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CHAPTER 5;

Law of Hire Purchase


Hire Purchase Act 1967

Prepared by; Alizah Ali


Department of Law UITM Bandaraya Larkin

-alizah ali-

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


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

The definition of HP
Sect 2(1) of Hire Purchase Act 1967

Hire Purchase

Letting of goods with an option to purchase

or

Purchase of goods by installment


-alizah ali-

The definition of HP
Ownership is not transfer to the Hirer

At the time contract is made

Hirer only obtain the possession of the goods


The ownership will remain with the Owner until payment is complete

-alizah ali-

The definition of HP
Concept of HP
Credit Corporation (M) Sdn Bhd vs The Malaysian Industrial Finance Corp

-alizah ali-

definition of owner, hirer, price and goods

Sect 2(1) HPA 1967

owner

hirer

price

goods

-alizah ali-

definition of owner, hirer, price and goods


Sect 2(1) HPA 1967

goods

1st Schedule of HPA 1967

Consumer goods

Motor vehicles

Case : Kesang Leasing Sdn Bhd Vs Mohd Yusof Ismail


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formation of HP
1. B4 agreement Giving 2nd Schedule Notice
2. Agreement must be in writing

3. Agreement must be signed


4. Content of HP agreement 5. Separate agreement for every item of goods 6. Copy of agreement must be served on the Hirer
-alizah ali-

formation of HP
1. Giving 2nd Schedule Notice
Sect 4(1) HPA 1967

Before agreement of HP is made A must Sec 4(1)(a) of HPA 1967 Owner made a complete set of 2nd Schedule Sect 4(1)(b)(i) & (ii) of HPA 1967 Sort of quotation description of the goods
summary of financial obligation

-alizah ali-

formation of HP
1. Giving 2nd Schedule Notice
In person Sect 4(1) HPA 1967 Acknowledge receipt

Method of service

No need to pay any considera tion

NO ..
YES .. Sect 46 RM3000 @ 6 months imprisonment -alizah ali-

No obligation to enter into the contract

formation of HP
1. Giving 2nd Schedule Notice
Sect 4(1) HPA 1967

Contract is void
If no 2nd Schedule Notice

Sect 4 (4) of HPA 1967


Affin Credit (M) Sdn Bhd vs Yap Yuen Fui

Guilty Sect 46 of HPA 1967


-alizah ali-

formation of HP
2. Agreement must be in writing
Sect 4A HPA 1967

Contract is void
If not in writing

Guilty Sect 46 of HPA 1967

-alizah ali-

formation of HP
3. Agreement must be signed
Sect 4B HPA 1967

All parties to the agreement must sign Sect 4B(1) HPA 1967 Sign a complete agreement and not a blank agreement Sect 4B(2) HPA 1967
Contract is void
If not sign

Guilty Sect 46 of HPA 1967


-alizah ali-

formation of HP
4. Content of HP agreement
Sect 4C HPA 1967

o Date of agreement o No of installment o Amount of each installment\time for payment o Descriptions of goods o Address where the goods placed
-alizah ali-

Specify

formation of HP
4. Content of HP agreement
Sect 4C HPA 1967

Tabular form

o Cash price o Deposit price o Vehicles registration o Insurance amount o Balance original payable o Total amount payable
-alizah ali-

formation of HP
4. Content of HP agreement
Sect 4C HPA 1967

Contract is void
If not contain

Guilty Sect 46 of HPA 1967

-alizah ali-

formation of HP
5. Separate agreement for every item of goods Sect 4D HPA 1967

Contract is void
If not contain

Guilty Sect 46 of HPA 1967

-alizah ali-

formation of HP
6. Copy of agreement must be served on the Hirer Sect 5(1) HPA 1967 Within 14 days after making the contract Sect 5(3) HPA 1967 A copy of HP agreement
-alizah ali-

Sect 5 HPA 1967

hirer guaran tor

A copy of insurance policy

formation of HP
6. Copy of agreement must be served on the Hirer Sect 5 HPA 1967

Contract is void
If not get a copy Sect 5(1A) HPA 1967

-alizah ali-

Liability of owner in the case of mispresentation

owner

Mispresentation Hirer may


Lau Hee Teah vs Hargill Engineering Sdn Bhd
-alizah ali-

dealer

Sect 8(1)(a) HPA 1956 RESCIND the contract

Sect 8(1)(b) HPA 1956 Claim for DAMAGES

Liability of owner in the case of mispresentation

Exemption clause
Exclude, limit & modify

Sect 8(2) HPA 1957

Contract is VOID

-alizah ali-

Liability of owner in the case of mispresentation


Right of innocent owner Dealer mispresentation Innocent owner may be indemnified by the Dealer
-alizah ali-

