OBLIGATIONS OF THE PARTIES IN A CONTRACT OF HIRE PURCHASE

Hire Purchase

In a contract of hire purchase, we have between two to three parties. The normal parties in a contract of hire purchase are the owner and the hirer. In some instances a third party, a financier, is involved.

In a contract of hirer purchase, the different parties have obligations to each other. Most of these obligations are stated under statutory provisions, while some are embodied in the common law.

Obligations/Duties of the Owner

  1. Delivery of the Goods: It is the duty of the owner to deliver the goods to the hirer when due. The goods must also be delivered in good condition.
  2. Title: Before goods can successfully be assigned to a contract for hire purchase, the owner must have a title to the goods.
  3. Description of the Goods: The owner of the goods must ensure that the goods are delivered according to the buyer’s description. Also, the goods must fit their description.
  4. Fitness and Quality of the Goods: The goods must be of merchantable quality and they must fit the purpose for which they were hired. However, if there is any defect in the property, it should be something that the owner can easily discern. For example, in the case of Anoka vs. SCOA Warri[1] the hirer returned a vehicle due to defect in its engine. The court held that the implied term of fitness for purpose would not be applicable here due to the fact that the defect was something which the owner couldn’t easily discern. He couldn’t have ordinarily known of a fault in the engine unless he took the engine apart.
  5. Quiet Possession: The hirer has a right to quiet possession of the goods. The owner is obligated to abstain from unnecessarily disturbing the buyer.
  6. Furnishing Information: There is a general obligation on both parties to always furnish information regarding the hire purchase contract. This information includes things like arrears paid, date of payment, balance remaining etc.

Duties/Obligations of the Hirer

  1. Acceptance of Delivery: It is an obligation on the hirer to accept the goods when they are delivered by the owner. If doesn’t he can be sued for non-acceptance.
  2. Duty of care: The hirer has a duty to use the goods in ways that would not occasion damage to the goods.
  3. Payment of instalments: This is one of the main functions of the hirer. He has to pay instalments for the hirer purchase as and when due. There are a plethora of cases to help support this assertion. In the case of Animashawun vs. CFAO[2] the hirer defaulted in payment and the owner repossessed the goods. The court held that since the hirer had failed to pay his instalments at the required time, the owner had the right to repossess the goods.
  4. Redelivery of the Goods: If the hirer purchase agreement falls through, it is the duty of the hirer to redeliver the goods to the owner.
  5. Duty not to sell the Goods: The hirer has a duty not to sell the goods until the last instalment has been paid.
  6. Duty not to act Inconsistent to Owner’s Right: The hirer also has a duty not to act in relation with the goods in a manner that is inconsistent with the right of the owner. He can only do this when the goods have been completely purchased.

References

[1] (1955/56) WNLR 113

[2] (1960) LLR 113

Author: Olanrewaju Olamide

Olamide is an avid reader who believes that no knowledge is wasted. If he is not surfing the internet, he would be doing something else to get more information, whatever that is.

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