INTRODUCTION

SOURCES DEFINITION

Hire Purchase Act

S. 2(1) HPA – HP agreement includes a
1967 (HPA). LETTING of goods with an OPTION to
purchase and agreement for the
purchase of goods by installments.
(whether the agreement describes
the installments a rent or hire or otherwise)
A transaction where a person acquire
goods and pays
them off by INSTALLMENTS
until full payment is made to,
title of the goods
remains with the owner despite
possession been given to the hirer.
 CREDIT CORPORATION (M) BHD
v.
LAYSIAN INDUSTRIAL FINANCE CORP & AN
 Until the hirer had exercised his
option to purchase by paying the
total amount and fulfilling all his
obligation under hire purchase
agreement, no property in the car
passed to the hirer.

High Court
GOODS GOVERNED BY HPA

The First Schedule of the HPA

All consumer goods
motor vehicles, namely
invalid carriages,
motor cycles
motor cars including taxi cabs
and hire cars;
good vehicles;
buses
 s 2(1) ‘
consumer goods -
‘goods purchased for personal,
family and house hold purposes’.
S 1(2) declares that the Act applies ‘in respect only of hire
purchase agreements relating to goods
specified in the First Schedule’.

HOW ABOUT THOSE GOODS WHICH

ARE NOT SPECIFIED IN THE FIRST
SCHEDULE?
 HPA also allow parties to agree to
be bound by the Act in respect of
those goods not ordinarily regulated.
owner hirer
Agreed on sale of COMPUTER based on HPA

goods outside HPA coverage

 Section 1(2) did not exclude the
application of provisions of the Act
to hire purchase agreements in
respect of goods outside its
coverage provided the parties to an
agreement CONSENTED to be
bound by them.
 FORMATION & CONTENT OF THE HP AGREEMENT

S 4(1):

Before HPA is entered into, the owner is

required to give a prospective hirer:-

A summary of the hirer’s financial

obligations
a written statement under the proposed agreement
regarding a such as the cash price of the goods,
the term charges and
description other charges
of the goods eg. insurance, freight, vehicle, registration etc.
 Any person who has served with
the written statements above, is
under no obligation to enter into the
hire purchase agreement and need
not pay nor give any consideration in
respect of the preparation or service
of such statements. (ITT)

S 4(3):
Any person who imposes such
an obligation or requirement is
guilty of an offence.

S 4(6):
 WRITTEN AGREEMENT

S 4A(1): S 4A(2): a HP S 4A(3) the

requires HP agreement which is owner shall be
agreement to be not in writing shall guilty of an
IN WRITING be VOID offence under
the Act
SIGNATURES OF PARTIES

•S 4B(1) – HP
agreement to be
signed by or on
behalf of all the
parties to the
agreement
 BLANK DOCUMENT

•S 4B(2) – HP
agreement or other
forms must be duly
•S 4B(3) – an
completed before the
agreement that •S 4B(4) – an
intending hirer or his
does NOT COMPLY owner, dealer,
agent is required to
with subsections (1) agent or person
sign thereon, signing of
& (2) is VOID. acting on behalf
BLANK FORMS by a
of the owner who
hirer is against the Act
CONTRAVENES
any of the
provisions is
GUILTY of an
offence.
 A hire-purchase
agreement that
1. a DATE on
CONTRAVENES any of
which the 7. The
the requirements is VOID
hiring starts ADDRESS
and the owner who enters
into such an agreement is where the goods
GUILTY of an offence are kept
2. The NUMBER OF
INSTALLMENTS to
be paid by the hirer 6. A
CONTENTS DESCRIPTION
OF THE
3. The S. 4 C(1): GOODS
AMOUNTS of sufficient to
each of the identify them
installments and 4. Vehicle
registration 5. The TIME
the person to
fees, if FOR THE
whom and the PAYMENT of
place at which applicable
each of the
the payments installments
are to be made
 1. The cash price of 10. The total amount
the goods 9. The total
payable
amount in items
6 and 7
2. The deposit
showing
separately the 8. The annual
Hire-purchase
amount paid in percentage rate
agreement
cash and the for term charges
must
amount provided provide a
by consideration table containing
other than cash 7. Term
charges
3. Delivery of
freight charges,
if any 6. The total amount
5. Insurance referred to above
less the deposit
4. Vehicle
registration fees, if
applicable
 SEPARATE AGREEMENT

