements in the
order in which the agreements were entered into.
 Avoidance of certain provisions

Any provision in any hire-purchase agreement whereby-

a) Any right conferred on the hirer by this Act to determine a hire-purchase
agreement is excluded or restricted;
b) The hirer is subject to any greater liability on the determination in any manner
whatsoever, of the hire purchase agreement or of the bailment thereunder,
than the liability to which he would be subject if the hire-purchase agreement
were determined in accordance with this Act;
 Avoidance of certain provisions

c) The hirer is required to pay interest on any overdue instalments at a rate exceeding eight
per centum per annum under a hire-purchase agreement which provides for terms charges
at a fixed rate or, two per centum above the prevailing rate of terms charges, under a hire-
purchase agreement which provides for terms charges at a variable rate, simple interest
calculated on a daily basis or such other rate of interest as may be prescribed;
d) The owner is relieved from liability for the acts or defaults of any person acting in
connection with or in the course of the negotiations leading to the entering into the hire-
purchase agreement;
e) the owner or any person acting on his behalf is authorised to enter upon any premises for
the purposes of taking possession of goods otherwise than in accordance with the
provisions of this Act comprised in the hire-purchase agreement or is relieved from liability
for any such entry:
 Avoidance of certain provisions

f) the operation of the hire-purchase agreement is determined or modified

or any person is determined or modified or any person is authorised to
repossess any goods comprised in a hire-purchase agreement if the hirer
becomes bankrupt or commits an act of bankruptcy or executes a deed of
assignment or executes a deed of arrangement (whether all or any of those
events are named); or
g) except as expressly provided by this Act, the operation of any provision
of this Act is excluded, modified, or restricted
Shall be void and of no effect.