PK504 BUSINESS LAW

LAW OF HIRE PURCHASE

LESSON LEARNING OUTCOME

CLO3
IDENTIFY CLEARLY THE PRINCIPLES OF CONSUMER
PROTECTION SUCH AS HIRE PURCHASE
INTRODUCTION

DEFINITION
STATUTE HIRE PURCHASE ACT 1967 (HPA 1967)

S.2(1) Contract of hire purchase may include:

A contract of letting goods with an option to purchase;
or
A contract for the purchase of goods by instalments.
INTRODUCTION
Property in goods is not transferred to the
hirer at the time when the contract is made
The hirer only obtains possession over the
goods but not the ownership
Ownership remain with the owner until full
payment of the installments by the hirer and
the hirer chooses to purchases the goods.
CREDIT CORP (M) BHD v THE MALAYSIAN
INDUSTRIAL FINANCE CORP & ANOR
Court held: until the hirer had exercised his
option to purchased agreement, no property
in the car passed to the hirer
INTRODUCTION
DEFINITION S.2(1)

OWNER person who lets or has let goods to a

hirer under a hire purchase agreement
HIRER person who takes or has taken goods
from an owner under a hire-purchase
agreement
PRICE total sum payable by the hirer under HP
agreement (incl. deposit, monthly installments
& monthly interest)
GOODS - Limited specified in 1st schedule
(all consumer goods, motor vehicles)
FORMATION OF AGREEMENT
A. GIVING NOTICES OF THE 2ND
SCHEDULE BEFORE ENTERING HPA

Owner must serve a notice duly completed

on intending hirer and signed by the owner
according with the form set out in Part 1 of
2nd schedule s.4(1)(a)
If the HPA is carried out by dealer dealer
must serve a notice duly completed on
intending hirer and signed by the owner
according with the form set out in Part 1 of
2nd schedule s.4(1)(b)(i)
FORMATION OF AGREEMENT

PART 1 2ND SCHEDULE SHORT DESCRIPTION OF

THE GOODS COMPRISED IN THE HPA &
SUMMARY OF THE FINANCIAL OBLIGATIONS
After notices serve, dealer must serve another
notice duly completed & signed both by dealer &
prospective owner Part II 2nd Schedule s.4(1)
(b)(ii)
FORMATION OF AGREEMENT

Methods of service s.4(2)

i. owner/ dealer must give notice personally to
the intending hirer, and
ii. Upon receiving notice, intending hirer must
acknowledge receipt by signing at the
appropriate column contained in the notice
FORMATION OF AGREEMENT
Upon receiving notice, intending hirer is not
under any obligation to enter into any HPA
with the owner/dealer s.4(3)
Shall not also be required to pay or give any
consideration to the owner/dealer for the
preparation or service such notice.
If so, the person who imposed such obligation
shall be guilty of an offence under HPA 1967
s.4(6)
FORMATION OF AGREEMENT
If HPA is made without serving the notice, the
agreement shall be void s.4(4)
AFFIN CREDIT (M) SB v YAP YUEN FUI

Held: An offer to enter into HPA is subjected to

a condition precedent imposed by s.4(1).
Failure to give a written statement under the
2nd schedule shall render the contract void.
Owner/dealer who did not serve the notices,
shall be guilty for an offence under HPA 1967
s.4(5)
FORMATION OF AGREEMENT

b. THE AGREEMENT MUST BE IN WRITING s.4A

S.4A(1) A hire purchase agreement must be in
writing
S.4A(2) otherwise, the agreement shall be void
S.4A(3) - Owner who does not comply this formality
shall be guilty for an offence under the HPA 1967
Penalty s.46 Fine <RM3000 or imprisonment <6
months or both
FORMATION OF AGREEMENT
c. THE AGREEMENT MUST BE SIGNED s.4B
Every HPA must be signed by all parties to the
agreement s.4B(1)
Agreement only can be signed by hirer when the
agreement (forms or document relating to
agreement) has been duly completed. Signing
blank forms by the hirer shall be invalid s.4B(2)
Owner/dealer who does not comply this
formality shall be guilty for an offence under HPA
1967 s.4B(4)
Penalty s.46
FORMATION OF AGREEMENT
d. CONTENTS OF THE HIRE PURCHASE AGREEMENT
(HPA) S.4C
a valid HPA must contain some particulars that
are required s.4C
Specified s.4C(1)(a) :
i. Date of the agreement
ii. Number of installment to be paid
iii. Amounts of each installments, to whom & where it
is tp be paid
iv. Time for payment
v. Description of the goods, and
vi.The address where the goods are placed
FORMATION OF AGREEMENT
The agreement shall also set out in a tabular
form s.4(1)(c):
i. The cash price
ii. The deposit paid
iii.The expenses of delivering the goods freight
iv.The vehicle registration fees (in respect of
vehicle)
v. The insurance amount
vi.The terms charges
vii.The annual percentage rate for terms charges
viii.The balance originally payable, and
ix.The total amount payable
FORMATION OF AGREEMENT

If the HPA does not contain all the particulars,

the agreement shall be void s.4C(2)
The owner of the goods who did not comply
this requirement shall be guilty of an offence
under HPA 1967 s.4C(3)
Penalty s46
FORMATION OF AGREEMENT
e. SEPARATE AGREEMENT FOR EVERY ITEMS OF
GOODS S.4D
If there is more than 1 item of goods being
hired at one time from the same owner, there
must be separate HPA for every item of the
goods s.4D(1)
If this formality is not complied with, the HPA
shall be void s.4D(2)
The owner will be guilty for an offence under
HPA 1967 s.4D(3)
Penalty s.46
FORMATION OF AGREEMENT
f. COPY OF THE AGREEMENT MUST BE SERVED ON
THE HIRER S.5
Within 14 days after making of the HPA, the owner
shall serve on the hirer and the guarantors a copy of
the agreement each. - S.5(1)
If owner failed to comply, HPA would be
unenforceable by the owner s.5(1A)
If the total amount payable under HPA consists of
payment for insurance, the owner shall serve a copy
of the insurance payment receipt and within 7 days
after receiving the policy from the insurance
company, a copy of the insurance policy must be
served by the owner to the hirer s.5(3)
IMPLIED TERMS UNDER HPA 1967