Statutory Rights & Duties of Hirer


1. Right to a copy of agreement Sect 5 HP 1967
RIGHT
of HIRER

current position Sect 9 HP 1967 3. Right to appropriation of payment


made in HP agreement Sect 10 HP 1967
4. Right to apply from court-to get

2. Right to a copy of Statement of

an order to remove the goods -alizah Sect ali- 11 HP 1967

Statutory Rights & Duties of Hirer


5. Right to assign Hirers right which stated
in HP agreement Sect 12 HP 1967

RIGHT of HIRER

6. Right by Operation of Law Sect 13 I HP 1967


(personal-death & company-winding up)

7. Right to early completion of the


agreement Sect 14 HP 1967

8. Right to terminate the agreement


Sect 15 HP 1967
-alizah ali-

Statutory Duties & Obligation of Hirer


eventhough the goods hired destroy Ka Yim Credit & Leasing Sdn Bhd vs Pang Kim Cha

1. Duty to continue payment

DUTIES of HIRER

2. Duty to inform Owner the position of the


goods

Sect 37 HP 1967

3. Fraudulant Sale or Disposal of


goods by the Hirer Sect 38 HP 1967
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Right Of Owner In Repossession


RIGHT TO REPOSSESSION
Hirer defaulted to pay 2 successive

installment,

or

Hirer defaulted to pay the last installment

Death Hirer
default

4 successive

installment Sect 16(1) HPA 1967

-alizah ali-

Right Of Owner In Repossession procedure


Before

1 Sect 16 HPA 1967 / 4th Schedule


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

-alizah ali-

Right Of Owner In Repossession

procedure

Pang Brothers Motors Sdn Bhd vs Lee Aik Seng

19 days
United Manufacturers Sdn Bhd vs Sulaiman Ahmad

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

-alizah ali-

Right Of Owner In Repossession

procedure

to serve 4the Schedule Notice Exemption


if the owner can prove that there is a possibility that the Hirer would conceal or remove the goods from the owner Section 16(2) of HPA 1967
-alizah ali-

Right Of Owner In Repossession procedure


During Sect 16(7) HPA 1967
Required the owner/dealer to comply with regulation as regard to the manner to repossess the goods

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


if if

owner owndealer

show ic/business card show ic/authority card


-alizah ali-

Cont Right Of Owner In Repos session

procedure

Can enter into Hirers Premise proper & lawful manner Failure to comply offence Regulation 9 Dealer commit offence owner is deemed guilty unless ..

-alizah ali-

Right Of Owner In Repossession


After

procedure

1. Sect 16(4) HPA 1967

Immediately Owner shall deliver to the


hirer a document of acknowledge receipt of the goods Sect 16 (5) of HPA 1967 contain of document
-alizah ali-

Right Of Owner In Repossession


After
2. Sect 16(3)n HPA 1967

procedure

Within 21 days of the repossession owner serve 5th Schedule

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Right Of Owner In Repossession


require the owner to redeliver the goods to him + arear of installment + installment due + interest due + cost of repossession +cost of storage + cost for redelivery

procedure

5th Schedule
option

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

-alizah ali-

Right Of Owner In Repossession


Take the goods Pay installment due Cost incidental to repossession Cost delivery

procedure
DO NOT take the goods Pay full payment

5th Schedule
option

Cost incidental to repossession

-alizah ali-

Right Of Owner In Repossession

Cont

procedure

If x 5th Schedule

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

-alizah ali-

Right Of Owner In Repossession


3. Sect 16A HPA 1967

Cont

procedure

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


goods to the owner, owner shall for..

not impose payment

a) cost of repossession
b) cost incidental to repossession a) cost of storage
-alizah ali-

Right Of Owner In Repossession


4. Sect 17 HPA 1967

Cont

procedure

After repossession, owner shall not sell/dispose the goods without written consent from the Hirer.
If dispose without consent he shall be guilty under Section 17(2) HPA 1967
-alizah ali-

Right of Hirer After Repossession


Reject the goods

Take the goods

hirer 5th schedule (option)


-alizah ali-

Right of Hirer After Repossession


1. Take the goods
Require the owner to redeliver the goods to the hirer i this can be made within 21 days after the service of 5th Schedule Notice. ii this can be made via written application to reinstate the agreement

-alizah ali-

Right of Hirer After Repossession


Take the goods
iii Hirer has to pay; 1) arear of installment + interest Sect 9(1)(a)HPA 2) remedy for breach of agreement Sect 19(1)(b)HPA 3) cost incidental to repossession Sect 19(c) HPA 4) cost of redelivery Sect 19(c) HPA

-alizah ali-

Right of Hirer After Repossession


2. Reject the goods
Reject the goods and require the owner to sell the goods to any person introduced by the hirer who is prepare to buy the goods for cash. Sect 18(4) HPA 1967

Public auction Sect 18(4)(a) HPA 1967 Owner serve a notice to the hirer Not less than 14 days b4 the date Of auction
-alizah ali-

Private auction Sect 18(4)(b) HPA 1967 Owner give hirer an option to buy the goods at the price which he intends to sell