Hire Purchase Flashcards
hire purchase definition
3 key features
2 cases
s.2 HP definition
- bailment for hire
- option to purchase
- not a contract of dale until all instalments are made.
case:
- lee v butler
- elijah barasa v munir omar
statutory requirement (s.3): 4 of them
- not exceed 4 million shillings
- not body corporate
- not a government scheme
- HP made at the commencement of the act
from HP to contract of sale (4 of them)
1 case
- goods are on hire only.
- The property in them does not pass to the hirer until he has paid the final instalment of the hire-purchase price. The owner has the property in goods.
- There is no seller or buyer until the hirer exercises his option to buy.
The hirer may buy the goods but he is not bound to buy them- Helby v Matthews - an offer is made by the buyer and its irrevocable
conditions and warranties implied in agreements (6) section 8 HPA
- the condition that the owner will have a right to sell the goods at the time when the property is to pass
- warranty on quiet possession
- warrant of free of encumbrances
- merchantable quality
- transfer of title upon payment of the last instalment.
- fit for purpose
The distinction between HP and sale of goods contract on credit (1)
the distinction between HP and sale (1) + 1 case
the distinction between HP and conditional sale ( 1 case)
A buyer of goods may request to be allowed to buy goods by instalments. This is a sale on
credit. Property in the goods passes on payment of the first instalment where the goods are
ascertained. As such, the buyer can give a good title to a bona fide purchaser.
While HP does not allow 3rd party to get a good title.
HP is not a contract of sale until the last payment of an instalment is made. owner and hirer. ( Helby v Matthews)
A conditional sale is a contract for sale in instalments but the property is to remain with the
seller until such conditions as to the payment of instalments or otherwise as may be specified
in the agreement are fulfilled. A sale on credit with reservation of property in the seller until
the payment of the full price.
When drafting a hire purchase agreement, one must be careful not to turn it into a conditional
sale by making it obligatory for hirer to buy. (lee v butler)
requirement for hire purchase agreement ((2)- 1 case)
- establishment of registry with attoney general - s.4 HPA
- an agreement to be registered - s.5 HPA
- in writing (dates, price- s.6)
- English
- stamp duty (fidelity commercial bank v agritools - lack of registration, it cannot be enforced against a hirer by the owner + s.19 inadmissible without a stamp as evidence)
false information (misrepresentation)- liable to a fine of 5 thousand and less and imprisonment of 6 months.
minimum clause ( 1 case) - for protecting owner from depreciating goods as they are used by the hirer and not benefit the him (owner). 1 scholar
hire purchase agreement there is a clause which states the minimum amount that the hirer is liable to pay upon the exercise of the right to terminate the agreement.
- associated distributors v hall- cannot act as a penalty clause
laibuta: the court will not enforce a minimum payment clause in any case where it is intended
to operate as a penalty or liquidated damages for breach of contract. amount must be reasonable to the loss suffered by owner.
misrepresentation - non-est factum plea (explicit terms binding)
2 cases
s. 34 HPA: false information (misrepresentation)- liable to a fine of 5 thousand and less and imprisonment of 6 months.
or VOID!!!
- Muskham v Howard [1963]: the doctrine of non-est factum only applied where mistake as to the class and character of a document but not in the content.
- howatson v webb: Webb’s mind did not go with the pen. webb’s mistake was the content of the document not the character. that the contents of the deed made it a conveyance by way of mortgage.
Void Provisions Under the Act, S. 7 (5 OF THEM)
does it limitate freedom to contract) - nop because it is meant to protect the hirer (weaker party)
if these 5 things are present in HPPA, then the agreement is void ab initio!!!
- An owner or any person acting on his behalf is authorized to enter upon any premises
for the purpose of taking possession of goods which have been let under a hire-purchase
the agreement, or is relieved from liability for such an entry - The right conferred on a hirer by section 12 to terminate the hire-purchase agreement
is excluded or restricted, or any liability beyond that imposed by section 12 is imposed
on a hirer by reason of the termination of the hire-purchase agreement by him under
that section - A hirer, after the termination of the hire-purchase agreement or the bailment in any
manner whatsoever is subject to a liability which exceeds the liability to which he
would have been subject if the agreement had been terminated by him under this Act; - any person acting on behalf of an owner in connexion with the formation or conclusion
of a hire-purchase agreement is treated as or deemed to be the agent of the hirer - An owner is relieved from liability for the acts or defaults of any person acting on his
behalf in connexion with the formation or conclusion of a hire-purchase agreement.
