Topic Explanation

Section 4(1) (a) – before an agreement is entered into, the owner is required to
give a prospective hirer a complete written statement signed by him
Formation of HP agreement
Section 4(1) (b) – imposed same condition on the dealer – with additional req that
at any time after the service of written statement to the hirer, but before HP agt is
entered into, he (dealer) must serve the prospective hirer, a written statement
signed by him and the prospective owner (financier/banker)

Section 4(3) – the prospective hirer is under no obligation to enter into HP

agreement even he has been served the above written statement

 Also not bound to make payment for the written statement

S 4(6)- any person imposes (paksa utk entr agreement) such obligation is guilty of
an offence

The form must contain the 2nd schedule;

Content of the schedule:
1) Description of the goods
2) The registration number (vehicle)
3) Statement whether the goods is new or second hand
4) Address where the goods will be kept
5) Cash price of the goods
6) Deposit
7) Insurance or fee
8) Duration of the HP
9) The installment payment

If owner fails provide the form ;

Section 4(4) – the HP agreement is void

Section 4(5) – the owner shall be guilty of an offence under the Act

Affin Credit (M) v Yap Yuen Fui

Court: Section 4(1) was a mandatory obligation before an offer to enter into a HP
agreement. It is an offer and acceptance and if the owner fails to give the written
form in the 2nd Schedule, or fails to sign it, the HP agreement is void

HP agreement must be in writing
(sec 4.A(1)
HP agreement must be signed
sec 4A(1A) - A HP agreement shall be in the national language or English language
sec 4A(2) – if it is not done in writing or which is not in the national language or
English language, the agreement is void / not valid.
sec 4A(3) – the owner is guilty of an offence under the Act if he fails to comply
with this requirement
Section 4B(1) - It has to be signed by or on behalf of all
parties to the agreement.
However, before the hirer has to sign anything, the document must be fully filled
out with all the necessary details
Section 4B(2) – the agreement must be completed before the intending hirer or
his agent is required to sign
Section 4B(2A) - no owner shall deliver or cause to be delivered to any dealer,
agent or person acting on behalf of the owner a hire purchase agreement or any
other form or document relating to a hire purchase agreement which has not been
duly completed( owner tkleh delivered good slagi agreement x lngkp)
Section 4B(3) - a hire purchase agreement that contravenes section 4A(1),(2) and
(2A) shall be void
Section 4B(4) - the owner or dealer who contravenes sections 4B(1),(2) or delivers
or causes to be delivered a hire purchase agreement in contravention of
subsection (2A) shall be guilty of an offence under the Act
Ming Lian Corp v Haji Nordin
 Court: if the parties signed the agreement with a blank
space which is later filled by the owner, the agreement may binding if:
 The hirer was aware of the term and knew what he was signing
 There is no fraud or misrepresentation by the owner
The contents of HP agreement
Separate agreement for every item
Service of document when HP
agreement is completed
Section 4C(1) – all hire-purchase agreement must include:
(i) date of the commencement of hiring
(ii) the number of instalments
(iii) the amounts of each instalments
(iv) the time for the payment
(v) The description of the goods
(vi) the address where the goods is kept
sec 4C(2) HPA - Failure to include these particulars will render the hire purchase
agreement as void
section 4C(c) - The content of the agreement must be specify in table form
 Cash price
 Amount of deposit paid in cash
 Any fees payable ;eg, cost for delivery, registration of vehicle, insurance,
any other charges
Section 4D(1) – requires a separate HP agreement in respect of every item of
goods purchased
Section 4D(2) – non compliant with subsection (1) the agreement shall be void
Section 4D(3) – shall be guilty of an offence under this Act
Section 4D(4) – unless the goods are sold as a set,
they are considered as one item.
Section 5(1) – within 21 days after the HP agreement is completed, the owner shall
serve on each, the hirer and the guarantors, a copy of the agreement. (owner kna
bgi copy agreement ke hirer dlm masa 21 hari)
This is a mandatory requirement
Section 5(2) – at any time before the final payment has been made under a HP
agreement, the owner must serve to the hirer within 21 days after he has received
a request in writing from the hirer, supply to the hirer a copy of any memorandum
or note of the agreement: ( dlm proses bayaran, even blm settle full bayaran, hirer
blh req copy agreement dan owner kena bagi ke hirer dlm masa 21 hari)
(a) on payment by the hirer of the prescribed fee; or
(b) where no fee, one free copy and a fee may be charged for the supply of a
second or subsequent copy
Section 5(3) - if there is any an insurance policy purchased by the hirer, the owner
is required to serve on the hirer a copy of the insurance payment receipt

