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Hire purchase Hire Purchase Act HPA s. 2(1) – letting of goods with an option to purchase

Hire purchase Hire Purchase Act HPA s. 2(1) – letting of goods with an option to purchase - agreement to purchase goods by instalment But does not include:

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Hire purchase Hire Purchase Act HPA s. 2(1) – letting of goods with an option to purchase

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  1. Hire purchase Hire Purchase Act HPA s. 2(1) – letting of goods with an option to purchase - agreement to purchase goods by instalment But does not include: i-an agreement which passes the property in the goods to B at the time of the agreement or any time before the delivery of goods to B. ii- if the agreement involved hire or sale of goods by a person engaged in the trade or business of selling goods of the same nature or description as the goods comprised in the agreement

  2. Credit Corporation (M) Sdn Bhd v the Malaysian Industrial Finance Corp & Anor Until the hirer (H) pay the whole amount of the purchase price and fulfill his obligations under the agreement – property in the hired car does not pass to H. In hire-purchase – property will not pass to H until he made the option to buy by settling the whole of the agree price.

  3. Goods – subject matter of the hire-purchase s.1(2) list of goods in the 1st schedule i-All consumer goods – s. 2(1) goods purchased for personal, family and household use. ii-Motor vehicles For other goods the parties may agree that the contract becomes a hire-purchase contract. Kesang Leasing Sdn Bhd v Mohd Yusof bin Ismail s.1(2) did not exclude the application of the HPA provisions to a hire-purchase agreement in respect of goods which is not in the 1st schedule if the parties agreed to be bound by the HPA.

  4. Formation Legal obligation which must be complied with - o/wise the agreement is void. Sometimes it is also an offence to violate the HPA. 1- pre-contractual stage Written information to the hirer. Signed by the provider. If the owner or its agent, conducted the negotiation, used form in Part 1 Schedule 2.

  5. SECOND SCHEDULE PART I (Paragraph 4(1)(a) and 4(1)(b)(i)) SUMMARY OF YOUR FINANCIAL OBLIGATIONS UNDER THE PROPOSED HIRE-PURCHASE AGREEMENT This document contains a short description of the goods comprised in the hire-purchase agreement and a summary of your financial obligations under the proposed hire-purchase agreement. Particulars of goods Short description of goods: ...................... If motor vehicle, state registration number: ...................... State whether new or second-hand: ...................... Address where goods will be kept: ...................... Particulars Relating To Your Financial Obligations

  6. Cash price of goods *RM ...................... Amount to be paid before entering into the hire-purchase agreement (hereinafter referred to as "deposit") RM ...................... Cash price less deposit RM ...................... RM ...................... Freight charges, if any RM ...................... Vehicle registration fee, if any RM ...................... Insurance (a) For motor vehicles, insurance in respect of the first year only RM ............. (b) For goods other than motor vehicles, in respect of the duration of the hire-purchase agreement RM ............. Terms charges: (a) rate per annum ...................... (b) total amount of terms charges RM .............

  7. Balance originally payable under the agreement RM ............. Annual Percentage Rate Balance originally payable under the agreement, inclusive of deposit, referred to in the agreement as the "hire-purchase price" RM ............. 31 of 37 Difference between cash price of goods and the total amount you will have to pay RM ............. Particulars Relating To Payment Duration of payment of instalments in number of months or years .............................. Number of instalments .............................. Amount of each instalment .............................

  8. This document is issued by or on behalf of ......................at ...................... day of ...................... on this ......................19 ...................... pursuant to paragraph **4(1)(a)/ subparagraph 4(1)(b)(i) of the Hire-Purchase Act 1967. This document is given free of charge without any obligation to enter into a hire-purchase agreement. I/We ......................NRIC No ......................of ...................... hereby acknowledge receipt of this document. Signature ...................... Date ...................... ___________________________________________ NOTE: *Price stated will be valid for period of 7 days. ** Strike out whichever inapplicable.

