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THE LAW OF HIRE - lecture notes on HIRE PURCHASE
prepared by PAA JOY
LAW (Ghana Institute of Management and Public Administration)
Studocu is not sponsored or endorsed by any college or university
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THE LAW OF HIRE - PURCHASE
NATURE AND DEFINITION
Common law definition:
At common law, a contract of hire purchase is defined as an agreement under which an owner
delivers goods on hire to the hirer in return for certain periodic payments made by the hirer and
further agrees that the hirer may return the goods and terminate the hiring or elect to purchase
the goods at the end of the hiring period.
In sum, a hire purchase contract is an agreement under which goods are delivered on hire to the
hirer, and the hirer makes periodic payments to the owner, the hirer having an option to
purchase the goods, but being under no obligation to do so.
Generally, a hire-purchase agreement may be likened to a bailment transaction, the owner
being the bailor and the hirer, the bailee. After completing the agreement, the hirer is given
actual possession and use of the goods hired.
The owner retains the property in the goods, or the title to the goods.
This property or title remains in the owner until such time that the hirer exercises his option to
purchase –by paying the full hire purchase price.
The hirer therefore cannot lawfully dispose off the property in the goods to a third party until
he has exercised the option to purchase.
There can be a contract of sale where the goods are delivered to the buyer and payment to be
made in a period. There are credit and conditional sales-here property passes only upon the
payment of a price. These two kinds of sales are both different from the hire purchase because
in a hire purchase agreement, the hirer has not agreed to buy the goods it is likened to a
bailment transaction unlike the sale of goods where the buyer is bound to pay the price for the
goods.
PECULIAR FEATURES OF A HIRE – PURCHASE AGREEMENT (UNDER THE COMMON LAW)
● THE ELEMENT OF A HIRE: under the terms of a hire – purchase agreement, the hirer is
given actual possession and use of the goods hired, in return for the payment of certain
stated rents to the owner of the goods. The rental or the hire-rent is normally payable in
installments. Possession of the goods is with the hirer, but the property in the goods
remains with the seller.
● POSSESSION AND PROPERTY: the result is that, whereas possession of the goods is
given to the hirer the absolute property in the goods remains throughout in the owner
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of the goods. The property in the goods resides in the owner until the hirer exercise
exercises his option to purchase the goods.
It follows therefore , that before the exercise of the option by the hirer , the hirer cannot in his
own right lawfully dispose of the absolute property in the goods to a third party.
BUT the property retained by the owner is not absolute in that in practice, it does not entitle him
to dispose of the goods in any way of his own choosing without the hirer in possession.
● It confers on the hirer an option to purchase not an obligation to purchase.
The essential features of a hire-purchase agreement at Common Law were identified in the case
of HELBY V. MATHEWS [1895] A.C. 471
Facts : The appellant the owner of a piano , agreed to let it on hire, the hirer to pay a rent by
monthly installments, on the terms that the hirer might terminate the hiring by
delivering up the piano to the owner , he remaining liable for all arrears of hire; also that
if the hirer should punctually pay all until such full payments, the piano should become
his sole and absolute property, and that until such full payment the piano should
continue the sole property of the owner. The hirer received the piano, paid a few of the
installments and improperly and without the consent of the appellant, pledged the
piano with the respondents, who were pawnbrokers, as security for an advance. The
appellant, upon discovering this, demanded the piano from the respondents, and on
their refusing to deliver it brought an action of trover. The defence set up by the
respondents was that they had received the piano from the hirer in good faith,and
without notice of any claim on the part of the appellant , and that the hirer having
“bought or agreed to buy” it from the appellant, they were protected by section 9 of the
Factors Act, 1889 [where a person, having bought or agreed to buy goods obtains with
the consent of the seller possession of het goods or the documents of title to the goods,
the delivery or transfer , by that person or by a mercantile agent acting for him, of the
goods or documents of title , under any sale, pledge, or other disposition thereof, or
under any agreement for sale, pledge , or other disposition thereof, to any person
receiving the same in good faith and without notice of any lien or other right of the
original seller in respect of the goods, shall have the same effect as if the person making
the delivery or transfer were a mercantile agent in possession of the goods or documents
of title with the consent of the owner.]
Issue: whether the transaction between the appellant and the hirer was a hire purchase
agreement or a contract of sale.
Held : it was held on appeal that , on a true construction of the agreement, the hirer was
under no legal obligation to buy , but only had an option either to return the piano or
become its owner by paying the hiring price in full ; that since the hirer had not
exercised his option to purchase he was not a buyer of the goods and could not pass a
valid title to a third party, the Pawnbroker.
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Per Lord Herschell“ Where is any such legal obligation to be found? Brewster (the hirer)…did
not agree to make thirty –six or any number of monthly payments. Al he undertook was
to make the monthly payment…so along as hekept the piano. He had an option no doubt
to buy it by continuing the stipulated payments for a sufficient length of time. If he had
exercised that option he would have become the purchaser. I cannot see under these
circumstances how he can be said either to have bought or agreed to buy the piano.
The terms of the contract did not upon its execution bind him to buy, but left him free to
do so or not as he pleased, and nothing happened after the contract was made to
impose that obligation.”
Per Lord Watson “These stipulations, in my opinion, constitute neither more nor less than a
contract of hiring, terminable at the will of the hirer, coupled with this condition in his
favour , that , if he shall elect to retain it until he has made thirty-six monthly payments
as they fall due, the piano is then to become his property. The only obligation which is
laid upon him is to pay the stipulated monthly hire so long as he chooses to keep the
piano. In other words, he is at liberty to determine the contract in the usual way, by
returning the thing hired to its owner. he is under no obligation to purchase the thing, or
to pay a price for it. there is no purchase and no agreement for purchase until the hirer
actually exercises the option given him.”
STATUTORY DEFINITION
Section 24 of the Hire Purchase Act, (1974) N.R.C.D. 292
The Hire Purchase Decree defines a hire-purchase agreement as an “agreement for the
bailment of goods under which the bailee may buy the goods or under which the
property in the goods will or may pass to the bailee.”
Comparing this definition to a contract for the sale of gods, this is an agreement for the
bailment of goods and not the sale of goods. Again, the property in the goods will or
may pass to the bailee and does not automatically pass in the sale of goods.
THE ESSENCE OF THE HIRE PURCHASE AGREEMENT
1. The essence of the hire purchase agreement is therefore
a. the bailment of the goods by an owner to the hirer in return for certain periodic payments
made by the hirer and
b. an agreement by which the hirer has an option either to return the goods and thereby
terminate the hiring or to purchase the goods.
Object : the object of the hire –purchase agreement is to ensure that the property in the goods
remains in the owner unless and until the hirer exercises the option to purchase the goods.
OPTION TO PURCHASE :
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A hire-purchase agreement is sometimes more than a simple contract of hire since it confers on
the hirer the option to purchase the goods.
By granting the option , the owner is said to have made an irrevocable offer to sell the goods
to the hirer if the conditions set out in the agreement are fulfilled. Usually, the condition
referred to here is the full payment of the hire purchase price.
On the hirer’s part however, he is under no obligation to buy the goods. He may exercise the
option, that is, he may accept the offer (to sell) once he has fulfilled the conditions-by
completing the payment schedule under the agreement.
But he may also elect to terminate the hiring and return the goods to the owner without buying
the goods.
In sum , the hirer has the power to purchase the goods but is not bound to do so.
The ‘option to purchase’ may be drafted in one of two ways :
1. Upon due performance of all the terms of the agreement, the hirer may be entitled to
purchase the goods upon payment of an additional (and usually nominal) sum called
the option fee.
Here the hirer takes the goods on the Hire for a stated rent an makes the periodic payments
until the end of the Hiring period. He then exercises the option to purchase by paying an
additional sum of money (i.e. the option fee), at the end of the period and thereafter
becomes the owner of the goods.
2. Secondly, the stated rents payable by the hirer may include the option fee, so that at the
end of the period no new or additional payment s required. Here upon due performance
of the terms of the contract, i.e. on due payment of all the installments, the property in
the goods automatically vests in the hirer.
The definition in section 24 uses the words “may” and “will”. So in a hire –purchase
agreement under the common law, the important point is that the hirer may at any time
before he exercises his option to purchase terminate the agreement by returning the goods
to the owner. the hirer is not under a legal obligation to conclude the transaction.
Per Lord Watson in Helby v. Mathews “these stipulations, in my opinion constitute nothing
more or less than a contract of hiring terminable at the will of the hirer coupled with a
condition in his favour, that if he shall elect to retain the piano until he has made all the 36
monthly payments as they fall due, it shall become his property.”
Hire-purchase against credit sale transactions
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● The feature which distinguishes a credit sale transaction from a hire-purchase
transaction is that in a credit sale transaction, the buyer is not merely a bailee of the
goods , since property passes to him after the contract is completed and the goods are
delivered to him. The buyer in a credit-sale transaction becomes an owner of the goods
even though the price is yet to be paid (payable in instalments). In a hire-purchase
agreement, the hirer becomes owner only after effectively exercise his rights
● A credit sale transaction being a contract for the sale of goods is governed by the
provisions of the Sale of Goods Act. See Obeng v. Gyamfi (1966) C.C. 64
● The rights of the seller in a credit sale agreement are less substantial than the rights of
an owner in a Hire-Purchase agreement .the seller in a credit –sale transaction parts
with the property in the goods (in accordance with the provisions of the sale of acts eg.
on delivery).
The owner in a Hire-Purchase Agreement retains the absolute property in the goods. If the
buyer defaults , the seller in a credit sale agreement is generally entitled to sue for the
price. Normally he cannot recover possession of the goods because they have become
the property of the buyer.
