Hire Purchase Commercial Note PDF

Table of Contents 1. Define a Hire Purchase ?.............................................................................. 2 2. Parties to a Hire Purchase Agreement ?......................................................... 2 3. Formalities of a Hire Purchase Agreement ?.......................

Table of Contents 1. Define a Hire Purchase ?.............................................................................. 2 2. Parties to a Hire Purchase Agreement ?......................................................... 2 3. Formalities of a Hire Purchase Agreement ?................................................... 2 4. What should be in a Hire Purchase Agreement ?............................................ 2 2. Features of a Hire Purchase?........................................................................ 2 3. What are the hardships caused by the High Puchase Act?.............................. 3 4. Implied conditions of a Hire Purchase (They should protect the buyer)?.......... 3 5. What is the diGerence between a Hire Purchase or Credit Sale?..................... 3 6. How do you end a hire purchase agreement?................................................. 3 7. What is the Advantage of Hire Purchase to Hirer and Seller?.......................... 4 8. What to do before and after terminating a contract?-s.8 Higher Purchase Act.. 4 9. What is doctrine of subrogation?................................................................... 4 10. What is the right of the owner?................................................................... 4 11. What is the Duty/Obligation of the owner?.................................................. 4 12. What is the Duty/Obligation of the hirer?.................................................... 5 13. What are the clauses that a owner should put in the contract?.................... 5 14. How to fund a Hire Purchase deal............................................................... 5 15. What is the diGerence between Hire purchase and Loan ?........................... 6 16. What is the diGerence between Hire purchase and Hire ?........................... 6 17. What is the diGerence between Hire purchase and conditional sale?........... 6 18. What is the diGerence between Hire purchase and sale?............................ 7  1. Define a Hire Purchase ? A process where the owner of goods transfers goods to a hire on regular payment at the end, the hirer has the option of buying or returning the goods. 2. Parties to a Hire Purchase Agreement ? Fiannce company (owner) Dealer Hirer The finance buys the item from the dealer, then start another contract as the owner to the hirer. 3. Formalities of a Hire Purchase Agreement ? Offer Aceeptance Consideration Capacity 4. What should be in a Hire Purchase Agreement ? Monthly payment cost Cost of item and premium payable Date of settlement Description of goods Deposit payable Copy of the ageement must be sent to hire within 12 days It must be in wiriting and signed by the hirer on behalf of the parties 2. Features of a Hire Purchase? Monthly payment Option to puchase at the end Must be written – s.2 Hire Puchase Act Owner owns the good until payent is complete Hirer can end agreement before the completion date (Any contract saying not to end is void)  3. What are the hardships caused by the High Puchase Act? No gurantee that the will give the property at the end for purchase You cannot exclude ending the contract early 4. Implied conditions of a Hire Purchase (They should protect the buyer)? Seller must own the goods Buyer enjoy the goods quietly Goods for the purpose Goods of good quality 5. What is the difference between a Hire Purchase or Credit Sale? HIRE PURCHASE CREDIT SALE Involves a third finance company Payment of goods is postopened to that is financing the property a later date (they have the goods on Option to buy the propery at the end credit) payment Default if the goods is not paid on Monthly regular payment that day.. 6. How do you end a hire purchase agreement? Frustration from unforseen circumstance e.g. war as you areunable to perform your payemnt Notice to the hirer Paying out the agreemnt Judgement from the court – when the court sees it just and equitable Meeting conditions on the agreement 7. What is the Advantage of Hire Purchase to Hirer and Seller? Hirer Seller They can pay in installemnt, no need They retain ownership of the for lumpsum property until the hirer wants to They enjoy the goods without the complete transaction decision to own it Get regular payment Option to buy the goods at the end You can take the property back in of the agreement default You can stop the deal at anytime as you do not have ownership 8. What to do before and after terminating a contract?-s.8 Higher Purchase Act Before o Tell the seller that you want to terminate the contract o Pay at least half of the cost § You will pay extra if less than half is paid o Item returned in good condition After o Make sure the goods are returned after temination o Goods must be returned in good consition, you did not own it. 9. What is doctrine of subrogation? If a guarantor pays for a buyer , he can take the right of the seller (take the item until the buye he paid for pays him) 10. What is the right of the owner? Failing the contract, the owner can cancel the contract and repossess the goods. o Right of seizure is absolute except the contract says therwise. o Even if there is only one instllmnt left – Adenyi Atere 11. What is the Duty/Obligation of the owner? Duty to deliver goods (delivery is a fundamental obligation)  IMPORTANT OR CONTRACT IS UNENFORCEABLE o Say in writing the agreed price, outside the memorandum or contract -s.2 Higher Purchase Act o There must be signed memeorandum - s.2(2) Give goods he is the tried owner of. o You cannot give what you do not have 12. What is the Duty/Obligation of the hirer? o Fundamental duty of the hire is to accept goods o Take proper care of the goods in his possession o You cannot sell or gift the goods – they do not own it o Buy the goods or give them to the owner o Pay the minimum payment on time or the hire can collect the property. 13. What are the clauses that a owner should put in the contract? Exclusion clause – s.4(3) o Generally - to protect against liabilities – this cannot remove the owner from obligatory rsposibilites § It will protect him even if he has it an he is guilty of the obligation § IN HIRE PURCHASE – The owner can exclude if all the faults have been brought to the hrier before the agreemnt. Minimum Payment clause § The hirer can terminate the contract before the completion of the installment. § Ammount dependent on 2 things 1. When the hire has paid 1½ of the purchase price a. Liability is unpaid ammount 2. Not paid up to 1½ of the total price. a. Law says he needs to pay up to it 14. How to fund a Hire Purchase deal 1. Finance companies  § Where the dealer is unable to aVord the goods in credit to the buyer, e.g. they need cash flow to run the car business i.e. no money to pay emplyees § They can work with a finance company to deliver the goods , the finance company, pays the dealer and start contract with the purchaser/hirer. 2. Block discounting Commented [oE1]: Explain § The dealer gives the finance company his right at a discountd price. 3. Resource agreement (e.g. dealer guarntee to finance company) § The dealer promises the hire company to be liable for any loss if the hirer defaults payment 15. What is the difference between Hire purchase and Loan ? Hire Loan The company owns the property , The owner ownes the item transfer only happens when the immediately , the lender has no buyer has made the final payment. claim on the property unless the buyer defaults 16. What is the difference between Hire purchase and Hire ? Hire Purchase Hire Option to buy but at the moment Possession of an item to use for not decided some time. They can oay for the full hiring period and return the itme when they are done No option to buy 17. What is the difference between Hire purchase and conditional sale? Hire purchase Conditional Sale They have can decide to purchase at Entering into the agreement, they a later date. have already agreed to buy the property but payment has not been decided. 18. What is the difference between Hire purchase and sale? Hire Purchase Sale Only possessory rights are Ownership is transfeed on transferred until payement is compeltion fo the contract complete, or hirer excersize right to buy off