Law of Hire - Purchase
Governed by The Hire-Purchase Act 1967
Meaning of Hire Purchase Contract
 An agreement wherein an owner agrees to hire goods
to the hire with an option for the hirer to purchase the
goods.
 To regulate the form and contents of hire-purchase
agreement and to define the legal rights, duties and
liabilities of hirers, owners and other parties to hirepurchase agreements.
Goods Specified

S. 1 (2) Hire Purchase Act in First Schedule can be divided into 2:
 Consumer Goods – S2(1)Hire Purchase Act
means goods purchased for personal, family or household purposes
 Motor Vehicles:
i.
Invalid carriages
ii.
Motor Cycles
iii.
Motor cars including taxi, cabs and hire cars
iv.
v.
Goods Vehicles
Buses
S1(2) HPA
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Definations
Section 2(1)
of Hire-Purchase Act
• Owner
 A person who let goods to be
hirer under a hire-purchase
agreement
 A person to whom the owner’s
rights or liabilities under the
agreement have passed by
assignment or by operation of law
S2(1)HPA
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Definations
Section 2(1) of HirePurchase Act
• Hirer
 the person who takes or
has taken goods from an
owner under a hirepurchase agreement
 a person to whom the
hirer’s rights or liabilities
under the agreement have
passed by assignment or
by operation of law
S2(1)HPA
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FORMATION OF HIRE-PURCHASE AGREEMENTS
Before hirepurchase
agreement is
entered
During
formation of
Hire-Purchase
Agreement
After the making
of hire-purchase
agreement
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Before any hire-purchase agreement is entered
Part 1 of the Second Schedule
S.4(1)(a)
Stage of negotiationleading-hire purchase
agreement
Done
To the potential
Hirer
S4(1)(a)HPA
Owner or any person
other than the Dealer
acting on behalf
Shall serve
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During formation of Hire-Purchase Agreement
S.4(1)(b)
Stage of
negotiation-leadinghire-purchase
agreement
Shall serve
To the
potential
Hirer
Done
S.4(2)
When the potential
hirer
Receive Part 1 &
2 of the 2nd
Schedule
Dealer
As acknowledge
receipt
The potential hirer
need to sign the
document
Part 1 & 2 of the 2nd
Schedule
S4(1)(b)(i)(ii)
S4(3)when the
potential hirer
recieved Part 1
&11 of 2nd
Schedule
No Obligation to enter
the hire-purchase
agreement
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CONTENTS OF HIRE-PURCHASE AGREEMENT-
SPECIFIC A DATE
S.4C HIRE-PURCHASE ACT
SPECIFIC THE PLACE AT WHICH THE
PAYMENTS ARE TO BE MADE
SPECIFIC THE NUMBER OF
INSTALMENTS TO BE PAID
CONTAIN A DESCRIPTION OF
GOODS
SPECIFIC THE AMOUNTS OF
EACH INSTALMENTS
SPECIFY THE ADRESS WHERE THE
GOODS UNDER THE HIRE-PURCHASE
AGREEMENT
SPECIFY THE PERSON TO
WHOM TO BE MADE
SPECIFY THE TIME FOR THE
PAYMENT
S4.C HPA
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After the making of hirepurchase agreement
S.5(1) Hire – Purchase
Agreement
Within 14 days after
making hirepurchase
agreement
Owner need to be
serve
Hirer
Quarantors
Each copy of the
agreement
3/22/2016
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After the making of hire-purchase agreement
S. 5(1A)
S5(2)
S5(3)
• FAILED to fulfilled the
section, owner cannot
enforce the
agreement
• At any time before the
final payment, owner
need to supply to
hirer WITHIN 14 days
a copy of
Memorandum or Note
of Agreement on
payment of priscribed
Fee, if any
• Any part of the
payment consists
amount paid for the
insurance policy in
respect the goods –
the owner- within 7
days after receiving
the policy, need to
sent a copy that affect
the rights the hirer
under the policy
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IMPLIED TERMS IN HIRE-PURCHASE AGREEMENT
A breach of condition
• Is a serious breach and it goes to the ‘root’
of the contract
• Entitle the party not in breach to repudiate
the contract and sue for damages.