duties of the hirer (5)
- The duty to take delivery of the goods
- The duty to exercise reasonable care over the goods in his possession
- The duty not to remove or permit the removal of the hired goods from the premises where they are ordinarily located without the owner’s consent
- The duty to pay the hire-purchase instalments as they fall due
- the duty to continue hiring the goods for the agreed period, and not to re-let, sell or part with possession
thereof
Rights of the owner: ( 5 of them)
- Right to receive the hire-purchase price in full from the hirer prior to delivery and transfer of legal ownership of the contractual goods. (section 8(e) of the Hire Purchase Act)
- Right to delivery of the following documents by the registrar: a certificate of registration,
and a certificate of registration purporting to be given under the hand of the registrar shall be
prima facie proof of the facts therein certified in any proceedings [section 5(3) of the Hire
Purchase Act] - Right to protect his or her goods if he or she under a hire-purchase agreement has given written notice of his ownership thereof to the landlord of the premises where the goods are kept and the landlord shall not have any right of distress over the goods for rent [section 9(4)]
- Right to recover possession of goods from a hirer by instituting a suit [section 14(1)
This includes the right to have the goods returned to him and receive
a written notice when the hirer terminates the agreement before the final payment [section
12(1) of the Hire Purchase Act] - Right to terminate the contract only where there is a fundamental breach of the Hire-Purchase contract or where the hirer has defaulted payment (non-payment of instalments
duties of the owner (4)
- To sell the goods to the hirer at the time when the property is to pass; implied condition in
hire purchase agreements [section 8(1)(a) of the Hire Purchase Act] and to transfer legal
ownership and title of the goods to the hirer upon payment of the hire purchase price in full
[section 8(e)] - To state in writing in the prescribed form to the prospective hirer, otherwise than in
the agreement, a price at which the goods may be purchased by him for cash before a hire-purchase agreement is entered into in respect of any goods [section 6(1) of the Hire Purchase
Act] - To reimburse the hirer for any additional expense incurred in returning the goods to
premises other than those from which they were originally supplied (section 12(3) of the Hire
Purchase Act) - To furnish the hirer with information and/or direction(s) with regard to the agreement.
E.g. on things such as the price etc
Termination and Completion of Hire Purchase
- ( 4 ways) to terminate HP CONTRACT.
- Termination by way of Performance
- Termination by the Hirer; s.12
-Return the goods to their owner.
-Give notice of termination.
- Pay the difference between [(1.5 of Purchase Price) - - - Total sums paid/due] or pay lesser
sum as may be specified in the agreement - Termination by way of Completion by the Hirer; s.13
- Give notice by way of paying the residual amount of money
- The hirer has the right to exercise this right of completion
(a) at any time during the continuance of the agreement; or
(b) within twenty-eight days after the owner has taken possession of the goods, upon paying
or tendering to the owner in addition to the net balance due-
- The reasonable costs incurred by the owner in and incidental to taking possession of
the goods; and
- any amount properly expended by the owner on the storage, repair or maintenance of
the goods; and
- any additional interest which is due under the agreement. - Termination by the Owner of the Goods in question
- upon default in payment
- breach of the agreement by hirer
the owner recovers the goods through a SUIT where 2/3rd of the purchase price has already been paid. -s.15 HPA. IF THE OWNER STILL TERMINATES:
a. hirer released from all liability
b. hirer can recover all money paid to the owner through suit.
when a suit is instituted for the recovery of possession in cases where at least two-thirds
of the hire-purchase price has been paid, S.16(1) prohibits the owner from taking any steps to ENFORCE payment of any sum due under the agreement or under any contract of guarantee relating thereto, except by claiming the sum in the suit.
The court in this regard may order;
- Specific delivery of all the goods to the owner;
- Specific delivery of part of the goods to the owner and transfer to the hirer of the owner’s title to the rest of the goods.
- Specific delivery of all the goods to the owner and postponement of the operation of the order on condition that the hirer or guarantor pays to the owner the outstanding balance of the hire-purchase price on such terms and conditions as are just