  9. If the person is a dealer he has to fill in Part 1 and 2 of Schedule 2. PART II (Subparagraph 4(1)(b)(ii)) CONSENT OF PROSPECTIVE OWNER TO ....................................................... TAKE NOTICE that ................................................................................. NRIC No. ...................... of ...................... intends to enter into a hire-purchase agreement in respect of ...................... and a copy of a summary of his financial obligations under the proposed hire- purchase agreement has been served on him on the ...................... day of ......................19 ...............,

  10. a copy of which is attached herewith, pursuant to subparagraph 4(1)(b)(i) of the Hire-Purchase Act 1967. 2. If you agree to be a party as owner in the proposed hire- purchase agreement, kindly confirm by signing at the appropriate column of this document. ...................... (Signature of Dealer) Name: ...................... Address: ......................

  11. Date: ...................... TO ...................... ...................... * I/We ...................... hereby agree to be a party as owner in the proposed Hire-Purchase agreement. ...................... (Signature of the prospective owner) Name: ...................... Address: ...................... Date: ...................... [Act A813:s.33] ___________________________________________ NOTE: *Insert Description

  12. The prospective hirer must sign the document to acknowledge receipt of the document. s. 4(3) The provider of the document cannot charge the prospective hirer the cost of preparing the document even if the prospective hirer refused to enter into the hire-purchase agreement. If he is charge the agreement is void. Failure to give the document and hire-purchase was made – void. An owner of the goods committed an offence. Penalty =RM3000 fine or 6 months prison or both. S.46

  13. 2-during the conclusion of the contract • s. 4A(1)- The agreement must be in writing. Failed to comply-agreement void, (s. 4A(2)), owner guilty of an offence under HPA, penalty =RM3000 or 6 months imprisonment or both (s. 4A(3) and s. 46). b) s. 4B(1) – the HP agreement must be signed by or on behalf of all the parties. Cannot be signed blank. Must be completed by the owner, dealer, agent, or anyone acting on behalf of the owner first. S4B(2). Failure to comply, the agreement - void. S. 4B(3).

  14. s. 4(B)(4) i-The owner, dealer, agent or the person acting for the owner – entered into an agreement contradicts s.4B(1) – committed and offence under HPA; ii - If they required or caused the prospective hirer or his Agent to sign the agreement –contradicts s. 4B(2) – committed an offence under HPA. Penalty s. 46 Case before s. 4B was inserted into the HPA. Ming Lian Corp Sdn Bhd v Haji Noordin and Credit Corp (Malaysia) Bhd v Tuanku Hishamuddin bin Tuanku Laksamana

  15. In both cases, decided before s. 4B was inserted in the HPA,- the agreements were valid-even if the hirer signed them with blank spaces which were later filled in by the owner provided the hirer was aware of the terms and knew what he was signing and that there being no proof of fraud. 3-after the contract has been concluded s. 5(1) – after the conclusion of the HP agreement, the owner must serve on the hirer and the guarantors a copy of the agreement each. Failure – the owner cannot enforce the agreement. Valid agreement

  16. Based on the case of Kesang Leasing Sdn Bhd v Mohd Yusof and also Oii Boon Leong v Citibank N.A. the parties may agreed not to apply s. 5 to their contract Contents of HP Contract s.4C (1)(a) –every HP agreement must contain: • Specify the date when the hiring will commence; • Specify the number of installments to be paid by H; • Specify the amount of each installment, the person to accept payment, the place where the payment is to be made

  17. (iv) Specify the time (hour) when the payment is to be made (v) Description of the goods –sufficient to identify them. (vi) Specify the address where the goods are located s. 4C(b) The agreement must also specify the type of consideration agreed if it involve other than cash. s. 4C(1)(c) The agreement must have a schedule which contains: i) cash price of the goods if they can be bought on cash;

  18. ii) Deposit if any, and the form of the deposit, cash etc; (Deposit not less than 1/10 of the cash price; (s. 31) if the owner failed to obtain deposit he is guilty of an offence. Penalty s. 46.) iii) Specify the delivery charge if any which has been included in the total hiring charge; iv) Specify the amount that is included in the total charge which has been used to register the vehicle in case of HP involving vehicles; v) Any amount from the total charge payable for insurance coverage for the goods; vi)The total of the amount referred to in (i), (iii), (iv) and (v);