A breach of warranty
• Is a less serious breach
• Does not entitle the party not in breach to
repudiate the contract and sue for damages
only
Implied Terms
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IMPLIED CONDITIONS
S7(1)(b)
Right to
sell
S7(2)
Merchantable
Quality
Implied Condition
S7(3)
Fitness
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S7(1)(b) Hire
Purchase Act
Right to sell
• The owner shall have the
right to sell the goods at the
time when the property is to
pass
• Ahmad Ismail v Malayan
Motor Co. & others
Implied Conditions
14
•
S7(2) Hire
Purchase Act
Merchantable
Quality
3/22/2016
The goods shall be of merchantable quality. However,
no such condition will be implied in the following
circumstances:
a)
Where the hire has examined the goods or a sample
thereof, as regards defects which the examination
ought to have revealed ( S.7(2)(a) )
or
b) If the goods are second-hand goods and the
agreement contain a statement to the effect that:
i.
the goods are 2nd hand; and
ii. All conditions and warranties as to quality are
expressly negatived, and the owner proves that the
hirer has acknowledged in writing that the
statement was brought to his notice.( S7(2)(b) )
•
Lau Hee Teah v Hargill EngineeringSdn Bhd &
others
•
Traders Finance Corp Ltd v Rourke & others
Implied Conditions
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•
S7(3) Hire Purchase
Act
Fitness
That where the hirer makes known to the
owner the particular purpose for which
the goods are required, the goods must
be reasonably fit for that purpose, except
in the following circumtances:
i.
if the goods are second-hands; and
ii.
all conditions and warranties of
fitness and suitability are
expressly negative, and the
owner proves that the hirer has
acknowledged in writing that the
statement was brought to his notice.
Implied Conditions
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IMPLIED WARANTIES
S7(1)(c)
S7(1)(a)
Hirer enjoy quite
possession of the
goods
3/22/2016
Implied Waranties
Goods must be free
from any charge or
encumbrance at the
time when the
property is to pass.
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STATUTORY RIGHTS OF HIRER
S9: To be supplied documents and
information
S12: To assign his right, title and interest
under hirer-purchase agreement
S10: To require the owner to appropriate
payments made in hire –purchase
agreement
S13: To have his right, title and interest
passed on by operation of law
S11: To apply to the magistrate’s Court for
an order approving the removal of goods
to another place
S14: To complete the purchase of goods
earlier than due date
S15: To terminate the hiring
Statutory rights of hirer
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Statutory Right
S14 of Hire Purchase Act.
Early Completion of Agreement
Right of Hirer to complete the purchase of goods by paying
or tendering to the owner the net balance due under
the hire – purchase agreement
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S. 14(1) of Hire-Purchase Act
The hirer under a hire – purchase agreement may
If he has given notice in writing to the
owner of his intention to do so on or
On or before the day specified for that
purpose in the notice
Complete the purchase of the goods by
Paying or tendering to the owner
The net balance under the agreement
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S14(2) Hire
Purchase Act
Statutory Rights
Of Hirers
3/22/2016
• Any amount (other than the
deposit) paid or provided by or
on behave of the hirer under
the agreement
• The statutory rebate for terms
charges; and
• If the hirer requires any
contract of insurance to be
cancelled, the statutory rebate
for insurance
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S14(3) Hirer- Purchase
Act
•
•
The rights conferred on
hirer
•
3/22/2016
At any time during the continuance of the
agreement
Where the owner has taken possession of the
goods (within 21 days after the owner has
served a notice in form set out in the Fifth
Schedule) in addition to the net balance due
together with reasonable costs(if any)of
storage, repair or maintenance of the goods
incurred by the owner incidental to his taking
possession of goods.
Where the hirer has returned the goods to the
owner within 21 days after the service on him
of the notice in the form set out in the Fifth
Schedule, upon payment to the owner(within
21 days after the owner has served a notice in
the form set out in the Fifth Schedule) the net
balance due under The Act.
copyright 2006
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Statutory Rights Of Hirers
S15 of Hire Purchase Act.
Right of Hirer to Terminate The Hiring
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Statutory
Rights Of Hirers
S15(1)
Hire-Purchase
Act
• The hirer of any goods comprised
in a hirer-purchase may
terminated the agreement by
returning the goods to the owner
during ordinary business hours at
the place at which the owner
ordinarily carries on business or
to the place specified for that
purpose in the agreement
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Statutory Rights • Where the nature of the goods
Of Hirers
comprised in a hire-purchase
S15(2)
Hire-Purchase
Act
agreement or the facililtes
available at the place of business
that is would be impracticable to
return the goods to such a place,
the hirer may terminate the
agreement by returning the goods
to any place agreed to by the
parties to the agreement
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Statutory Rights
Of Hirers
S15(3)
Hire-Purchase
Act
•
•
•
Where the parties fail to agree, the hirer who
proposes to return goods to the owner under
this section may, subject to sub-section(4),
apply to a court of a Magistrate for an order
fixing the place which the goods may be
returned, and the court:
(a) shall fix the place that is in its opinion
reasonable having regard to all the
circumstances surrounding the transaction;
(b) may order that, subject to the goods
being returned to the owner, the agreement
shall be determined on such date as is
specified in the order, not being the date the
hirer required the owner to nominate a
reasonable place for the return of the goods.