In the case of hire-purchase, since the owner retains property in the goods, if the hirer defaults
in paying the instalments, the owner would be normally entitled
● The rights of a buyer in a credit sale agreement are more substantial than those of a
hirer under the High Purchase Agreement.
In a credit sale transaction, the buyer, if he has obtained possession of the goods, can pass a
good title to a third party by virtue of his ownership.
The hirer in a Hire-Purchase Agreement under the common law, cannot pass a good title to any
third party until he has effectively exercised his option to purchase.
The High Purchase Act govern two kinds of transactions: hire purchase agreement, and
conditional sale agreements.
Section 24 of the act, the definition section defines a conditional sale agreement as an
agreement for the sale of goods, under which the purchase price or part of it is payable
in installments and the property in the goods is to remain in the seller even though the
buyer is in possession of the goods until certain conditions specified in the agreement
are fulfilled by the buyer.
A conditional sale agreement therefore is essentially a sale transaction under which the price is
payable in installments and the seller retains the property in the goods until the
fulfilment of all the conditions specified in the contract.
The Conditional Sale Agreement is different from a credit sale transaction in that under the
Conditional Sale Agreement, the transfer of property takes place at a future time and
only upon the fulfilment of the specified conditions. Property does not pass to the buyer
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immediately but only upon fulfilment of the conditions. A buyer in a conditional sale
agreement has possession but not property.
It should be noted that: The Conditional sale Agreement is a ‘conditional’ sale where as the
credit sale is an “unconditional sale” agreement.
CONDITIONAL SALE AGREEEMENT AGAINST THE HIRE-PURCHASE AGREEMENT (UNDER
COMMON LAW)
As between the parties, the Conditional Sale and Hire Purchase Agreement appear to be very
similar. In both cases, the buyer or hirer has possession of the goods only and acquires
the goods as owner only at a later date and upon fulfilment of specified conditions.
the critical or essential difference between the two is that whilst the buyer in a conditional sale
agreement is legally bound to purchase the goods, the hirer is under no obligation but
merely as an option to purchase.
The buyer in a Conditional Sale Agreement unlike the hirer in a hire-purchase agreement has
the option to elect whether to buy the goods or return them to the seller.
Under the conditional sale agreement, the person who takes the goods is under a binding
obligation to purchase the goods and therefore the parties to a conditional sale
agreement are rightly described as buyer and seller.
In the case of the HPA, the person who takes the goods is not under a binding obligation to
purchase but may elect whether to purchase the goods or terminate the hiring and
therefore the parties are properly referred to as The Hirer and the Owner.the hire
becomes the buyer only after the exercise of the option to purchase.
Another important distinction between the HPA and the CSa is that a buyer in a CSA, even when
he has not fully paid for the goods or fully performed the conditions stated in the
contract can transfer a valid title to a third party under section 32 (1) of the sale of
goods Act, if the requirements therein are satisfied.
It is clear that a hire in a HPA cannot rely on section 32 (1) of the SGA because he is not a buyer
of goods re even one who has agreed to buy the goods.
As was stated earlier, it is important to note however that the CSA and the HPA have
traditionally been treated as equivalents under most regulatory statutes. The two are
considered identical and most statutes enacted govern hire purchase agreements govern
conditional sale agreements as well.
Under the Hire Purchase Decree, 1974, NRCD 292, hire purchase and conditional sale
agreements are , to all intents and purposes equated where such agreements fall under
statutory control.
ORIGIN AND DEVELOPMENT OF HIRE-PURCHASE
Hire purchase trading is believed to have started in England in the second half of 1846.
Eventhough the practice of selling goods on credit with the price being payable in
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installments is of very early origin, the appearance of hire-purchase as a commercial
institution is said to have began in the second half the nineteenth century.
Hire Purchase Trading became very popular in England with the introduction of the Singer
Sewing Machine. The Singer Manufacturing Co. is said to have let out it machines to its
customers under hiring agreements which included an option to purchase and the sums
paid by way of hire rent were entered as part of the purchase price where the purchaser
exercised the option to purchase.
Hire purchase transaction were then extended to cover the sale of wagons furniture, motor cars
and even extended to the sale of false teeth. In the years following , hire-purchase
became a very popular means of obtaining goods on credit and was available for the
acquisition of a wide range of consumer goods.
It must be observed that in all these years when hire-purchase trading was in force, the rights,
duties and obligations of the parties were governed solely by the common law, i.e. the
general contract law.
It must be observed however, that in all these years when the hire-purchase system was
increasingly in use, the rights, duties and obligations of the parties were governed by the
common law i.e. the general contract law. there was no special legislation goverening
they were treated as ordinary contracts
Unfortunately, the expansion of hire-purchase trading brought with it certain abuses and
unscrupulous practices which the common law was incapable of remedying. The lack of
statutory control of hire-purchase transaction created a situation where owners of
goods, by reason of their stronger bargaining power were free to exploit hirers.
THESE ABUSES OF THE HIRE PURCHASE SYSTEM INCLUDE THE FOLLOWING:
1. Signing of Blank Hire Purchase forms : hirers were induced to enter into hire purchase
agreements which they did not understand an after the signing of these agreements,
the hirers had no way of resigning from these contracts without considerable liability.
The common law in such circumstances, offered no relief to the party who signs a
document without reading it.( the only available defence being the plea of non –est
factum, which tended to be considerably difficult to establish).
Sometimes, hirers were made to sign blank hire purchase forms and at a later date, the owners
inserted more onerous terms without the knowledge of the hirers.
● Snatch –Back Device : this is another prevalent practice of hire purchase
dealers/owners. Here unscrupulous owners encouraged their customers to take on hirepurchase commitments which were well beyond their means. The aim of such dealers
was to allow the hirers to fall into arrears towards the end of the hiring period when
most of the instalments had already been paid so that the owner could quickly
repossesses the goods upon the hirer’s default. This way, the owner could make for
himself considerable profit without having to part with the goods. This state of affairs
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●
●
●
These
was even worsened by the decision in the case of Cramer v. Giles (1883) 1 Cab & El 151,
in this case, it was held that the act would not interfere to protect a hirer in default, so
that even if he defaulted on the last instalment only, having punctually paid all the
previous instalments, the owner was still entitled to terminate the agreement and
recover possession of the goods immediately without having to return any part of the
sums paid.
Widely Drawn Exclusion Clauses: apart from these abuses, hirers also suffered from
widely drawn clauses which the owners included in the agreement to exclude all
conditions or warranties in respect of the quality of the goods or their fitness for any
purpose. The result was that hirers had goods foisted on them which were totally unfit
for the intended purpose, but for which they were nevertheless obliged to pay for.
Hirer’s liability upon termination: as already noted, a hirer in a HPA is not legally
bound to complete the payments to the end of the hiring period. But may elect to
return the goods to the owner and thereby terminate the hire purchase agreement.
However, owners of goods inserted in eth HPA certain clauses known as “minimum
payment clauses” which required the hirer to pay upon termination, exorbitant charges
for depreciation of the goods etc. these charges which were payable on termination
were so prohibitive that most hirers were discouraged from attempting to terminate the
agreement.
No Requirement to state the Cash Price and The Hire-Purchase Price :another difficulty
which the hirer faced was that it was virtually difficult for the hirer to ascertain how
much he was paying by way of finance charges or interest for the credit facility extended
to him. this was because , the owner was not under any obligation to inform the hirer
how much the price of the goosds would have been if they had been purchased for
cash.ie. thecash price. As a result , the owner could charge an excessive rate of interest
without the hirer being aware of that fact.
drawback or abuses led to the introduction of Hire purchase legislation in the UK. In
1938, the Hire –Purchase Act was introduced in the UK which has influenced our law on
hire purchase.
HISTORY OF THE LAW OF HIGH PURCHASE IN GHANA FROM 1958 TO DATE
Before 1958, the law relating to all kinds of sale transactions , ie. outright sales, credit sales,
hire-purchase transactions, conditional sale Agreements were governed by :
The common law and the English statutes of General Application.
These included :
● The Fators Act of 1823, 1825 and 1842
● The Mercantile Law (Amendement Act of 1856, etc.
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In 1958 however , the Hire Purchase Act 1958, Act 55 was passed in Ghana to regulate only
high purchase agreeements. What that meant was that after , 1958 contract for the sale of
goods and conditional sale agreeements continued to be goverend by the common law and
English statutes of general application.
In 1962, the Sale of Goods Act, Act 137 was enacted to govern the contract for the sale of
goods as well as high purchase agreement. The aim of the drafters of the sale of Goods Act
was to cover in one statute the grounds covered by the English Sale of Goods Act of 1893,
English Hire Purchase Act of 1938 and the Factors Act of 1889.
THE FUSION OF HIRE –PURCHASE AND SALE TRANSACTIONS UNDER THE S.G.A. ACT 137 ,
1962
The Sale of Goods Act in order to regulate both Hire Purchase and Contract of Sale in one
statute achieved a fusion between outright sales and hire purchase transactions by defining
a contract of sale to include a hire –purchase transaction. The fusion between the law of
high purchase and the law of sale was achieved by section 1(2) of the sale of goods Act. So
the section tried to merge the definition of a contract of sale of goods with the definition of
a hire purchase agreement.
Under section 1(2) of the Sale of Goods Act, it was provided that “ where by virtue of one
or more contracts , a person agrees for value to bail goods to another on such terms that the
property in the goods may at the option of the bailee pass to the bailee, then for the
purposes of this Act, the person is deemed to have agreed to transfer the property in the
goods to the bailee, and the bailor shall be deemed to be the seller and the bailee shall be
deemed to be the buyer.”
