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Which of the following must be included in a Hire Purchase Agreement?
Which of the following must be included in a Hire Purchase Agreement?
What is a key feature of a Hire Purchase?
What is a key feature of a Hire Purchase?
What is a hardship caused by the Hire Purchase Act?
What is a hardship caused by the Hire Purchase Act?
Which implied condition protects the buyer in a Hire Purchase?
Which implied condition protects the buyer in a Hire Purchase?
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How does a Hire Purchase differ from a Credit Sale?
How does a Hire Purchase differ from a Credit Sale?
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Which of the following is NOT a method to end a Hire Purchase agreement?
Which of the following is NOT a method to end a Hire Purchase agreement?
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What condition is NOT implied under a Hire Purchase to protect the buyer?
What condition is NOT implied under a Hire Purchase to protect the buyer?
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Which advantage does a Hire Purchase provide to the seller?
Which advantage does a Hire Purchase provide to the seller?
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What is the primary defining characteristic of a hire purchase agreement?
What is the primary defining characteristic of a hire purchase agreement?
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Who are the primary parties involved in a hire purchase agreement?
Who are the primary parties involved in a hire purchase agreement?
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Which of the following is NOT a formal requirement for a hire purchase agreement?
Which of the following is NOT a formal requirement for a hire purchase agreement?
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What is an implied condition of a hire purchase agreement meant to protect?
What is an implied condition of a hire purchase agreement meant to protect?
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What describes a major difference between hire purchase and a credit sale?
What describes a major difference between hire purchase and a credit sale?
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How can a hire purchase agreement be terminated?
How can a hire purchase agreement be terminated?
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Which of the following is a duty of the hirer in a hire purchase agreement?
Which of the following is a duty of the hirer in a hire purchase agreement?
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What is often regarded as an advantage of a hire purchase to the seller?
What is often regarded as an advantage of a hire purchase to the seller?
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What actions must be taken before terminating a hire purchase contract?
What actions must be taken before terminating a hire purchase contract?
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What happens to the ownership of goods during a hire purchase agreement?
What happens to the ownership of goods during a hire purchase agreement?
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What is required from the hirer if they wish to terminate the contract without owning the goods?
What is required from the hirer if they wish to terminate the contract without owning the goods?
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What right does a seller have if the hirer defaults on payments?
What right does a seller have if the hirer defaults on payments?
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What is the fundamental duty of the hirer in a hire purchase agreement?
What is the fundamental duty of the hirer in a hire purchase agreement?
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What should an owner do if a hirer has not made payment?
What should an owner do if a hirer has not made payment?
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According to the rules of hire purchase, what must be documented in writing?
According to the rules of hire purchase, what must be documented in writing?
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What happens to the seller's rights in a hire purchase if an installment is missed?
What happens to the seller's rights in a hire purchase if an installment is missed?
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What must occur for an owner to exclude liability under a hire purchase agreement?
What must occur for an owner to exclude liability under a hire purchase agreement?
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What happens if the hirer pays 1½ of the purchase price in a hire purchase agreement?
What happens if the hirer pays 1½ of the purchase price in a hire purchase agreement?
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Which statement best differentiates hire purchase from a loan?
Which statement best differentiates hire purchase from a loan?
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What is typically required by finance companies to facilitate a hire purchase deal?
What is typically required by finance companies to facilitate a hire purchase deal?
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What distinguishes a hire purchase agreement from a standard hire agreement?
What distinguishes a hire purchase agreement from a standard hire agreement?
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What is the primary concern for a dealer when offering hire purchase financing?
What is the primary concern for a dealer when offering hire purchase financing?
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In a resource agreement involving hire purchase, what is the dealer's responsibility?
In a resource agreement involving hire purchase, what is the dealer's responsibility?
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What is the role of block discounting in hiring purchase financing?
What is the role of block discounting in hiring purchase financing?
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Study Notes
Hire Purchase Agreements
- A hire purchase agreement is a process where the owner of goods transfers the goods to a hirer on regular payments. The hirer has the option to buy or return the goods at the end of the agreement.
- Parties involved include the finance company (owner), the dealer, and the hirer. The finance company purchases the item from the dealer and then enters into a contract with the hirer.
- Formalities of the agreement include offer, acceptance, consideration, and capacity. All aspects are contractually binding and documented in writing.
- A hire purchase agreement should contain monthly payment costs, item costs with any premium, settlement dates, description of the goods, and any deposit payable. A copy must be provided to the hirer within 12 days. The agreement must be written and signed by all parties.
Key Features of a Hire Purchase Agreement
- Monthly payments
- Option to purchase the item at the end of the agreement.
- Written agreement required.
- The owner retains ownership of the goods until the buyer completes the payments.
- The hirer can end the agreement before completion, sometimes with a clause specifying no termination. However, such a clause may be legally challenged.
Hardhips Clause
- A guarantee that the property will be delivered after purchase.
- The ability to end a contract early without penalty, is protected by law.
Implied Conditions
- The goods must be owned by the seller.
- The buyer can use the goods without disturbance..
- The goods are fit for the purpose described.
- The goods are of satisfactory quality.
Hire Purchase vs. Credit Sale
- Hire Purchase: Involves a third-party finance company. The buyer has the option of purchasing. Payments are regular.
- Credit Sale: Payments aren't made regularly, and if the buyer fails to pay, the seller can immediately repossess the item.
Ending a Hire Purchase Agreement
- Termination due to unforeseen circumstances such as war.
- Notice to the hirer.
- Full payment of the agreement.
- Judgement from the court, if the circumstances are considered just and equitable.
Advantages of Hire Purchase for Hirer and Seller
- Hirer: Doesn't need a lump sum, pays over time. They can use the item without committing to ownership immediately.
- Seller: Regular payments, ownership retention until purchase is complete, and the likelihood of recovering the goods if the hirer fails to pay.
Contract Termination Actions
- Before Termination: The hirer informs the seller of termination intent, usually needs to pay at least half the cost.
- After Termination: The owner requires the item to be returned in good condition.
Doctrine of Subrogation
- A guarantor (paying for the buyer) can take over the seller's rights (seizing the item) if the buyer defaults.
Owner's Rights (in event of default)
- Cancel the contract and repossess the goods.
- The right of seizure is absolute, unless specified otherwise in the contract.
Owner's Duties/Obligations
- Delivering the goods as agreed (delivery in this respect is a fundamental obligation).
Clauses in Hire Purchase Contracts
- Exclusion Clause (s.4(3)): Protects the seller from liability, though it cannot remove fundamental obligations; it has to be reasonable.
- Minimum Payment Clause: Ensures the hirer makes regular payments.
- Amount Dependent Clauses: Vary based on the amount paid (11½% of the purchase price).
Funding Hire Purchase Deals
- Primarily through finance companies.
Hire Purchase vs. Loan
- Hire Purchase: Ownership transfers only when the final payment is made.
- Loan: Ownership of the item transfers immediately upon issuing the loan.
Hire Purchase vs. Hire
- Hire Purchase: An option to buy later.
- Hire: Temporary possession without the option to buy.
Hire Purchase vs. Conditional Sale
- Hire Purchase: The hirer can choose to purchase the item later.
- Conditional Sale: The hirer agrees to buy the item before or upon entering the agreement.
Hire Purchase vs. Sale
- Hire Purchase: The seller retains ownership until full payment.
- Sale: Ownership transfers immediately to the buyer.
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Description
This quiz explores the fundamental concepts of hire purchase agreements, including the roles of involved parties, key features, and necessary formalities. Test your understanding of the contractual elements and obligations that define these financial agreements.
