Hire Purchase

CHAPTER 5;

Law of Hire Purchase Hire Purchase Act 1967

Prepared by;

Alizah Ali Department of Law

UITM Bandaraya Larkin

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At the end of the class, students are able to understand…

The definition of HP The definition of owner, hirer, price and goods The formation of HP (b4 & during the agreement-6) Liability of owner in the case of mispresentation Statutory Rights & Duties of Hirer(8) Statutory Duties & Obligation of Hirer(3) Right of owner in repossession Right or Hirer After Repossession

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H

ire P

urc

hase

Sect 2(1) of Hire Purchase Act 1967

The definition of HP

or

Letting of goods with an option to purchase

Purchase of goods by installment

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At the time contract is

made

Ownership is not transfer to

the Hirer

Hirer only obtain the

possession of the goods

The ownership will remain with the

Owner until payment is complete

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Credit Corporation (M) Sdn Bhd vs

The Malaysian Industrial Finance

Corp

Concept of HP …

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definition of owner, hirer, price and goods

owner hirer

price goods

Sect 2(1) HPA 1967

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definition of owner, hirer, price and goods

goods

Sect 2(1) HPA 1967

1st Schedule of

HPA 1967

Consumer goods

Motor

vehicles

Case : Kesang Leasing Sdn Bhd Vs Mohd Yusof Ismail

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formation of HP

1. Giving 2nd Schedule Notice B4 agreement

2. Agreement must be in writing

3. Agreement must be signed

4. Content of HP agreement

5. Separate agreement for every item of goods

6. Copy of agreement must be served on the Hirer

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• Before agreement of HP is made

• A must Sec 4(1)(a) of HPA 1967

• Owner made a complete set of 2nd Schedule

Sect 4(1)(b)(i) & (ii) of HPA 1967

• Sort of quotation description of the goods

summary of financial obligation

formation of HP

1. Giving 2nd Schedule Notice Sect 4(1) HPA

1967

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formation of HP


1967

Method of service

Acknowledge receipt

In person

NO .. No need to pay any considera

tion

No obligation to enter into the contract

YES .. Sect 46

RM3000 @ 6 months

imprisonment -alizah ali-

formation of HP


1967

If no 2nd Schedule

Notice …

Contract is void

Sect 4 (4) of HPA 1967

Affin Credit (M) Sdn Bhd vs Yap Yuen Fui

Guilty Sect 46 of HPA 1967

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formation of HP

2. Agreement must be in writing Sect 4A HPA

1967

If not in writing…

Contract is void


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• All parties to the agreement must sign Sect 4B(1) HPA 1967

• Sign a complete agreement and not a blank agreement Sect 4B(2) HPA 1967

formation of HP

3. Agreement must be signed Sect 4B HPA

1967

If not sign…

Contract is void


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oDate of agreement

oNo of installment

oAmount of each installment\time for payment

oDescriptions of goods

oAddress where the goods placed

formation of HP

4. Content of HP agreement Sect 4C HPA

1967

Sp

ecif

y …

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oCash price

oDeposit price

oVehicles registration

oInsurance amount

oBalance original payable

oTotal amount payable

formation of HP


1967

Tab

ula

r fo

rm …

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formation of HP


1967

If not contain…

Contract is void


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formation of HP

5. Separate agreement for every item of goods Sect 4D HPA

1967

If not contain…

Contract is void


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formation of HP

6. Copy of agreement must be served on the Hirer Sect 5 HPA

1967

Within 14 days after making the contract

hirer

guarantor

Sect 5(1) HPA 1967

A copy of HP agreement

A copy of insurance

policy

Sect 5(3) HPA 1967

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formation of HP

6. Copy of agreement must be served on the Hirer Sect 5 HPA

1967

If not get a copy…

Contract is void

Sect 5(1A) HPA 1967

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Liability of owner in the case of mispresentation

owner Mispresentation

Hirer may… dealer

Sect 8(1)(a) HPA 1956

RESCIND the contract

Sect 8(1)(b) HPA 1956

Claim for DAMAGES

Lau Hee Teah vs Hargill

Engineering Sdn Bhd

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Exemption clause

Exclude, limit & modify

Contract is VOID Sect 8(2)

HPA 1957

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Right of innocent owner

Dealer mispresentation

Innocent owner may

be indemnified

by the Dealer

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Statutory Rights & Duties of Hirer