Section 1(2) of the Sale of Goods Act effectively defined a hire-purchase agreement as a
contract for the sale of goods and thereby brought hire – purchase agreements within the
ambit of the Sale of Goods Act. This meant that all the rules provided for under the Sale of
Goods Act relating to the quality of the goods, fitness of the goods, etc. applied to hirepurchase agreements as well as to outright sales.
In addition there was Part 8 of the Sale of Goods Act which was included to apply exclusively
to Hire –Purchase contracts
Furthermore, section 81, the definition section defined a hire-purchase contract as a
contract of sale of goods in which the price is to be paid in five or more installments.
JUSTIFICATION FOR THE FUSION
The drafters of the sale of gods act justified this fusion on two main grounds:
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1. Firsts of all, they asserted that the real intention of the parties to a hire-purchase was
the sale and purchase of the goods involved. It was claimed therefore that by defining a
hire –purchase agreement as a contract of sale, the Act gave effect to the real intention
of the parties. the Memorandum to the Sale of Goods Act sated : “ in any event contract
of hire purchase is in reality for the sle of goods in which the price is paid by
installments, although in law there may be certain important differences”.
2. Secondly, the drafters considered it undesirable that certain sale transaction be
governed by one law (the sale of goods Act), and others governed by a different law (i.e.
The Hire Purchase Act). The justification therefore was that by fusing hire purchase
transactions with sale contracts, there could be one uniform Regulatory Law for all the
various kinds of sale transactions. It is the memorandum to the Sale of Goods Act, it is
stated that there was no justification for the continued separate treatment of the sale of
goods contract and hire-purchase contracts as was traditional in English Law. also it was
believed that there was no reason why eth special provision relating to hire purchase
should not be applied to all goods.
This broadly speaking is what the sale of Goods Act proposed to do. To cover in one statute
the grounds covered by the three English Acts – Sale of Goods Act (of 1893); the Factors Act
(1889) and the Hire Purchase Act 1938
After 1962, ie.after the enactment of the Sale of Goods Act (1962), hire –purchase
transaction were brought within the legal definition of contracts of sale so that the implied
conditions and warranties relating to quantity of the goods etc applied with equal vigor to
outright sale and hire-purchase.
PROBLEMS CREATED BY THE FUSION
1. Firstly , It was a misconception that a high purchase agreement was a contract of sale.
This is because in essence a true hire-purchase agreement can never amount to a
contract of sale. This is because the hirer in a HPA is under no binding obligation to buy
the goods.
2. Definitional problems : the Sale of Gods Act in section 81 defined a hire –purchase
agreement as “ A contract of sale in which the purchase price is to be paid in 5 or more
instalments”. This definition was found to be defective because it was wide enough to
cover all kinds of of sale transactiosn including credit sales and conditional sale
agreement but ironically did not cover the true common Law Hire –purchase transaction
since at common law a hire purchase agreement was certainly not a contract of sale
These problems led to the undoing of the fusion. Leading to the promulgation of the High
Purchase Act,N.R.C.D 292
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The draftsman makes the following admission in the opening paragraph ofhte memorandum of
the decree :
“ This decree which follows the recommendation of the law reform commission modifies the law
relating to hire-purchase and conditional sale agreements. Sicne 1962, these two forms
of credit transactions have been regulated by the Sale of Goods Act, 1962, Act 137.
Owing to difficulties caused by the fusion of the law of sale of gods, hire –purchase and
conditional sales in one act, it has been felt advisable to deal with hire –purchase and
conditional sales separately in this decree.”
SCOPE OF THE HIRE PURCHASE DECREE NRCD 292
The Hire Purchase Decree applies exclusively to hire purchase agreements and conditional sale
agreements. All other sale transactions (outright sale and credit sales) are governed by
the Sale of goods Act.
In spite of the new law, it could be argued that Hire purchase agreements are still goverened by
the Sale of goods Act ad the definition of hire purchase in section 81, no mention s made
of section 1(2).
It would however not be realistic to argue that since section 1(2) has been saved HPAs continue
to be governed by the SGA, because such an argument would run counter to the spirit
and avowed purpose of NRCD 292.-which is to provide rules to regulate hire-purchase
and conditional sales exclusively.
FORMAL REQUIREMENTS FOR THE FORMATION OF A HIRE PURCHASE AGREEMENT UNDER
THE HIRE PURCHASE DECREE.
SECTIONS 1-3
These sections stipulate certain requirements which must be fulfilled for the creation of a valid
and enforceable high purchase agreement.
● Firstly, before a high purchase agreement or a conditional sale agreement is made, the
owner or seller must state orally and in writing to the prospective hirer or buyer the cash
price and the hire purchase price or the total purchase price. The total purchase price is
in reference to the conditional sale agreement-see section 2.
“before an agreement is made, the owner shall state orally and in writing to the prospective
buyer or hirer…the price at which the goods may be purchased for cash and the hirepurchase price ...”
● Secondly, for the hire-purchase agreement or Conditional Sale Agreement to be
enforceable, it must be in writing and signed by the hirer or buyer , and by or on behalf
of all the other parties to the agreement.-see section 1(a)
it should be noted that the hirer is required to sign personally.
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Thirdly, according to section 3 of the Decree, for a HPA to be valid and enforceable, it must
contain the following:
a. A statement of the cash price and the Hire –purchase price of the goods to which
the agreement relates.
b. A statement of the amount of each installment to be paid by the hirer and the dates
or the mode of determining the dates on which each installment becomes payable.
c. A description or list of the goods to which the agreement relates sufficient to identify
the goods; and
d. A notice which is at least as prominent as the rest of the contents of the agreement,
in the terms set out in the First or Second Schedule.
The notices in the 1st and 2nd schedules contain a statement acknowledging:
1. The hirer’s right to terminate the HPA and a statement of his liability upon
termination; and
2. A statement acknowledging the statutory restriction on the owner’s right to
recover the goods.
Section 3(2) stipulates that the owner is required to deliver a copy of the hire purchase
agreement to the hirer within fourteen days after the making of the agreement.
Discretion of Court to Dispense with specific Requirements
According to section 3(3) where the parties fail to comply with the requirements in section 3(1)
(b) and (c) and section 3(2), the court can exercise its discretion and still hold the agreement
enforceable if it considers it just and equitable to do so and if it is clear that the omission of
those requirements has not prejudiced the hirer in any way.
The effect of section 3(3) therefore is that where the parties fail to include in the agreement the
amount of each instalment/ date and the description of the goods, or where the owner fails
to deliver a copy of the agreement to the hirer within the stipulated period of 14 days, the
courts may, in exercise of their discretion, nevertheless hold the agreement enforceable if it is
clear that the non-compliance with these requirements has not in any way prejudiced the
position of the hirer.
It is important to note that the discretion of the court can be exercised only when the parties
fail to comply with the specific provisions mentioned in section 3(3), namely sections 3(1)(b)
and (c) and 3(2)see Ekuona Construction Co. Ltd v. Bank For Housing And construction [1992] 2
GLR 222
FACTS: by a series of international agreements between the government of the Republic of
Ghana and the World Bank, the Government of Ghana obtained a credit loan from the World
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Bank for the purpose of financing Ghana’s roadsmaintenance projects. By an agreement
between the parites, the facility was given to the defendant, The Bank For Housing and
Construction and the Ghana Highway Authority
Under one of the projects, the B.H.C. was to procure creditable Ghanaian road contractors to
carry out road maintenance works to be awarded by the Ghana Highway Authority. The loans
were to be given to the contractors by way of provision of equipment, plant and machinery
which were to be paid for by these contractors together with interest from payment vouchers to
be issued by Ghana Highway Authority to , for work done under the various contract works
awarded them. The plaintiff-company whose business included road construction and
maintenance applied for and was accepted.
Certain equipment were released to the plaintiff-company for work on contracts awarded it by
Ghana Highway Authority. The plaintiff-company worked on the project for about three years
when B.H.C. claiming that the plaintiff company had breached the terms of the agreement
terminated the contract and seized the equipment. The plaintiff company contended
persistently that it had not breached the contract and that the seizure of the equipment was
wrongful and unlawful. The plaintiff therefore brought this action against B.H.C. , claiming inter
alia a declaration that the impoundage by the defendant of the equipment, plant and
machinery was wrongful and unlawful. BHC however justified its action on the ground that the
plaintiff had fialed to settle its financial commitments under the agreement and aht G.H.A. had
terminated its contract with the plaintiff. The parties were also in dispute as to whether their
agreement was a loan agreement simpliciter or a hire-purchase agreement. The court found
also on the evidence that even though the parties did not execute a hire-purchase agreement,
the contract contained description of the equipment; their value; the purchase price
(including interest) , and the manner of payment. However, the agreement did not state the
amount of each installment, the date and the mode of determining the date from payment. It
also did not contain a list of the equipment sufficient to identify them. The court also found
that G.H.A. had not terminated the contract of the plaintiff at the time B.H.C. seized the
equipment and that rather the plaintiff had been granted an extension of time by G.H.A. to
complete the contract. Furthermore, the court found that at the time of the seizure, the
plaintiff had paid more than 50 per cent of the value of the equipment; and also that
subsequent to seizure G.H.A. terminated the contract with the plaintiff.
Issue : whether or not the agreement was a loan transaction or a hire purchase agreement.
holding :the court of Appeal held inter alia that although the plaintiff had possession of the
equipment, the property in them was only to pass to the plaintiff after full payment for the
equipment. The transaction therefore fell within the definition of a “hire-purchase agreement”
by section 24(1) of the Hire Purchase Decree, 1974 (N.R.C.D. 292) and that the agreement also
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satisfied substantially the condition for a hire – purchase transaction set out under section 3(1)
of N.R.C.D. 292 notwithstanding the absence, contrary to section 3(1)(b) and (c) of N.R.C.D.