S. 4 D (1) - Where

more than one item
of goods is S. 4 (D)(2) & (3) - A
purchased, there S. 4 D (4) - Any contravention of this
must be a separate goods which are requirement renders
hire-purchase essentially similar the agreement void
agreement in respect or complementary and the owner guilty
of every item to each other and of an offence
sold as a set are
regarded as an item
 SERVICE OF DOCUMENTS

S. 5(1) - the owner S. 5 (4) - failure

must serve the hirer to comply – shall
and the guarantors a be guilty of an
copy of the hire-
purchase agreement
offence against
WITHIN 21 DAYS after the Act
it is made

S 5(2) - At any time b4 FINAL PAYMENT

has been made under the agreement, the
owner must within 21 days upon a
request in writing from the hirer, supply
to the hirer a copy of any memorandum
or note of the agreement
 Right to copy of Right to terminate agre
statement of curr ement if not able to pay
: S15 Right in the
ent position: S. 9
event of
repossession
of the goods
by
Right to appropri STATUTORY RIGHTS OF HIRER owner:S16
ate payments: S
10 (Part IV of the Act)
Provisions SS 9 – 15 HPA 1967
Right to apply
for an order for Right to
goods to be early
moved: S11 Right to pass
completion
title/rights
of the
Rights to assign by operation of law
agreement:
rights to someone – on S14
else under the death/bankruptcy:
agreement: 12 S13
 1.RIGHT TO COPY OF STATEMENT OF
CURRENT POSITION

S 9: At any time b4 the final payment, a

d. the amount
hirer is entitled
S. 9 to request the owner for derived from
a written statement pertaining interest on
to the following information: overdue
installments

a. the b. the amount c. the amount

amount paid which has which is to
to the owner become due become payable
on behalf of
the hirer
 H/ever this right can only be
exercised not more than once in
three months

If the hirer makes such requests

more than once in 3 months, the
owner can refuse to comply.

Usually, the hirer has a right to

be supplied within 14 days a
statement by the owner.
 If the owner fails to comply without reasonable
cause and so
long as such defaults continues,
the owner cannot enforce;

ii. exercise any

i. the agreement against the hirer right to recover the
or; goods from the
hirer
S. 9(2) & (3) - If the default
continues for a period of one
month, the owner shall be
guilty of an offence and be
liable to a fine not exceeding
RM1000
 2. RIGHT TO REQUIRE THE OWNER TO APPROPRIATE
PAYMENTS MADE IN HIRE-PURCHASE
(WHEN MORE THAN ONE AGREEMENT IS ENTERED): S 10

A hirer has a right to The hirer can

appropriate where he direct payment to a
has more than one particular
agreement, and agreement or
payment is insufficient payment to any 2
to discharge the total or more
amount due agreements in such
proportion as he
thinks fit
RM200 (per month) RM150 RM150

I need RM500 to settle all

the items but I got only
RM300…
3. RIGHT TO APPLY FOR AN ORDER
FOR GOODS TO BE MOVED

S 11 – confers a right on
the hirer to apply to a
magistrate for an order
permitting him to move the
goods.
4. ASSIGN RIGHTS TO SOMEONE ELSE
UNDER THE AGREEMENT

S 12(1) – the right, title & interest

of a hirer under a hire purchase
agreement may be assigned with
the consent, if the consent
unreasonably withheld, may be
waived.
 5. BY OPERATION OF LAW

S 13 – the right, title & interest of a

hirer under a hp agreement can pass
by operation of law to the personal
representative of the hirer.

Occurs on the death or bankruptcy of

the hirer.
 (6)Early completion of the agreement

S 14(1) – hirer needs to give

written notice to the owner
indicating his intention.
7.TERMINATE AGREEMENT IF NOT ABLE TO PAY

S 15(1) – can terminate at any

time by returning the goods to the
owner.