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Statutory Rights
• Notice of an application
Of Hirers
under subsection (3) shall be
given to the owner by the
hirer
S15(4)
Hire-Purchase
Act
27
Statutory Rights
Of Hirers
S15(5)
Hire-Purchase Act
•
Where a hire-purchase agreement is determined
pursuant to this section:
•
(a) The hirer may require the owner to sell the
goods to any person introduced by the hirer who is
prepared to buy the goods for cash at a price
agreeable to the owner
(b) where the value of the goods at the time when
it is returned to the owner is more than the balance
outstanding under the hire-purchase agreement,
the hirer is entitled to the difference which is
recoverable as a debt due;
(c) where the value of the goods at the time when
is returned to the owner is less than the balance
outstanding under the hire-purchase agreement,
the owner is entitled to the difference which is
recoverable as a debt due.
•
•
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Statutory Rights
Of Hirers
S15(6)(a)
Hire-Purchase Act
•
For the purpose of this section:
•
(a) ‘
balance outstanding under the hirerpurchase agreement’ means the
total sum payable by the hirer to
complete the purchase of goods to
which the agreement relates and the
amount derived from interest on a
overdue installments which has yet to be
paid less;
• (i)
the amount paid by or on behalf
of the hirer excluding
• (ii)
statutory rebate for terms
charges; and
• (iii)
statutory rebate for insurance. If
any;
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Statutory Rights Of
Hirers
S15(6)(b)
Hire-Purchase Act
•
“value of the goods at he time when it is
returned to the owner “means:
• (i)
the best price that could
reasonably be obtained by the
owner; or
• (ii)
If the hirer had introduced a person
who had brought the goods for
cash, the amount paid by that
person.
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REPOSSESSION BY OWNER
• The owner has the right to recover possession of
the goods if the hirer commits a breach of his
obligations under the hire-purchase agreement.
• S16 Hire-Purchase Act
• Phang Brothers Motors Sdn Bhd v Lee Aik Seng
• Public Prosecutor v Mohamed Nor
3/22/2016
31
S16(1) Hirer Purchase Act : stated that notices are required to be given to hirer in
the event of repossession the goods
If a hirer defaults in two
successive payments or
default in the final
payments
He must serve on the
hirer a notice in writing
of his intention to
retake possession
The owner must personally deliver to
hirer a document acknowledging
receipt of the goods. If the hirer was
not present at that time, the owner
must sent to him, immediately after
taking possession of the goods, a
document acknowledging receipt of
the goods. The documents must
contain a description of the goods and
the date, time and place at which the
owner took possession of it
The owner must
serve on the hirer
and guarantor,a
notice in writing in
the form set out in
the Fifth Schedule
within 21 days
after he has taken
possession of the
goods.
S16 Hirer Purchase Act
The period fixed by
notice must have
expired and must not
be less than 21 days
The owner cannot sell or
dispose of the goods
without the written
consent of the hirer until
the expiration on 21 days
after the date of service of
the said noiice.
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S16(1A) Hirer Purchase Act
Where a hirer is deceased, an owner shall not
exercise any power of taking possession of
goods comprised in a hire-purchase
agreement relating to the payment of
instalments unless there have been 4
successive defaults of payments.
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S16A :
provides that a hirer who returns goods comprised in a
hire-purchase agreement within 21 days after service on
him of notice in form set out in the Fourth Schedule shall
not liable to pay:
The cost of
repossession
The cost
incidental to
taking
repossession
The cost of
storage
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S17 of Hire- Purchase Act
After repossession , the owner must not sell or
dispose of the goods for 21 days
S18 of Hire- Purchase Act
the hirer’s rights and immunities when
goods repossessed
35
S18(1): where the owner takes possession of any goods under section 16:
S18(1)(a) The hirer may within 21 days after service on him of
the notice referred to in S16(3) by giving to the owner a notice
in writing signed by the hirer or his agent-
S18(1)(a)(i) Require the owner to re-deliver to or the order of
the hirer(subject to the compliance by hirer S19) the goods
that have been repossessed; or
S18(1)(a)(ii) Require the owner to sell goods to any person
introduced by the hirer who is prepared to buy the goods for
cash at a price not less than the estimated value of the
goods set out in the first mentioned notice.
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S18(1) (b) : the hirer may recover from the owner
If the value of the goods at the time of the owner so taking possession thereof is less
than the net amount payable but the total of that value and the amount paid or
provided, whether by cast or other consideration, by or on behalf of the hirer under the
agreement exceeds the net amount payable – the difference between that total and the
net amount payable; or
If the value of the goods at the time of the owner so taking possession thereof is equal to
or greater that the net amount payable –the total of that value and the amount paid or
provided, whether by cash oe other consideration, by or on behalf of the hirer under the
agreement, less the net amount payable.
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