292. And since the omission of the provisions of section 3(1)(b) and (c) had not prejudiced the
plaintiff, the court would dispense with eth requirement under the subsection. Accordingly, the
right of B.H.C. to seize the equipment dependent upon the provisions of N.R.C.D. 292.
Section 8(1) of N.R.C.D. 292 prohibited the enforcement of any right to recover
possession of "protected goods" from the hirer or buyer except by action. Section 8(4)
of N.R.C.D. 292 defined "protected goods" as goods (a) which had been let under a
hire-purchase agreement or sold under a conditional sale agreement; (b) one-half of the
hire-purchase or total purchase price of which had been paid or tendered by or on
behalf of the hirer, buyer or guarantor; and (c) the hirer or buyer had not terminated the
agreement by virtue of any right vested in him. In the instant case, the plaintiff had
almost settled his indebtedness to B.H.C. Having paid more than 50 per cent of the
purchase price, the equipment became protected goods which could not be seized
without an action in court. Accordingly, the action of B.H.C. in seizing the plaintiff's
equipment violated the provisions of N.R.C.D. 292 and consequently was premature
and unlawful.
Per J.A “ The transaction, on the evidence, is more than a mere loan transaction where money
is given to a borrower to purchase equipment himself on the loan and it is secured with the
equipment purchased and other securities. In this case ,the lender provides the money , and
uses it itself to procure equipment which does not become the property of the borrower until
full payment for the property. “
“ in this transaction , what B.H.C. gave the plaintiff-company was not money but equipment to
be paid for through interim payment certificates issued in the joint names of both the plaintiffcompany ad B.H.C. for work done by the plaintiff –company for G.H.A. evne though the plaintiff
company was to have possession of this equipment, the property in ti only passed to the
plaintiff company after full payment for the equipment. These facts clearly fit into a case of hire
purchase agreement clearly defined.
“even if the requirements of section 3(1) of N.R.C.D. 292 have not been strictly adhered to,
the court has power to dispense with conditions (b) and (c) of section 3(1) of N.R.C.D. 292. As
it would appear from the evidence, B.H.C. was the dominant party in the transaction. In
exhibit B, B.H.C. clearly sets down all the requirements save the plaintiff –company’s rights
under the agreement. I am satisfied on the evidence that the transaction between the parties
satisfied the provisions of N.R.C.D. 292. I think this is a proper case to dispense with the
requirements contained in paragraphs (b) and (c) of section 3(1) an (2) of N.R.C.D. 292 since,
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even if the requirements have not been complied with, such omission has not prejudiced the
plaintiff-company and that it is just and equitable to dispense with the requirement.
The discretion of the court does not include the power to dispense with the requirement of
statutory notice (section 3(1)(d)), the statement of the cash price and hire purchase price
(section 3(1)(a)) or the requirement that the hire –purchase agreement must be in writing . see
U.T.C. v. Johnson okoro [1965] C.C. 54
U.T.C. V. JOHNSON OKORO ( Djabanor, J)
Facts : in 1961, the defendant hire-purchased a motor vehicle from the plaintiff for the total hire
purchase price of 1,284 :12/-. The schedule to the Hire Purchase Agreement provided that after
1963:11:3d. had been paid, the owners could not retake possession of the vehicle without the
hirer’s consent or an order of the Court. (this is in tandem with the second schedule of nrcd 292see section 3(1)(d) ). By March 1962, the defendant had paid 963: 15/- pounds, leaving a
balance of 320:17/-pounds which was then overdue. Cost of repairs and insurance were also
owing. In that month, the defendant took the vehicle to the plaintiffs for repairs. On
completion, the plaintiffs refused to release it to the defendant unless the cost of repairs and all
outstanding accounts had been settled. The defendant had no money, and he was obliged to
sign a second hire purchase agreement. The schedule to this second agreement read: “ after
644:9:11d pounds had been paid, the plaintiff cannot retake the vehicle.”
In January 1963, the defendant who, in spite of the second hire purchase agreement had
apparently not paid anything to the plaintiffs again took the vehicle to the plaintiffs for repairs.
The plaintiff demanded that as a condition to commencing the repairs the defendant should
deposit 50 pounds. The defendant could not get the 50 pounds. He asked to take the vehicle
away from the plaintiffs to have it repaired outside. The plaintiffs refused to release the vehicle
until all outstanding debts had been paid.
On the defendant failing to apy, the plaitniffs instituted the present action claiming the arrears
of rentals, plus the cost of previous repairs, insurance and interest.
the defendant also counterclaimed for the amounts he had paid to date, on the ground that the
plaintiffs seized the vehicle without his consent or an order of the court as required by section
12 of the Hire Purchase Act, 1958.
Held : in view of section 4(2)(c) of the 1958 Act, the second hire purchase agreement was null
and void, because the schedule thereto was incorrectly drafted, in that it failed to state in
addition to anything else, that the plaintiffs could not retake possession “without a court
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order”.-see section 3(1)(d) of our current Decree. By January 1963 therefore, the operative
agreement was the 1961 agreement.
And so since the plaintiffs seized the vehicle without an order of the court, by s.12(2)(a) of the
1958 Act, the defendant is released from all liability under the agreement. The plaintiffs are
therefore not entitled to the amount claimed and interest thereon. They will however be
entitled to the cost of repairs and insurance.
This means that for a hire purchase agreement to be enforceable by the owner the following
mandatory requirements must be fulfilled :
1. The HPA must be in writing and signed by or on behalf of both praties;
2. Beyond that the high purchase agreement must contain the following :
3. There must be a statement of the hire –purchase price;
- Statutory Notice on the hirer’s right to terminate ; and the restriction on the owner’s
right to recover the goods
EFFECT TO THE NON-COMPLIANCE OF THESE MANDATORY REQUIRMENTS
Section 1 provides that if the high purchase agreement does not comply with the mandatory
requirements, in sections 1-3, then the agreement so made shall not be enforceable by the
owner. 1(1)
In this respect, the agreement shall not be enforceable by the owner. this means that if the
agreement does not comply with the mandatory requirements, the owner is not entitled to
terminate the agreement, however the agreement can be enforced by the hirer. See Yayo v.
Nyinase [1975] 1GLR 422.
FACTS :by an oral agreement the plaintiff agreed to buy the defendant’s second-hand vehicle for
2000 cedis. She paid a deposit of 800 cedis on the purchase price, took delivery of the vhicle
and undertook to pay the balance by six equal monthly instalments. She later paid a further
sum of 650.0 cedis bringing the total thsu paid on the purchase price to 1,450.00 cedis. Shortly
after taking delivery , the vehicle started developing mechanical faults and the plaintiff sent it to
a fitter’s shop for repairs. The defendant seized the vehicle at the fitter’s shop on the ground
that the plaintiff had failed to pay the balance of the purchase price as agreed. The plaintiff
commenced an action at the circuit court against the defendant for recovery of money he had
received under the hire-purchase agreement inter alia. The defendant disputed that the
agreement was a hire –purchase agreement. The trial judge held that the seizure of the vhicle
was contrary toAct 137 for the plaintiff having paid more than half of the hire purchase price,
he entered for the plaintiff for the sum of 1450.00 as claimed.
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On appeal by the defendant, his counselcontended , inter alia, that even if it was conceded that
the agreement in the instant case was a hire-purchase agreement, the agreement was
nevertheless unenforceable since it was not in writing as required by section 66(1) of Act 137.
ISSUE: whether failure to comply with statutory prvisions requiring that the agreement
beevidenced in writing, buyer could still enforce the agreement.
Held –Per Hayfron –Benjamin JA (as he then was) : although Act 137, s. 66 required that the
cash price in a hire –purchase agreement must be stated in writing, non-compliance with that
provision would not adversely affect the rights of the buyer because subsection 93) of that
section made it clear that it was the seller and not the hirer or buyer who would suffer for
failure to comply with that statutory provision. Consequently, the agreement despite the
absence in writing was enforceable against the defendant.
● That by virtue of the fact that the agreement constitutes a hire purchase agreement and
the buyer having paid more than five instalments and that more than fifty percent of the
purchase price in respect of the vehicle had been paid to the seller, and the seller seized
the vehicle, the buyer’s right to recover from the seller all sums paid in respect of the
contract seems unimpeachable.
Per Hayfron Benjamin “ The trend of legislation has been to limit the rights of the owner or
seller at common law, and to confer more effective rights on the buyer, hirer or consumer. The
rights of the buyer at common law have largely not been limited. The right of the hirer or buyer
to enforce a hire-purchase agreement is not affected by the absence of writing although a seller
cannot do so except the agreement is in writing or the Court dispenses with this requirement
under section 66(4) of the Act. Section 69(similar to 8 of our present Act) of the Sales of Goods
Act, 1962 (Act 137) is the high-water mark of the legislative effort at protecting the hire or
consumer from the actions of eth seller…. In this case there was admittedly a contract of sale
within section 1(2) of the Sale of Goods Act, 1962 9Act 137). The purchase price was made
payable by more than five instalments. Thee is evidence which the trial judge justifiably
accepted that more than fifty percent of the purchase price in respect of the vehicle had been
paid to the seller. The seller nevertheless seized the vehicle. The buyer’s right to recover from the
seller al sums paid in respect of the contract seems to me unimpeachable.
What does it mean when the act says the owner is not entitled to enforce –section 1(2):
● When the owner is not entitled to enforce that agreement , the first consequence is that
: the owner is not entitled to enforce any contract of guarantee relating to the
agreement –section 1(2)(a)
Coutts & Co. v. Brown Lecky and others: the plaintiffs , Coutts & Company, bankers, permitted
the first defendant, one of their customers , an infant, to overdraw his account. The
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overdraft was guaranteed by the second and third defendants, both of whom were of
age. The bank knew of the first defendant’s infancy. The defendant’s contract to repay
the loan being void by virtue of section 1 of the Infants Relief Act, 1874, the guarnators
resisted the bank’s lciam under the guarnatees on the ground that ehycound not be
made liable as guarantors of a debt rendered void by statute. The bank therefore
brought this action.