Protection of hirer & guarantors
A copy of the said policy also must be served on the hirer within seven (7) days of
its receipt
sec 5(4)- Any person who contravenes section 5 shall be guilty of an offence under
this Act
Condition
- The most important things in contract
- If owner breach, the hirer can end the contract
Warranties
- Not important as contract
- Any breach of warranty will only give right to hirer to claim damages only
but not to repudiate the contract
Implied conditions
1. Right to sell
Section 7(1)(b) – the owner shall have a right to sell the goods at the time
when the property is to pass to the hirer
Ahmad Ismail v Malayan Motor Co. & Ors
A car on HP was detained by the police on suspicion that it was stolen
property. when the car was released by police , the P (hirer) refused to accept it
and repudiated the agreement on the ground that the owner had breached the
implied condition as to title in section 7 (1)(b) of the HPA.
- Issue: whether detention of the vehicle by the police constituted a breach
of the D’s obligations under the HPA.
- Held: as the D were from the beginning the legal owner of the car, no
question of a breach of the implied condition as to title in section 7(1)(b)
arose
Azmi J says that:
“ there can only be a breach of condition under section 7(1)(b) if at the time when
the property is to pass, the finance company had no right to sell the car to the P
( hirer)”
PUBLIC FINANCE V EHWAN SARING
HC held that the owner should have a good title in the goods when the HP
agreement was made and not when the final payment was made. In this case, the
owner of the goods did not have a good title in the goods when the HP contract
was made. Therefore, the hirer was entitled to rescind the contract and could
recover the amount of the money already paid
 2. Condition as to merchantable quality (tahap kualiti barangan )

Merchantable quality means the goods are fit for particular use to which the said
goods were sold

If the goods is of no quality and defective, it can be considered as of no

merchantable quality

Section 7(2) – in every hire-purchase agreement there shall be an implied

condition that the goods shall be of merchantable quality, but such a condition
shall not be implied—

(a) where the hirer has examined the goods or a sample thereof, as regards
defects which the examination ought to have revealed ( the defects revealed after
inspection) ( hirer dh thu ada defect and agree to purchase)
So if there is some examination, the buyer cannot later complaint about such
defects which a full examination would have revealed

(b) if the goods are second-hand goods and the agreement contains a
statement to the effect that—
(i) the goods are second-hand; and
(ii)all conditions and warranties as to quality are expressly negatived (the goods
are second-hand goods and was informed as not of quality) and the owner proves
that the hirer has acknowledged in writing that the statement was brought to his
notice.
In other words, the owner must make sure that the hirer was acknowledge in
writing that he had been notified

ONG SIEW HWA V UMW TOYOTA MOTOR SDN BHD

Held that Section 7(2) of the Hire purchase Act 1967 clearly states that there shall
be an implied term in every HPAthat the goods hired shall be of 'merchantable
quality'
The plaintiff had proved on the balance of probabilities that the car was defective
when it was delivered to the plaintiff. This was a case where the mechanical faults
were discovered after the car was put to use. The plaintiff had complained of
drivability of the car from onset, the moment after accepting delivery of the car.
Further the first defendant by its own admissions had admitted the car's drivability
was far from satisfactory. The plaintiff being the consumer naturally had the
reasonable expectation that the car would be free from defects and would run
smoothly.It was held that the car supplied to the plaintiff was not of acceptable
quality

Traders Finance Corp Ltd v Rourke

Held: though the parties knew that the goods was second- hand goods, they still
need to clearly state it in the agreement and which showed that the good was
not of quality

Khor Boon Yee @ Kow Kim Choo ( Berniaga Atas Nama dan Gaya Sykt Bersatu) v
Mulpha Engineering Sdn Bhd
Held: the Apps used the machines for nine months and only complained that the
machines gave small breakdown problems. The period of nine months was too
long and not reasonable period for the apps to say that the machines were of no
quality and inappropriate for their use. The court could not see how the hire
purchase agreement could have been said to be null and void

Lau Hee Teah v Hargill Engineering Sdn Bhd

A hirer inspected a machine during negotiations but its defect was not visible. The
hirer then brought it by HP.
Held: the inspection made was not enough to reveal the defect with the engine.
The owner therefore could not deny that the machine was of merchantable quality

3) Condition as to fitness for purpose ( brg brfungsi like expected )

Section 7(3) – the goods shall be reasonable fit for the purpose at the time of
delivery, except:
A) if the goods are second hand; and
B) the agreement contains a statement to the effect that:
(i) the goods are second hand; and
(ii) the conditions and warranties of fitness and suitability are expressly negatived
and the owner proved that the hirer has acknowledged in writing, that the
statement was brought to his notice