Generally, goods should be

returned during the ordinary
business hours at the place at
which the owner ordinarily carries
on business.
8. REPOSSESSION BY THE OWNER

REPOSSESSION???

occurs when there is default by

the hirer i.e non-payment of
installments
 s 16 – 20 HPA detail provisions
setting out the rights & obligations
of both hirer & owner in the event
of repossession of the goods.
 When a hirer breaches a hire-
purchase agreement relating to
payment of installments of
sums of money, the owner may
take possession of the goods
if he complies with S 16(1) HPA
1967.
 (i)Payment of (ii) 2 successive
installments amount defaults of
to not more than payments
75% of the total cash
price of the goods Jan (x), Feb(x) - CONSECUTIVELY
Jan(x), Feb( /) Mac (x)

Total price: RM100k S 16(1) – Owner shall not

Paid: 50k exercise any power
of taking possession
of goods unless

(iii) Owner has served (iv) period of 21

on the hirer a notice days which is
in writing in the form fixed by notice
set out in the Fourth has expired
Schedule
What happen if owner did not comply
With Notice Under S 16(1) HPA 1967

Hirer can use reasonable

force to oust such persons from
his place/house.
The date specified was short
of 2 days for the statutory
minimum number of days.

The notice was bad in law

even if served & its effect was
therefore null & void.
 You failed to pay
monthly installment!

But u didn’t give prior

notice of 4th Schedule,
will kill u if u take the
property!!!
Owner's action was invalid
as contrary to S 16(1) &
hirer had a right to use
reasonable force to protect
the goods.
S16(1A): If hirer had paid installments
more than 75% of total cash price &
he failed to pay 2 successive months
installments - owner cannot re-
possess unless he obtained court’s
order.

S 16(1B): if owner had obtained

court’s order & served Fourth
Schedule Notice in writing to hirer, the
period fixed by notice had expired (ie
21 days) – owner can re-possess
If the hirer is a deceased?

S 16(1C) - Owner cannot

re-possess unless there
has been four successive
defaults of payments.
Rational – to give time for
deceased’s relatives to
settle deceased estates.
 owner need not comply
with subsection (1) if there
are reasonable grounds for
believing that the goods will
be removed or concealed.

S 16(2)
 within 21 days after the owner
has taken possession, he shall
serve to hirer & every guarantor,
a notice in writing, in the form
set out in the Fifth Schedule.

S 16(3)
 S 16(6): If the owner did not
comply With Notice Under S
16(3) HPA 1967?

owner’s right under hire-purchase

agreement cease,
but if hirer exercises his rights to
recover the goods so taken
possession of, the agreement has
the same force & effect in relation to
the rights & liabilities of the owner &
hirer as if the notice had been duly
given.
 S16(4) - where the owner take possession –
he must deliver to the hirer personally, a
document acknowledging receipt of the
goods.

S16(5) – the document acknowledging

receipt of goods must contain short
description of the goods, date, time &
place where repossession is made.
 Hirer who returns goods within 21 days after
the service on him of the notice set out in the
Fourth Schedule shall not be liable to pay

(a) the cost of (b) the cost c) the cost of

possession incidental to storage
taking
possession;
and
 HIRER’S RIGHTS & IMMUNITIES
WHEN GOODS REPOSSESSED
S 18(1)

Where the owner takes possession under S 16 –

1days after the service on him

of notice under S 16(3), by
giving to the owner a notice in
(ii) require the owner to sell the
writing signed by the hirer or
goods to any person introduced by
his agent
the hirer who is
prepared to buy
for cash,
not less than the estimated value
(i) of the goods set out in the
require the owner to re-deliver the goods first mentioned notice.
 CONDITIONS & WARRANTIES – SECTION 7(1)

(b) an implied c) an implied

(a) implied
condition - the warranty -
warranty -
owner have a goods shall be
enjoy
right to sell free from
quiet
the goods
possession of any charge or
the goods encumbrance
in favour of
any third party
 CONDITIONS & WARRANTIES – SECTION 7(2)

implied
condition - goods shall be of merchantable
quality

EXCEPTION:

(b) second-hand
(a) hirer has goods
examined the goods/
sample
- Must have detect
the defects
examination