It was held that the loan agreement was void because it was loaned to an infant and the
financy being known to all parties , the guarantors of the loan, cannot be made liable
in an action on the guarantee,
● The owner cannot enforce any security given by the hirer or guarantor in respect of
monies payable under the agreement -1(2)(b)
● The owner or seller is not entitled to enforce a right to recover the goods from the hirer
or buyer-1(2)(c)
These rules are designed to ensure the owner’s compliance with the statutory requirements for
the formation of a hire –purchase agreement. These formal requirements are primarily
designed to protect the hirer from possible fraud by the owner and also to ensure that
the hirer recives all the pertinent information relating to the transaction.
PROHIBITED CLAUSES-SECTION 4
For reasons of public policy, section four of the hire purchase decree stipulates that
certaincluases if found in the hire purchase agreement will be deemed to be void and of
no effect :
1. Any provision which confers on the owner the right or the authority to enter into any
private land or premises for the prupose of taking possession of goods which have
been let under a HPA or sold under a CSA; or any provision which relieves the owner
from liability for any such entry.-4(a)
2. Any provision which restricts or excludes the hirer’s right to terminate the HPA which
is conferred on the hirer by section 5 is also void and of no effect-4(b)
3. Any provision which imposes on the hirer a liability upon termination which is
greater than that stated in section 6 is also void and of no effect-4(b). Section 6 of
the Decree provides that upon termination , every hirer shall be liable to pay to the
owner the difference between the total amount already paid and 50% of the HPA.
Any provision which requires the hirer to pay an amount of money, which exceeds
this shall be void
Also section 6 stipulates certain liabilities with respect to the goods themselves –eg. if the
goods are damaged through the hirer’s failure to exercise reasonable care the hirer
shall be liable for such damage. Any provision which imposes on the hirer strict
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liability for the care of the goods upon termination, regardless of negligence would
be void and of no effect.
4. Any provision which imposes on the hirer, in the event of the agreement being
terminated in a manner different from that stated in section 5, a liability which is
greater than that stated in section 6, shall also be void and of no effect. -4(c)
Section 5 stipulates that the hirer shall exercise his right of termination at any time before
final payment is due, by tendering to the owner a written notice of his intention to
terminate the agreement. The effect of section 4(c) therefore is to render void any
provision in the HPA which subjects the hirer to additional liability (than that stated
in section 6) on the grounds that the agreement was terminated in a manner
different from that stated in section 5
5. Any provision where by any person acting on behalf of the owner or seller in
connection with the HPA is deemed to be the agent of the hirer shall also be void
and of no effect.-4(d)
Section 4(d) must be read together with section 12 of the Decree which states clearly that
with regard to any representations relating to the condition of the goods, made by a
dealer or salesman to the hirer, the dealer or salesman shall be deemed to have
made them as agent of the seller or owner and not as agent of the hirer or buyer.
● Finally, section 4(e) renders void any provision which seeks to relieve the owner or seller
from liability for acts of default of any person acting on his behalf in connection with the
HPA or CSA.
Sections 4(d) and (e) are designed to render ineffective the device employed by Owners to
escape liability for misrepresentations and breaches of warranties made by dealers or
salesmen acting on their behalf.
THE HIRER’S RIGHT OF TERMINATION UNDER SECTION 5 OF THE DECREE
A hire purchase contract like any other contract may be terminated in any of the ways allowed
by the rules of the general contract law. Hence factors which entitle a party to avoid a
contract such as mistake, misrepresentation, undue influence, duress, illegality etc, apply
equally to hire purchase contracts.
Apart from these factors, recognized by the general contract law, every hire-purchase
agreement by definition confers on the hirer the power to terminate the agreement if he
so wishes.
Section 5 of the Decree guarantees the hirer’s right to terminate the HPA at any time before
final payment is due.
According to section 5(1) of the Decree, at any time before the final payment falls due, the
hirer, notwithstanding anything to the contrary stated in the agreement is entitled to
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terminate the hire –purchase agreement by tendering a written notice of termination
to any person entitled to receive payment under the agreement.
The right of termination has been extended to conditional sale agreements, but subject to
certain conditions.
LIABILITY OF THE HIRER UPON TERMINATION-SECTION 6
According to section 6, after the hirer or buyer has terminated the HPA or CSA , he shall be
liable to do the following :
1. Where the hirer or the buyer terminates the agreement by virtue of section 5, the
hierr or buyer is liable to pay the difference between the total of the sums of money
paid and one half (or 50%) of the hire-purchase or the total purchase price, or if the
agreement specifies a lesser amount , the buyer is liable to pay the amount so
specified.-6(1).
What if the hirer pays more than 50%? Here he will not be liable to pay any additional sum
upon termination but he will not be entitled to any refund.
2. Section 6(2) provides that after the termination of the agreement by the hirer or
buyer under section 5, the Hirer or buyer shall return the goods at his own expense
to the premises from which they were originally supplied to him.
Where the owner or seller requires the hirer or buyer to return the goods to premises other
than those from which they were originally supplied, the owner shall be responsible
for any additional expense incurred by the hirer or buyer in returning the goods to
those premises.
3. Section 6(3) provides that the hirer is liable for any loss or damage caused to the
goods by reason of his failure to take reasonable care of the goods. That liability is
similar to the provision on section 27(4) of the Sales of goods Act
4. Section 6(4) provides that if the hirer after termination wrongfully retains the goods,
the owner can bring an action to recover the goods. In such an action, the court is
empowered to order to the hirer to return the goods to the owner without giving the
hirer the option to pay for them.
HIRER’S RIGHT TO COMPLETE THE TRANSACTION
Section 7 of the Hire Purchase Decree allows the hirer to turn the HPA into an outright sale
before the end of the hiring period.
According to section 7, the hirer may convert the agreement into an outright sale by:
notifying the owner in writing of his intention to purchase the goods outright; and
the hirer must then tender to the owner on a specified date the NET BALANCE DUE;
which is the different between the HPP and the amounts paid so far.
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Section 7(2) defines the NET BALANCE DUE as the HPP less any amount paid by the hirer
under the agreement.
After the payment of the net balance due, the purchase becomes complete.
When can the right to complete the agreement be exercised?-section 7(3)
● The right of the hirer to complete the agreement may be exercised at any time during
the continuance of the agreement
● The right to complete the agreement may also be exercised within twenty eight days
after the owner or seller has taken possession of the goods, having the right to do so.
According to section 7(3)(b), an owner or seller who recovers possession of the goods from
the hirer or buyer, having the right so to do is not entitled to dispose of the goods until after
twenty eight days.
Within those 28 days, the hirer or buyer is entitled to complete the agreement by :
a. Tendering to the owner or seller the net balance due; and
b. The reasonable costs incurred by the owner in taking possession of the goods; and
c. Any amount properly expended by the owner on the storage, repair or maintenance of
the goods.
RESTRICTION ON THE RIGHT OF AN OWNER TO RECOVER PROTECTED GOODS-SECTION 8
Section 8 constitutes an important limitation on the owner’s righto f recovery of the goods upon
the hirer’s default. This is one of the most important protections given to the hirer under the
Decree.
The general rule as stated in section 8(1) is that where goods have become protected as a
result of the hirer having paid at least one-half of the HPP , the owner cannot enforce his right
to recover possession of the goods upon default except by court action.
Section 8(4) defines protected goods as goods which have been let or sold under a HPA in
respect of which one-half or 50% of the HPP has been paid or tendered by the hirer or buyer.
CONSEQUENCES OF OWNER’S RECOVERY OF GOODS IN CONTRAVENTION OF SECTION 8(1)
According to section 8(2) where the owner recovers possession of protected goods otherwise
than by court action, the following consequences will follow:
1. First of all, the HPA if not previously terminated shall be terminated i.e. the HPA shall
automatically come to an end.
2. The hirer shall be released from all liability under the agreement and shall be entitled to
recover from the owner or seller, in an action for money had and received all sums paid
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by him under the agreement , and shall be also entitled to recover any security given by
him to the owner in respect of moneys payable. See Danso v. Taylor (1966) CC 152
De HORNE AGAH V. FARKYE BROS(1967) CC 120: in the High Court , the Plaintiff sought relief
under section 12(2) of the Hire Purchase Act, 1958 and claimed the recovery of all the
sums which he had paid to the defendants under a hire –purchase agreement. he also
claimed general and special damages for wrongful seizure of the vehicle subject of the
said agreement. his claim failed, the trial judge holding that at the date of the seizure ,
i.e. April 17, 1963, the plaintiff had not paid the requisite 75% of the cost of the vhicle
and that the taking out of a third party policy on the vehicle in the plaitniff’s name was a
serious breach of the agreement and entitled the defendants to seize the vehicle; and
by the plaintiff’s consent to the seizure , it was therefore justified. The plaintiff appealed,
and the Court of Appeal per Ollennu, Crabbe and Apaloo JJA held among others that :
by reason of the provisions of section 3, of the Act, sums by way of penalty ,
compensation , damages and the like cannot properly be debited to the hire-purchase
price. On the evidence therefore, by January, 19, 1962 the plaintiff had paid a sum in
excess of 75% of the total hire-purchase price. That the defendants’ right to seize the
vehicle without recourse to legal proceedings was lost on January 29, 1962.That the
plaintiff’s remedy was limited by the Act to the recovery of sums paid by him to the
defendants.