RIGHT

of HIRER

2. Right to a copy of Statement of

current position

Sect 9 HP 1967

3. Right to appropriation of payment

made in HP agreement

Sect 10 HP 1967

4. Right to apply from court-to get an order to remove the goods

Sect 11 HP 1967

1. Right to a copy of agreement

Sect 5 HP 1967

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I

Statutory Rights & Duties of Hirer

5. Right to assign Hirer’s right which stated

in HP agreement Sect 12 HP 1967

6. Right by Operation of Law Sect 13

HP 1967 (personal-death & company-winding up)

7. Right to early completion of the

agreement

Sect 14 HP 1967

8. Right to terminate the agreement

Sect 15 HP 1967

RIGHT

of HIRER

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Statutory Duties & Obligation of Hirer

DUTIES

of HIRER

1. Duty to continue payment

eventhough the goods hired destroy

Ka Yim Credit & Leasing Sdn Bhd vs Pang Kim Cha

2. Duty to inform Owner the position of the

goods

Sect 37 HP 1967

3. Fraudulant Sale or Disposal of

goods by the Hirer

Sect 38 HP 1967 -alizah ali-

Right Of Owner In Repossession

» default 4 successive installment Sect 16(1) HPA 1967

RIGHT TO REPOSSESSION

Hirer defaulted to pay 2 successive

installment, or

Hirer defaulted to pay the last installment

Death Hirer

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1

can repossess after 21 days from the date of service of 4th Schedule notice.

procedure

Before

Sect 16 HPA 1967 / 4th Schedule

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Pang Brothers Motors Sdn Bhd vs Lee Aik Seng

19 days

United Manufacturers Sdn Bhd vs Sulaiman Ahmad

repossess after 2 years from the date of the service of 4th Shcedule Notice

Right Of Owner In Repossession procedure

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to serve 4the Schedule Notice

Section 16(2) of HPA 1967

procedure

Exemption

if the owner can prove that there is a possibility

that the Hirer would conceal or remove the goods from the owner

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Required the owner/dealer to comply with regulation as regard to the manner to repossess the goods

if own- show ic/business card

if show ic/authority card

During

procedure

Sect 16(7) HPA 1967

HP (Recovery of Possession And Maintenance of Records by Owners) Regulations 1976

owner dealer

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Cont…

Can enter into Hirer’s Premise – proper & lawful manner

Failure to comply offence Regulation 9

Dealer commit offence owner is deemed guilty unless ..


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Immediately Owner shall deliver to the hirer a document of acknowledge receipt of the

goods

Sect 16 (5) of HPA 1967 – contain of document

procedure

After

1. Sect 16(4) HPA 1967

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Within 21 days of the repossession – owner serve 5th Schedule

procedure

After

2. Sect 16(3)n HPA 1967

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5th Schedule

require the owner to redeliver the goods to him

+ arear of installment

+ installment due

+ interest due

+ cost of repossession

+cost of storage

+ cost for redelivery

Complete the agreement by paying the balance due under the agreement + cost repossess

option

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5th Schedule

Take the goods

option

DO NOT take the goods

Pay installment due

Cost incidental to

repossession

√

Pay full payment

Cost incidental to

repossession

X

Cost delivery

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Cont…


If x 5th Schedule

owner will lose his right under HP agreement and x entitle to

get remedy

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Cont…

after receive 4th Schedule Notice, the Hirer is surrender the

goods to the owner, owner shall not impose payment

for..


a) cost of repossession

b) cost incidental to repossession

a) cost of storage

3. Sect 16A HPA 1967

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Cont…

After repossession, owner shall not sell/dispose the goods without written consent from the Hirer.


4. Sect 17 HPA 1967

If dispose without consent

he shall be guilty under Section 17(2)

HPA 1967

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Right of Hirer After Repossession

hirer

Take

th

e go

od

s

Reject th

e goo

ds 5th

schedule (option)

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Require the owner to redeliver the goods to the hirer

i this can be made within 21 days after the service of 5th

Schedule Notice.

ii this can be made via written application to reinstate the

agreement

1. Take the goods

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iii Hirer has to pay;

1) arear of installment + interest – Sect 9(1)(a)HPA

2) remedy for breach of agreement – Sect 19(1)(b)HPA

3) cost incidental to repossession – Sect 19(c) HPA

4) cost of redelivery – Sect 19(c) HPA

Take the goods

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Right of Hirer After Repossession Reject the goods and require the owner to sell the

goods to any person introduced by the hirer who is prepare to buy the goods for cash.

Sect 18(4) HPA 1967 Sect 18(4)(a) HPA 1967 Sect 18(4)(b) HPA 1967 Owner serve a notice to the hirer Owner give hirer an option Not less than 14 days b4 the date to buy the goods at the price Of auction which he intends to sell

2. Reject the goods

Public auction Private auction

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Hire Purchase

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