COMMERCIAL TRANSACTION 1.6 HIRE-PURCHASE, CERTAIN LEGAL PRINCIPLES
Section 1 Hire-Purchase Act, provides that the act would regulate agreements made after the act;
- For goods (other than motor vehicles) which are not more than #2,000
- All agreements in respect of motor vehicles irrespective of the price.
Section 20 Hire-Purchase Act defines a motor vehicle as a mechanically propelled vehicle adapted or intended for road use or for agriculture.
Section 2 Hire-Purchase Act provides that the owner shall;
- Notify the hirer of the cash price of the vehicle in case he wants to purchase. except the hirer has had the opportunity of seeing the cash price of the goods maybe by display, catalogue, and so on.
- Sub 2 goes further to state that the owner shall not be able to enforce the agreement if he defaults in compliance.
- A signed note or memorandum should be made to such effect; stating the;
Hire purchase price and cash price
The mode, amount, intervals, and dates of installment
Amount of deposit paid
Rate of interest
The good(s) which the agreement relates to.
If no prejudice has been occasioned, the courts might be lenient.
The hirer must sign in personae not any other person on his behalf. Section 2(2) Obisesan V.Adetoro; The husband signed for the wife. The court held that it was not valid. All done with cognizance of the act which is to curb injustice.
Section 3 Hire-Purchase Act;
Voids avoidance agreements; (due to higher bargaining power and high demand or absence of competition. An owner can make standard form agreements, the courts frown on this and the act has replicated)
- Relieving the owner of liability in the event of seizure of goods and damages resulting.
- Precluding the hirer from exercising his right.
- Where an agent or insurer is imposed on the hirer.
- Where more than required liability is imposed on him.
Section 4 Hire-Purchase Act;
Provides that in every hire-purchase agreement, there shall be;
- An implied warranty of quiet enjoyment and possession of the goods.
- Implied condition as to title
- Implied warranty as to freedom from third party charges or encumbrance.
- Except the goods are let as second hand and such fact is stated in the note or memorandum
- That they be of merchantable quality except the hirer has examined the goods and such examination ought to have revealed such defect.
- That they shall be fit for the purpose declared.
Section 4(3) provides that no contract or agreement can exclude such implied warranties. Except the hirer agreed to such after being notified of his right and the implications.
The duty of the owner to deliver the goods.
Implied condition as to title of the bailor.
Peaceful enjoyment and possession of the goods.
There is an implied condition as to quality, fitness for purpose, and same goods represented should be delivered.
In amusan and thomas V. Bentworth finance company limited:
The court held that where such defect is such that ought to have been identified by the hirer, he cannot claim. In this case, the hirer saw as they were pushing 3 out of the 5 hired vehicles out of the shop.
A party cannot exclude the performance of what he contracted to do by a provision in the agreement.
Ogwu V. Leventis Motors ltd.
The respondents substituted the vehicle of the hire-purchase agreement with an old one and transferred the same plate number (BYC 648) to the old vehicle. They claimed that it was the same one. When they were sued, they tried to rely on the condition excluding all implied conditions. The clause could not avail the owner.
See also karsales limited V. Wallis
UNDER THE ACT
Section 4(1) of the Hire-Purchase Act provides that;
There shall be;
- An implied warranty that the hire shall have and enjoy quiet possession of the goods.
- Implied as to right to sell when the property is to pass.
- Implied warranty of freedom from third party charges or hindrance.
- That the goods shall be of merchantable quality except the agreement expressly reveals the fact that the goods are second-hand. Or the hirer has examined the goods and such examination ought to have revealed the fact.
Section 4(2) provides that the goods shall be reasonably fit for the purpose communicated to the owner by the hirer.
Section 4(3) provides that the implied conditions set out in Section 4(1) cannot be excluded. Except it has been pointed out by the owner before the agreement is concluded. Polymera industries ltd V. S.E.R.A.P.
See also Section 3 Hire-Purchase Act.
OBLIGATION OF THE HIRER.
Take delivery of the goods and proper care of them. He is not to deal with the goods in a manner inconsistent with the owner’s title without the permission of the owner. For example, selling or pledging the goods else he could be liable for conversion. Helby V. Matthews. North central wagon finance company V. Graham
Once the agreement is terminated, the hirer should return the goods to the owner else he stands to be liable for detinue.
The hirer should keep up prompt payment of the installments.
From the implication of Section 3 of the Insurance Act, the vehicle needs to be insured. Who then insures? Depending on the agreement between the owner and the hirer. Though impliedly the duty of the hirer to insure. Section 3 of the Hire-Purchase Act provides freedom for the hirer to choose his insurance company.
North central wagon finance company V. Graham.
In STEPHEN ANOKA V. S.C.O.A WARRI;
The hirer replaced the defective engine of the lorry. It was held that the owners were liable in conversion to the hirer when they sold the engine.
Where the hirer refuses to return the goods the owner can institute a claim for detinue against the hirer.
REMEDIES FOR/OF THE PARTIES.
At common-law, it was determined by the terms of the agreement where no agreement, damages would be recoverable…
At common-law, it could be oral, in writing or by deed.
By the implication of Section 2 Hire-Purchase Act, if the agreement is covered, there must, at least be a note or memorandum of sale.
- Stating the cash price of the good. To provide an alternative to either purchase or go ahead with the hire-purchase agreement.
- Stating the hire-purchase price.
- The amount of each instalment and recurrence or intervals in which they should be paid.
- The subject matter. (The goods).