3. Any guarantor shall be entitled to recover from the owner or seller all sums paid by him
under the contract of guarantee.
4. Under section 8(3), instead of allowing the owner to keep the goods and suffer these
consequences, the hirer can apply to the court for an order for the return of the goods
to him and for the rescheduling of the payments under the agreement.
For cases dealing with the effect of the owner’s wrongful repossession of goods, see
● U.T.C. V. JOHNSON OKORO (SUPRA): here the court held that since the plaintiff seized the
vehicle without an order of the court the defendant was released from all liabilities
under the hire purchase agreement by virtue of the fact that the goods were protected,
in that more than 50% of the purchase price had been paid.
● DANSO V TAYLOR (1969) C.C. 152
Facts : by an agreement made in January 1964, the appellant hire-purchased a second-hand
vehicle from the respondent , a car dealer. The appellant paid no deposit and was to be
responsible for the repair of the vehicle during the pendency of the agreement. He
defaulted in the payment of the instalments in June and July 1966 and on the 30 th August,
1966 the respondent wrote to him that if the appellant did not pay certain expenses
incurred when he (respondent) repaired the vehicle , he would sell it. Subsequently he
seized the vehicle and sold it on the 16 thSeptember, 1966. The appellant alleged that he had
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paid more than half of the purchase price and so under section 69(1) of Act 137 the vehicle
could not be lawfully seized except by court order. He therefore claimed from the
respondent all the installments he had paid and damages for wrongful seizure of the goods.
The respondent on the other hand contended that the appellant had paid less than half of
the hire-purchase price and therefore he was entitled to seize the vehicle without court
action.
Held allowing the appeal: since the figures appearing in the pleadings and the evidence of
the parties were inconclusive in determining how much the appellant had actually paid on
account of the hire-purchase price before the seizure, it was the duty of the trial circuit
court to have considered what the probabilities of the case showed. That the trial court
failed to do. The court of appeal found on the balance of probabilities that the appellant
had paid more than half of the hire purchase price . therespondents’s seizure without an
order of the court was consequently wrongful. And that the fact that the appellant had
breached a clause in the agreement relating to the repair of the vehicle did not justify the
seizure by the respondent.
● TAYLOR v. S. Y. SASU & SONS [1973] 1 GLR 176
Facts : By a hire-purchase agreement the appellant purchased a vehicle from the respondents.
The hire purchase price of the vehicle was 12,400 cedis and the appellant was made to pay a
deposit of 2,600 to be followed by fourteen monthly installments of 700 each. After the
appellant had paid five instalments he defaulted and the vehicle was seized by the owenrs( the
respondents). The vehicle was later released to the appellant after he had paid the sum of 610
cedis to the owners thus bringing the total payments to 6710. The vehicle was seized a second
time in October 1968 but subsequently released on payment of the installment. It was finally
seized in April 1969 in default of payment of instalments. When the vehicle was finally seized
according to the appellant he had made a total payment of 8,843 to the owners. the appellant
therefore instituted an action in the High Court claiming that by the time of the third and final
seizure, he had paid at least one-half of the hire –purchase price, and hence the respondents
were not entitled to seize the vehicle without recourse to the courts by virtue of section 69 of
the Sale of Goods Act, 1967 (Act 137). He therefore sought the court’s aid in recovering the
sums paid in part satisfaction of het hrie-purcahse price. The resondents answered that such a
claim did not lie because the original agreement was terminated by seizure and that a new hirepurchase agreement was entered into in respect of the same vehicle. According to the
respondents, the appellant breached that agreement and hence inasmuch as he paid less than
one-half of the total hire-purchase price under this new agreement, the respondents were
entitled to and did repossess the vhiecle.
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Held per Amissah JA “According to the hire-purchase agreement the price of the vehicle was
12,400. By June 1967…6,100 had been paid. It was just 100 cedis short of the 50 per cent
which the legistlation required in order to give protection. Technically the repondents were in
their rights to seize the vehicle, though only just. A month after the seizure the respondents
accepted payment of 610 cedis. This was evienced by the receipted dated 19 July 1967. From
the date and the terms of the recipet and from the owners’ own pleadings it could not be
acceted that the 610 ceids was refereable to any other agreement than than the original
agreement made no 4 August 196. On the receipt of that sum the total payments made under
the agreement became 6710, more than half the hire –purchase price. Whatever rights the
respondents had to determine the agreement without the itnernventino of the court, they
waived by this acceptance.
Per Apaloo JA “ In view of the somewhat restrictive meaning of “hire-purchase price” in Act
137, s.81. it would take a lot to persuade me that our law would sanction two sales of the
same vehicle by the same vendor to the same purchaser by two successive hire-purchase
agreements having two different hire purchase prices.”
WHAT HAPPENS IN AN ACTION BROUGHT BY THE OWNER FOR AN ORDER FOR THE RECOVERY
OF PROTECTED GOODS?9-11
According to section 9(1)(a) , the court is empowered either upon its own motion (suo moto),
or upon application by either party, to make appropriate orders as it thinks fit for the purpose of
protecting the goods from damage or depreciation pending the hearing of the action. Such
orders include an order to the hirer prohibiting the use of the goods or restricting the use of the
goods. Normally, the goods would be in the possession of the buyer.
Upon the hearing of the action, the court may make any of the following orders:
1. Order for specific delivery 9(1)(b)(i) :The court may order the specific delivery of the
goods to the owner, subject if necessary to the condition that the owner refunds to the
hirer or buyer , such part of the sums paid by the hirer as the court may direct.
This is to prevent unjust enrichment of the owner
According to section 9(2), an order for specific delivery is an order for the delivery of the goods
to the owner without giving the hirer or buyer the option to pay their value
An order for specific delivery amounts to the court terminating the agreement and trying to
restore the parties to their original position (restititio in integrum).
When will an order for specific delivery be made:
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● The courts are usually reluctant to make an immediate order for the specific delivery
unless the hirer is known to be a persistent defaulter or it is clear that his financial
position will not enable him to make the payments necessary to discharge the
agreement except over a very long period of time
● Secondly, according to section 10(1), an order of specific delivery is the only kind of
order which the courts can make where the hirer or buyer has given up control or
possession of the goods. In such a case, the hirer will be ordered to return the goods to
the owner without being given the option to pay for them. Section 10(1) states that an
order for specific delivery shall not be postponed where the hirer is out of possession
or control of the goods. See Barnes v Ameen Sangari& Co. (1968) C.C. 57.
Facts : the appellant and the respondent entered into a hire purchase agreement for the hire of
a vehicle. The agreement provided for among other things that the hire shall not
represent the said vehicle to be his own property or allow himself to be held out as the
true owner thereof not assign or part with the possession thereof or purport so to do or
assume ownership thereof and he shall keep it free and exempt from legal processes
and that a breach will entitle the owners to seize the vehicle. By August 1960, the
appellant had paid to the respondent more than 75% of the hire-purchase price. On the
14th December 1960, the vehicle was attached at the instance of one JKK in execution of
a decree of a local court. The appellant made a certificate on a copy of the attachment
notice in these terms: “ I hereby certify that the above –mentioned Austin lorry … is for
me, an was seized under a writ of fifa…(sgd). B.A. Barnes, 16.12.60”.
On the 19th December, 1960, J.K.K. handed to the sheriff a letter requesting him to release the
lorry which was the released to the respondents’ manager. He in turn returned it to the
Ultimately , the appellant sued the respondent in the High Court , for money received on a hire
purchase agreement and damages. The claim was dismissed , the trial judge holding that
as possession of the vehicle was taken from a third party, i.e. the seriff, section 12 (2) of
the act did not apply. [section 12(1) where goods have been let under a hire –purchase
agreement and sevnty –five per cent of the hirer –purchase price has been paid,
whether in pursuance of a judgment or otherwise , or tendered by or on behalf of the
hirer or any guarantor, the owner shall not enforce any right to recover possession of
the goods from the hirer otherwise by an action.”-this is similar to protected goods
under section 8 of our hire purchase act.
On appeal it was held –(Azu Crabbe , LasseyJJa) (ollennu J.A dissenting)
● The key words in section 12(1) are , “enforce any right ot recover possession of the
goods from the hirer” and to avail himself of the protection providd by that section the
hrier must show not only that he paid 75% of the hire-purchase price but also that the
owner , without recourse to legal proceedings, recovered possession of the hired vehicle
from him.
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● Per Crabbe JA “The certificate made by the appellant in the notice of attachment was
repugnant to and inconsistent with, the terms of the hire –purchase agreement and on
that breach the owner had the right not merely to terminate the agreement but to the
immediate possession of the thing hired.
“Section 13(5) puts the appellant in this case completely out of court, for as between the
owner and the hirer the court has no power under the act to order specific delivery of
the goods to the hirer who is out of possession of the goods or is unable to pay the
balance of the hire –purchase price due for the gods or has lost control of them. ..it
follows therefore in my judgment that the combined effect of subsection (5) and (8) of
section 13 is that where the hirer is out of possession the court has no alternative but
to order the delivery of the goods to the owner, notwithstanding that 75% of the hirer
–purchase price has been paid.
Under section 9(b) of our Act, section 8 is subject to section 11 and 12.
2. Postponed Order for specific Delivery: The second kind of order which the court can
make is to make an order for specific delivery, but postpone the operation of the order,
on condition that the hirer or buyer pays the unpaid balance on terms specified by the
court, having regard to the means of the hirer and other relevant matter.-see 9(1)(b)(ii)
Except where the owner accepts an offer by the hirer as to conditions for the postponement ,
a postponed order can be made only when the hirer satisfies the court that the goods
are in his possession or control at the time the order is made.-10(1)
Terms of payment under the postponed order:
The effect of the postponed order is that the court varies the terms of the original hirepurchase agreement or CSA. The court is given broad powers to set out the manner in which
the unpaid balance of the HPP must be paid by the hirer. The judge must of course exercise his
discretion judicially and in fixing the time and amounts of payment of the unpaid balance, he is
specifically enjoined to have regard to the means of the hirer. This kind of order helps to give
the hirer or buyer a second chance to make goods the agreement.