Implied warranties
1. Warranty as to quiet possession of the goods

Section 7(1)(a) – implies a warranty that the hirer shall have and enjoy
quiet possession of the goods.
Therefore, there would be a breach of warranty if the hirer’s possession of
the goods is disturbed by anyone who claims title over the goods

Jones v Lavington
Held: quiet possession was decided to mean that there should not be any
interference from the seller or by any other individuals through the seller on the
goods under agreement

2. Goods must be free from any charge or encumbrance at the time when
the property is to pass (owner kena pstikan brg trsebut tkde bebanan htg
atau pun di claim dari org lain)

- Section 7(1)(c) - an implied warranty that the goods shall be free

from any charge or encumbrance in favour of any third party at
the time when the property is to pass

- Iow- the owner must pass good title at the time when the
property is to pass
 1. Right to be supplied documents and information –Sec 9 HPA

Sec 9 (1) HPA - At any time before final payment is made, a hirer can request the
owner to supply him with a written statement, to be signed by the owner or his
agent, within 14 days, showing:-
(a) the amount paid to the owner;
(b) the amount which has become due under the agreement but remains
unpaid
(c) the amount which is to become payable under the agreement; and
(d) the amount derived from interest on overdue installments

Rights and duties of hires The hirer can request the agreement which must be in writing not more than
once in three months

If the hirer makes such request more than once in three months, the owner
can refuse to comply

Where the request has been properly made by the hirer, the owner must comply
with it within 14 days of receiving such request

Section 9(2) – failure to follows subsection (1) without reasonable cause and while
the default continues—
(a) the owner shall not be entitled to enforce—
(i) the agreement against the hirer
(ii) any right to recover the goods from the hirer
(iii) any contract of guarantee relating to the agreement

2. Right to appropriation of payment- sec 10HPA

Section 10 – right to appropriate payment

If the hirer has more than one agreement and a payment is insufficient to
discharge the total amount due under all the agreements, the hirer may ask the
owner to appropriate payment accordingly

The hirer may require the payment to be appropriated to a particular agreement

under any two or more of the agreement in such proportion as he thinks fit.

If the hirer fails to make any such appropriations then the owner will be at liberty
to appropriate the amount which he received towards settlements of sums due
under the agreements in the order in which the agreements were entered into

3. Right to apply for order to remove goods – sec 11 HPA

It is the common practice to insert into a HP agreement a clause to the effect that
hirer must keep the goods in a place stated in the agreement. Consequently, any
removal from the place could be a breach of agreement, so that the owner may
exercise his right to repossess.

Section 11 confers a way out, a right on the hirer to apply to a magistrate’s court
for an order permitting him to move the goods to some other place if the owner
refused to do so. If an order is granted, the new place will be substituted for the
place agreed to in the agreement

4. Rights of assingments– Sec 12

Under a HP agreement, hirer is not the owner of the goods until he fulfilled
all his obligations under the agreement and exercised his option to purchase the
goods from the owner

Hirer has no power to pass a good title to a third party

Under sec. 12, it can be seen that the hirer has the right to assign his rights, title
and interest under the agreement to a third party with the consent of the owner

Eg; the hirer who purchases his car on hire purchase can sell his car to another
person provided he informs the finance company (owner) and the owner agrees
to such a sale to the third party

5. Right to pass the title right and interest by operation of law – sec 13

The right, title and interest of the hirer under the HP agreement can be passed to
the other person by operation of law due to:
- Death or
- Bankruptcy
- If a company, upon liquidation
Upon the hirer’s death, his rights, title and interest in the goods
pass on to his personal representative. In the case of bankruptcy,
his interests in the goods under the HP agreement passes on to
his trustee in bankruptcy (the Official Assignee)
 6. Right to early completion- sec 14

When a hirer wishes to complete the agreement earlier than the date initially
agreed upon, he may do so by giving notice in writing to the owner or before the
specified day, pay to the owner the net balance due under the agreement

sec 14(3)- The right to an early completion conferred by section 14 is exercisable

at any time during the continuance of the agreement

7. Right to terminate the hire purchase agreement- sec 15

Section 15(1) enables the hirer to terminate the hire purchase agreement at any
time

This is done by returning the goods to the owner at the place where the owner
ordinarily business hour at the owner’s place of business or to the place specified
for that purpose in the agreement

The act does not require any written notice to be given to the owner. However, if
the terms of the agreement stipulate such a procedure, then the hirer is required
to comply with the terms of the agreement

Under section 15(5), the hirer can require the owner to sell the goods to any
person introduced by him who is prepared to buy the goods for cash at a price
agreed by the owner

Where the value of the goods at the time when it is returned to the owner is more
than the balance outstanding under the HP agreement, the hirer is entitled to the
difference