Topic
A hire purchase contract :
Introduction
Provision
Certain situations are not
considered as HP agreements
Contract of Hire Purchase
first contract is between a
dealer/seller with the
financier
second contract is between
the financier and the
purchaser
Explanation
1) an agreement wherein an owner agrees to hire goods to the hirer with
an option for the hirer to purchase the goods
2) Must be in writting
3) To protect the consumer and fair trading practice
Sec 2(1) of HPA– Definition of HP agreement
 Definition of hirer, owner and dealer
1) The ownership of goods transferred at the time of contracts
or before delivery
2) Someone who regularly sells the same kind of stuff that he
trying to buy (For example, if you're a business that sells TVs,
and you're trying to buy a TV through a hire purchase
arrangement, this rule says that your transaction isn't
considered a regular hire purchase)
Seller or dealer makes the dealing with the purchaser
(the ownership of goods not passed at the time of agreement)
The purchaser agrees to purchase the goods,
(the dealer or seller will require the purchaser to approach the financier)
The seller or dealer will sell the goods to the financier
The financier known as the owner of
goods will then hire the goods to the purchaser
under the hire purchase terms
The ownership of the goods remains owner
until the hirer has fully paid the price agreed upon in the agreement
Parties involved Sec 2(1)

Case Credit Corporation (M) Bhd v The Malaysian

Industrial Finance Corp & Anor
Held (HC): until the hirer has exercised his option to purchase by paying the
total amount and fulfilling all his obligation under the HP agreement, no
property (title) in the car passed to the hirer

Tractors Malaysia Bhd v Kump. Pembinaan Malaysia Sdn. Bhd.

Fact: the Resp had brought an action for damages against the App for wrongful
possession
Issue: Whether a transaction involving a tractor was a sale or a hire-purchase
Held (FC): on a proper construction of the agreement, it was clear that the
intention of the parties not to pass the property in the tractor until full
payment been made. Hence, it was not a sale on installment terms but a hire-
purchase. Thus, the App has the right to repossess on breach of the terms by
the Resp
Provision
Sec 8(1) – provide the right to the hirer to rescind the contract against the
owner, claim damages from the dealer for making fraudulent representation,
warranty or statement
Sec 36- provides a penalty against the dealer if he makes false statements to
hirer

According to this section, making a false statement or representation by dealer

or a person acting on behalf of the owner, will be regarded as a serious offence

If convicted, the dealer, be liable to a fine not exceeding RM10,000 of

imprisonment for a term not exceeding 12 months or both.

Type of goods 1st Schedule

1) Consumer goods ( sec 2(1) )
2) Motor vehicles, namely
(a) Invalid carriages;
(b) Motor Cycles;
(c) Motor Cars including taxi cabs and hire cars;
(d) Goods Vehicles
(e) Buses
 Hap Seng Credit Sdn Bhd v Mohamed bin A Ralim & Ors
Held that the HP Act is only applicable the hire purchase agreements in relation
to goods specified in the first schedule to the HP Act

Case ; Kesang Leasing v Mohd Yusof Ismail

Issue: whether a computer is goods falls under HPA?
If both parties agreed to follow HPA, it can be subjected to HP agreement

Common law The hire purchase transaction is a contract wherein the owner lets out goods
on hire to another party and agrees that on completion of the necessary
payments, the hirer may either return the goods and terminate the contract or
elect to buy the goods

English Law Under the English common law, the hirer is given an option either to purchase
the goods at the end of the hiring period or within the hiring period after
paying the necessary payment as agreed between the parties. If the hirer
thinks that he does not need the goods he may elect not to purchase the goods
and can return the goods. The hirer is given an option to purchase at the end of
the duration of hire. He may decline to accept this option if he so chooses

Case Low Ping Ming v MBF Finance

Steve Shim J described

The nature of the hire purchase agreement in English common law. He stated,
“A HP agreement, at common law, is regarded as a form of contract whereby
the owner lets goods out on hire and agrees that the hirer may either return
the goods and terminate the contract or elect to buy the goods on the
completion of the required periodic payments. A common characteristic or
feature of such agreement is that the hirer has the option of purchasing the
goods. And throughout the period of the hire purchase agreement, title to the
goods remains with the owner. Therefore, unlike a sale of goods contract, no
title to the goods passes from the owner to the hirer during the period of hire

Rule/Regulation Relating to - Before formation of an agreement

HP Agreement - During the formation of the agreement
- After formation of the agreement
BEFORE DURING AFTER
S.4 S.5 S.16
(formation)
S.4A S.16A
(in writing)
S.4B S.17
( be signed)
S.4C S.18

S.4D