Generally when a postponed order is made, the terms of the original HPA are varied by the
courts. However, the new terms are not always given at the initiative of the court. The owner
and the hirer on their own initiative can agree on the terms for the postponed order and when
they so inform the court, the court will implement their wishes. In such a case, the court must
give effect to the wishes of the parties without regard to the fact that the hirer may not be in
possession of the goods.-10(2)
EFFECT OF POSTPONED ORDERS –SECTION 11
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1. During the pendency of the postponed order the hirer is deemed to be the Bailee of the
goods in accordance with the terms of the new agreement.
2. Secondly, the new conditions of payment of the hrie purchase price ( as imposed by the
court on its own initiative or at the request of the parties) supersede the terms of the
payemtn under the original agreement.
3. In making the postponed order, the court may vary or alter some of the other terms of
the agreement other than the terms of payment. For example, the terms of the contract
of guarantee as it deems necessary.
4. If the hirer fails to comply with the tersm of the postponed order, the owner is required
to ititiate an action against the hrieronly in the corut that made the postponed order.
The reason is that , that court would be already familiar with the parties, the agreement,
and the tersmfo the order , and therefore will be in apostion to deal comprehensively,
fairly and efficiently with the problems which may arise.
5. Finally , section 11(6) provides that while the postponed order is in effect, either of the
parites may apply to the court to have the order revoked varied or otherwise amended.
3. Split Order -9(1)(b)(iii) : the third type of oder which the court can make is an order for
the Specific dlievery of a part of the goods to the woner, and the transfer to the hrier of
the owner’s title toe the remainder of the goods. This is normally referred to as “Split
Order” and it presupposes that the goods are divisible.
Where the goods can easily be divided, the courts may allow the hirer to keep a portion of the
goods, the value of which approximates the installments paid so far and require him to
return the remainder.
Where however the goods are not divisible (for example a car), such an order cannot be made,
and in such acase it would be more appropriate for the court to adopote the first
,aporack ,ie. order the pseicife deliver of the goods to the owner, but order the owner to
refund to the hirer or buyer,, such amount as the court may deem necessary in the
circumsancesot prevent the unjust enrichment of the owner.
REPRESENTATIONS AND TERMS (SECTION 12-15)
The general rule as stated in section 12(1) is that notwithstanding any disclaimer in the HPA
any representation with respect to the goods, made either orally or in writing by a
dealer or salesman to the hirer in the course of any antecedent negotiations between
them shall be deemed to have been made by the dealer or salesman as agent of the
owner or seller.
This provision deals with situations where the HPA is concluded between a FinanceCompanies
and the hirer through a dealer or salesman.
Financing Ltd v Stimson [1962} 3 ALL E.R. 386
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Facts :the defendant saw a motor car on the premises of a dealer and signed a hire-purchase
form provided by the plaintiff , a finance company and produced by the dealer. The form
contained amongst others, clauses that the agreement should be binding on the finance
company only on acceptance by their signature, that the hirer acknowledged that before he
signed the agreement, he had examined the goods and satisfied himself that they were in good
order and condition, and that the goods should be at the risk of the hirer from the time of
purchase by the owner. upon payment of the first instalment by the defendant he was allowed
to take possession of the motor car, but being dissatisfied with it after two days, he returned it
to the dealer, saying that he did not want it and offering to forfeit the installment which he had
paid. Neither the defendant nor the dealer informed the finance company of the return of the
car. On one night the car was stolen from the dealer’s premises and recovered severely
damaged. On the following day, the finance company signed the agreement. Subsequently the
finance company sold the damaged car and claimed damages from the defendant for breach of
the hire purchase agreement or as bailee on the terms of the agreement.
Held : it was held among other things that the return of the motor car by the defendant to the
dealer amounted to revocation of the offer by the defendant since on the facts of the case, the
dealer had ostensible authority to accept the revocation of the offer on behalf of the finance
company.
Per Lord Denning “ the crucial matter in the case is whether there was ever binding
agreement between the defendant and the plaintiffs. The document which the defendant
signed on 16 March was only an offer .before it was accepted he returned the car to the dealr
and made, it clear that he did not want the car any more. Was that a revocation of offer? To
my mind that was a clear revocation provided that it was made to a person having authority to
receive it.”
“…in most of these hire-purchase transactions , the dealer is for many purposes the agent of
the finance company….the dealer holds the necessary forms ; he hands them over to the hirer
to sign; he forwards them to the finance company; he receives the deposit as agent for the
finance company; he receives from the finance company information that they are willing to
accept the transaction; and he is authorised to pass on that communication to the hirer. he was
in this very case the agent on behalf of the finance company to see that the insurance cover
was all in proper…”
Section 12(3) defines representation to include any statement or undertaken whether
constituting a condition or warranty or not.
IMPLIED TERSMS – 13-15
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● QUIET POSSESION -13(1)a : there shall be implied in every HPA a term that the hrier or
buyer shall have quiet possession of the goods;
This means that in addition to putting the hirer into possession of the goods, the owner must
leave him in peaceful possession of them during the pendency of the agreement.
It should be noted that this implied term is breached only where the hirer’s enjoyment of
possession is interfered with either by the owner himself or by the lawful acts of third
parties. the owner for an example of lawful acts of interference is not liable or any
interference by persons having no lawful claim to possession.
For an example of lawful acts of interference see Niblett Ltd v Confectioners Mterials Co. LTd
[1921] 3 K.B. 387
Facts :a firm who dealt in confectioners’ materials agreed in writing to sell condensed milk in
tins and of a certain standard at a price including insurance and freight from New York to
London. Payment was to be made in cash on receipt of the shipping documents. The
buyers received the documents and paid the price. The goods arrived bearing a name or
brand which was an infringement of the registered trademark of certain manufacturers
of condensed milk, at whose instance the commissioners of customs detained the
goods. The buyers were obliged to remove the name or brand in order to get possession
of the goods and could only ell them at a loss without any distinctive mark. In an action
by the buyers against the sellers for breach of warranty, it was held among other things
that the selelrs did not have a right to sell the goods since it bore a name which was an
infringement of the rgistered trademark of another acomapny and that they also
breached the implied warranty of quite possession of het buyer.
Per lord Atkin“ I think there was also a breach of the implied warranty in sub-s.2, that the buyer
shall have and enjoy quiet possession of the goods. It may be that possession would not
be disturbed if the only cause of complaint was that the buyer could not dispose of the
goods, and that the warranty is confined to disturbance of possession of the goods
delivered under the contract of sale. The warranty so interpreted was broken. The
appellants were never allowed to have quiet possession. They had to strip off the labels
before they could assume possession of the goods. Probably this warranty resembles the
covenant for quiet enjoyment of real property by a vendor who conveys as beneficial
owner in being subject to certain limitations, and only purports to protect the purchaser
against lawful acts of third persons and against breaches of the contract of sale and
tortious acts of the vendor himself.”
● Freedom from encumbrances :section 13(1)b states that there is an implied term that
the goods shall be free from any charge or encumbrance in favour of any third party at
the time when property is to pass to the hirer or buyer.
Encumbrance refers to any claim , charge , lien or liability attached and binding the property.
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It should be noted that this term does not come into operation until the time when property is
to pass to the hirer, usually at the end of the agreement so that even if there is an
encumbrance binding the goods at the time it was delivered to the hirer, the owner
would not be in breach of this term provided he procures a discharge of the
encumbrance before the time fixed for the exercise by the hirer of his option to
purchase.
● Right to sell the goods : section 13(1)(c) states that the owner has the right to sell the
goods at the time when the proerety is to pass.
● According to section 13(2)(a) and b, where the hirer or buyer , either expressly or by
necessary implication has made known to the owner or seller the particular purpose for
which the goods are required, or in the course of antecedent negotiations has made that
purpose known to any person by whom the negotiations were conducted, there shall be
, subject to section 14 , an implied term that the goods shall be reasonably fit for that
purpose.
Breach of Implied terms
Under section 13(3), a breach of any of the above implied terms by the owner gives the hirer a
right to damages in respect of the breach , or to any other remedy that the Court thinks
appropriate.
Implied term as to merchantable quality –section 14 : 14(1) enacts that in a hire-purchase
agreement there is an implied term that the goods are of merchantable quality at the
time of delivery.
What is merchantable quality :
The term “merchantable quality” has been said to require that the goods must be in such
condition that a reasonable man, acting reasonably , would after full examination accept
the goods in performance of his offer to buy them. See Bristol Tramways & Carriages
Co. Ltd .v. Fiat Motors Ltd [1910] 2 KB 831, 840-1
IN THE CASE OF Bartlett v. Sidney Marcus Ltd [1965] 2 All E.R. 753, it was stated that : “Goods
will be merchantable if they are in a usable condition, although not perfect A second
hand car, for example, may not be in perfect condition but may still be fit for use.”
“Merchantable does not mean that the thing is saleable in the market simply because
looks alright; it is not merchantable…if it has defects which make it unfit for the only
proper use but which are not apparent on ordinary examination.”
