Questions and Answers
What is required for repossession to be legal according to Section 16 (1)?
notice
Repossession after 21 days from the date of service of the 4th Schedule Notice does not have a time limit. (True/False)
True
What is required for repossession permits according to Section 17A?
After repossession, the owner must serve a document acknowledging receipt of the goods within ______ days according to Section 16 (4).
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What options does the hirer have upon receiving the 5th Schedule Notice?
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According to Section 2 (1) of the Hire-Purchase Act 1967, what is included in a hire-purchase agreement?
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In a hire-purchase agreement, possession of the goods lies with the hirer, and ownership remains with the owner until full payment.
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Who is considered the 'hirer' in a hire-purchase agreement?
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Consumer goods are defined in Section 2 as goods purchased for ______ purposes.
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Match the following formalities required for forming a valid hire-purchase agreement:
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What must the person intending to enter into a hire-purchase agreement for a second-hand motor vehicle declare in writing?
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When must the owner serve the hirer and the guarantor a copy of the Hire Purchase Agreement (HPA)?
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Any person contravening Section 5 (of the Hire Purchase Agreement) will not face any penalty.
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The owner must obtain from the hirer a deposit not less than one-tenth of the ____ price of the goods.
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Match the following statutory rights of a hirer to their descriptions:
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Study Notes
Definition of HPA
- A hire-purchase agreement (HPA) is a letting of goods with an option to purchase and an agreement for the purchase of goods by installments (Section 2 (1) of the Hire-Purchase Act 1967)
- 2 limbs of definition:
- Letting of goods with an option to purchase
- Agreement for the purchase of goods by installments
Characteristics of HPA
- A contract between hirer and owner
- Owner lets the goods to hirer for an agreed period
- Hirer pays deposit and monthly installments
- Possession is given to hirer, but ownership of goods remains with owner until full payment
- Owner can repossess goods upon failure to pay installments
- Hirer will only acquire title of goods if they have fully paid the installment
Parties and Goods in HPA
- Parties:
- Owner: a person who lets or has let goods to a hirer under a HPA
- Hirer: the person who takes or has taken goods from an owner under a HPA
- Guarantor (if required)
- Goods:
- All consumer goods
- Motor vehicles (including invalid carriages, motor cycles, motor cars, goods vehicles, and buses)
Formation of HPA
- Several formalities must be observed by parties:
- Owner or dealer must serve 2nd Schedule notice(s) to prospective hirer (Section 4(1))
- HPA must be in writing (Section 4A(1))
- HPA must be signed by all parties (Section 4B)
- Contents of HPA must include:
- Cash price of goods
- Deposit and separate showing of the amount paid in cash and by consideration
- Delivery and freight charges
- Vehicle registration fees
- Insurance
- Term charges
- Annual percentage rate for term charges
- Total amount payable
Liability of Owner and Dealer for Misrepresentation
- Meaning of misrepresentation: Incorrect or false statement made to hirer by owner or dealer
- Hirer has right to:
- Terminate the HPA and sue for damages against owner
- Sue for damages against person who made misrepresentation
Statutory Rights of Hirer
- Right to request a statement of current position (Section 9)
- Right to appropriation of payment (Section 10)
- Right to apply for order for goods to be removed (Section 11)
- Right to assign hirer's right (Section 12)
- Right by operation of law (Section 13)
Repossession Procedure
- Not mentioned in the text### Right to Early Completion of Agreement (Section 14)
- The hirer has the right to complete the hire-purchase agreement earlier than the actual term.
- To exercise the right, the hirer needs to give written notice to the owner indicating their intention and pay the balance due under the agreement on or before the stipulated date.
Procedures for Early Completion (Section 14(1))
- Give written notice to the owner.
- Notify the owner of the hirer's intention to make an early completion.
- Stipulate the date for early completion.
- Pay the net balance due on or before the stipulated date.
Situations for Early Completion (Section 14(3))
- Early completion during the continuance of agreement: hirer pays net balance due only.
- Early completion after repossession of goods: hirer pays net balance due and cost incurred by owner for repossession.
- Early completion after service of 4th Schedule Notice and hirer returns goods to owner within 21 days: hirer pays net balance due only.
Right to Terminate the Agreement (Section 15)
- The hirer has the right to terminate the hire-purchase agreement at any time by returning the goods to the owner during ordinary business hours.
- Upon termination, the hirer may require the owner to sell the goods to any person introduced by the hirer who is prepared to buy the goods for cash at a price agreeable to the owner.
- If the value of the goods at the time of return is more than the balance outstanding, the hirer is entitled to the difference.
- If the value of the goods is less than the balance outstanding, the owner is entitled to the difference.
Repossession Procedure
- Repossession occurs when the goods are taken back by the owner from the hirer due to default.
- The statute upholds this right, but procedures in Sections 16 to 18 must be complied with.
Procedure Before Repossession
- The owner can repossess the goods only if the hirer has defaulted on two successive installments, and the total payment made is not more than 75% of the total cash price of the goods.
- Service of 4th Schedule Notice is required, giving the hirer 21 days to pay arrears and interest due before repossession.
- The notice must be served personally or by registered post.
Procedure During Repossession
- Repossession can only be made by a person with a written permit.
- The owner or agent must produce and show their identity card and provide the name and address of the company they belong to.
Procedure After Repossession
- The owner must serve a document acknowledging receipt of the goods, containing a short description, date, time, and place of repossession.
- Service of 5th Schedule Notice is required, giving the hirer 21 days to either require the owner to return the goods and pay arrears or finalize the agreement by paying the balance due and cost for repossession.
- The owner cannot sell or dispose of the goods without the written consent of the hirer before the expiration of 21 days after service of the 5th Schedule Notice.
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Description
This quiz covers the definition, characteristics, formation, and liabilities of hire purchase agreements in Malaysia, as well as the statutory rights of hirers and repossession procedures.