The implied term as to merchantable quality does not arise in certain exceptional situations:
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● Where the hire has examined the goods or sample of the goods before delivery, there
will be no implied terms as to merchantable quality in respect of defects which ought to
have been revealed by the examination. 14(2)
● Where the goods are sold or let as second hand goods and they have been so described
in the agreement and the parties have expressly excluded the implied terms as to
merchantable quality-14(3)
● Thirdly, the implied term as to merchantable quality does not apply , where the goods
are let or sold as being subject to any Defect specified in the agreement , and the
agreement contains a provision that the implied term as to merchantable quality is
excluded.-14(4)
Exclusion clauses in Hire Purchase Agreements :
Section 14(5) provides that where the goods are sold subject to a defect, and the
agreement contains an exclusion clause relating to that defect, such clause will only be
effective if the owner proves that the defect was brought to the notice of the hirer.
Breach of implied term as to merchantable quality?
Section 14(6) provides that a breach of the implied term as to merchantable quality shall
give the hirer a right to rescind the agreement.
FURTHER IMPLIED TERMS IN SPECIAL CASES
Where goods are sold or let by reference to sample-15(1)
Under section 15(1) where goods are let under the HPA by reference to a sample, there shall be
an implied term that :
i.
ii.
The bulk will correspond exactly with the sample:
The hirer or buyer will have a reasonable opportunity of comparing the bulk with the
sample.
Where goods are let under a HPA by description
Under section 15(2), there shall be an implied term that the goods will corresponds exactly
with the description.
15(3) stipulates that where goods are let or sold under the agreement by reference ot a
sample as well as by description, there is an implied term in the agreement that the goods
correspond both with the sample and the description.
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15(4) makes it clear that a breach of any of these terms by the owner or seller gives the
hirer or buyer the right to rescind the agreement.
Rights of third Parties in the Event of Wrongful Sale or Disposition of Goods by Hirer or BuyerSection 16
The general rule under common law is that a person cannot transfer a better title than he
himself possesses.
Thus if the hirer sells the goods to a third party at a time when he has not effectively exercised
his option to purchase by completing the payments due under the agreement, the third party
will not obtain any valid title to the goods unless one of the exceptions to the nemo dat quod
non habet rule applies.
Section 16 however prescribes certain conditions which if fulfilled would confer on such a third
party a valid title, even where the hirer or buyer sells the goods at a time when he did not have
title to them, and even where none of the exceptions to the nemo dat rule applies.
Third party rights:
Section 16 provides first of all that where a hirer, in contravention of the agreement, disposes
off the goods to a third party in such circumstances that the third party does not acquire title to
the goods, and the hirer subsequently does anything which gives the owner or seller the right to
terminate the agreement and recover possession of the goods:
a. The third party may retain possession of the goods which he has purchased from the
hirer for a period of sixty days, or
b. Where the owner has already repossessed the goods, the third party may, upon a
written request , recover possession of the goods in question and retain them for a
period of sixty days.
What must the third party do within the 60 days in order to acquire a valid title to the
goods?
If within the 60 days the third party pays or tenders to the owner or seller either :
a. All the amounts due and unpaid by the Hirer to the Owner or
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b. The total due under any three instalments due and unpaid from the Hirer to the Owner
Whichever is less, according to section 16(2), upon such payment, the rights and
obligations of the hirer or buyer shall be transferred to the third party ie. the third party
steps into the shoes of the original hirer or buyer and will be treated as such.
Look at the illustration in dowouna’s cocaine.
Novation
Sometimes a party to a contract may want a third party to take over the agreement from
him. A form of agreement is executed whereby the hirer assigns his rights and liabilities
under the agreement to the third party.
Generally a liability may be assigned with the consent of the party entitled, but this is in
effect the rescission of the contract and the substitution of a new one in which the same
obligations or acts are to be performed by different parties. this is called a novation and
usually can only take place with the consent of the parties.
Where the arrears specified under section 16(2) are paid, the novation is effective and the
third party replaces the Hirer or buyer under the agreement ; the owner or seller has no
choice ni the matter.
If the third party pays all the sums owing under the HPA, the transfer to the third party of all
the rights and obligations of the Hirer would seem to be reasonable.
What happens if the third party pays the total due under any three of the installments/
what happens to the unpaid arrears?
Section 16(3) states the consequences where the third party pays to the owner the total due
under any three of the instalments :
Section 16(3)(a) provides that where the third party pays the total due udner any three
instalments, the third party is not liable to the owner for any amount then outstanding in
excess of the three instalments so paid.
Section 16(3)(b) provides that the third party , who has paid the total amount of three
isntalments to the Owner can recover from the Hirer the amount he has so paid to the
owner. [this presupposes that the third party has paid in full the price of the goods to the
hirer].
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Section 16(3)(d) stipulates that where the third party pays or tenders the total due under
any three of the instalments, the contract between the third party and the Hirer shall
terminate except with regard to the payment of all amounts then outstanding.
What happens if the third party has not fully paid the purchase price to the original hirer
According to section 16(4) , where the third party has paid nothing to the hirer or buyer ,ro
where the third party is in arrears of payment to the hirer or buyer , eh shall pay to th
owner or seller, not only the said three instalments, but also what he owes to the Hirer or
Buyer, provided that the total amount so payable by the third party to the owner shall not
exceed the total amount due and unpaid from the Hirer to the owner or seller.
The purpose of the provision in section 16(4) is to ensure fairness and to prevent the owner
from making any underserved profit, that is ,to prevent unjust enrichment.
Section 16(6) stipulates that nothing in this section derogates from the powers of a hirer or
buyer in whom the property in the goods has vested. This means that the provisions of
section 16 do not affect the right of the hirer who has already exercised his option to
purchase and in whom property is already vested, to dispose of the goods to a third party.
The provisions of section 16 only apply where there is a wrongful sale of the goods by a
Hirer or buyer who does not have title to the goods at the time of the sale to the third party.
Liability of the Hirer
Section 16(6) (b) provides that nothing in this section affects the liability of the Hirer or
buyer for the wrongful sale, pledge or other disposition.
This means that nothing in the section will prevent the owner or seller from suing the hirer
or buyer for damages for the wrongful sale.
Section 16(6)(c) provides that nothing in the section derogates from any liability of the Hirer
or Buyer to the third party or the owner or seller .
This means that the Hirer or buyer (who now becomes the seller under section 16) may be
sued by the third party for breach of the implied warranty under section 10 of the Sale of
goods Act that the seller shall have the right to sell the goods. The hirer would be liable as
seller for the breach of the implied warranty. As regards the owner, the hirer may be liable in
damages to the owner for a breach of an express term in the HPA against disposition or sale
of the goods by the Hirer at any time before property passes to him.
Finally, according to section 16(8) the provisions in section 16 only apply to a wrongful sale
of goods by the Hirer or Buyer where the third party to whom the goods were sold or
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pledged received the goods for value, in good faith and without notice of the Hirer or
Buyer’s lack of title.
Where these three conditions are satisfied, section 16 will apply notwithstanding the fact
that the agreement forbids such disposition or sale of the goods and notwithstanding that
the goods have become protected.
Enforcement of provisions in the agreement –notice of default
Where the hirer or buyer fails to carry out his obligations under the hire purchase
agreement, section 17 prevents the owner from enforcing any penalties prescribed in the
agreement (such as payment of damages, forfeiture or acceleration of payments of the
installments) until the owner has made a written demand to the Hirer to carry out the
obligations in question within a specified period of not less than two weeks and the hirer
has not done so within this stipulated period of time.
Provision of information about the goods to the owner
According to section 18, where under the HPA the Hirer is to keep the goods in his
possession or control there is a duty imposed on the Hirer upon receiving a written request
from the owner to provide the owner with information as to where the goods are at the
time the information is given.
Failure to provide the owner with this information without reasonable cause within 14 days
of the receipt of the request shall make the hirer liable to pay a fine.-see 18(2)
Removal of the goods from Ghana
The general rule is that a hirer or Buyer cannot remove the goods from Ghana without the
written consent of the owner or seller.
Where the hirer contravenes this rule, he shall be guilty of an offence and liable to pay a fine
unless he can show that:
a. In removing the goods , he did not intend to deprive the owner of his ownership of the
goods; or
b. That he did not intend to defeat the rights of the owner or seller to obtain the payments
due to him under the agreement.-19(2)
Duty of the owner to supply documents and provide the hirer with information-section 20
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At any time before the final payment has been made under the HPA , the Hirer may send a
written request tothe owner for information about his liabilities under the agreement .
Upon receiving such a request, the owner or seller shall within seven days supply to the
hirer the following:
i.
A copy of the hirer purchase agreement;
ii.
A statement signed by the owner or seller stating :
a. The amount paid by the hirer so far
b. The amount due and unpaid under the agreement
c. The date on which such unpaid amounts become payable.
While the owner fails without reasonable cause to comply with the Hirer’s request , the
following consequences shall apply while the default continues :
a. The owner shall not be entitled to enforce the agreement against the hirer
b. The owner shall not be entitled to enforce any contract of guarantee or any right to
recover possession of the goods.
c. The owner shall not be entitled to enforce any security given in respect of moneys
payable under the agreement
d. If the default continues for a period of thirty days, the default shall be guilty of an
offence and liable to pay a fine.
Successive agreements section 21
Under section 21, where more than one agreement is made in respect of the same goods, in
determining whether or not the goods have become protected goods, it is the HPP specified
in the first agreement that is used. If one half of the HPP as stipulated in the first agreement
has been paid, the goods will be deemed to be protected irrespective of the fact that in the
subsequent agreeements covering the same goods, the HP has been altered.
It is when one half of the hirer purchase price of the first agreement is paid that section 8-11
will then apply. See also UTC v. Johnson Okoro.
Finally under section 23, the parties are allowed to vary their rights, duties and liabilities
under the agreement by express agreement or by custom or course of dealing between
them. However, such variations are subject to the express provisions of the Decree.
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