  19. vii) Any other charges included in the total charges; viii) Annual interest charge - follow the method in sch 7; ix) Total amount in (iv) and (vii); x) Total amount payable Other rules regarding the HP agreement i- s. 4C(1)(d) – the agreement must not contain any particulars wh. differ from the particulars found in the written statement or statement served on H. (see s. 4(1)(a)(b)

  20. Failed to comply with s.4C(1) –agreement void.(s. 4C(2). Owner –guilty of an offence. (s.4C(3). penalty - s. 46. ii-s. 4D(1)– separate agreement must be made for different item of goods. If the goods are essentially similar or complementary to each other – can be sold as a set. (s.4D(4)) s. 4D(2) – failure to comply – agreement void, s. 4D(3) – owner- guilty of an offence, penalty - s. 46.

  21. iii- the HP agreement or the written document given to H before the conclusion of the agreement cannot be altered. Not terms can be added. Not effective unless consented by H or his agent (signature or initial on the agreement). S. 39 Protection of Hirer and guarantors Implied condition and warranty i- s. 7(1)(a) – implied warranty that H shall enjoy quiet possession of the goods (Niblett v Confectioners’ Materials Co – interference by owner, or person claiming through him and also from lawful act of third party) ii- s.7(1)(b) – owner implied condition that he has the right to sell when the property is to pass

  22. At the time the HP agreement was made not when final payment was made. Public Finance Bhd v Elwan bin Saring At the time when the property is to pass in s. 7(1)(b) means at the time when H decides to pay all sums due under the HP agreement. Including the moment when the agreement was concluded because he may chose to pay the whole amount at that time. iii- s.7(1)(c) – implied warranty that the goods would be free from charge or encumbrances in favour of 3rd party when the property is to pass

  23. iv- S.7(2)(a) impliedconditionthat the goods are of merchantable quality except: • H examined the goods or sample with regard to defect wh. such examination should have revealed; (b)The goods are used goods and the agreement contains the statement that the goods are used and that all warranty and conditions are expressly negatived, and the owner must prove H had made a written acknowledgment that he was shown the statement.

  24. Law Hee Teah v Hargill Engineering Sdn Bhd & anor To show that the goods are not of merchantable quality Pl. must prove that it is not useful for any purpose and therefore not saleable under the description. No need to show that the goods were bought by description and that the seller deals in the goods of that description

  25. If H examined the goods and failed to cover the defects which the examination ought to have shown – cannot claim that the owner breach the condition. v- s. 7(3)(a)(b) - if H expressly or impliedly made known to owner, dealer or any servant of the owner or the dealer the purpose of him acquiring the goods – impliedconditionthat the goods shall be reasonably fit for the particularpurpose. (not in case of used goods and the statement similar to (b) above is found in the agreement. See slide 23

  26. Misrepresentation by owner or dealer s.8(1)every representation, warranty, statement made by –owner, dealer, anyone acting on their behalf – in connection with the h/p or in the course of negotiation wh. lead to the conclusion of HP agreement = s.8(1)(a)- right of H against the owner- if the representation is made by the dealer or its agent - to rescind the contract as if the representation was made by an agent of the owner; s.8(1)(b)- against the one who made the representation, warranty or statement – damages against that person as if the purchase was made from him.

  27. Contracting parties cannot contract out of the provisions in s. 8(1). It they did the exclusion will be void Statutory Rights of H i- s. 9(1)(a)(b)(c)-H has a right, upon request w/in 14 days, to receive statement as to his financial position- amount paid; amount due but unpaid; amount payable; amount derived from interest. Failed to comply w/out reasonable cause– owner cannot enforce - the HP agreement against; right to recover the goods from H; any contract of Guarantee.

  28. 2-s. 10 - right appropriation of payments More than one agreement but not enough fund to pay all –H can choose to pay any of the agreement, if failed to direct the payment, payment can be directed towards satisfying the payment due in the order the agreement was made. 3-s.11 –right to apply for an order that the goods can be removed from where it should have been placed (if the agreement specified the location). W/out the order –breach of contract -owner may exercise right to repossess.

  29. 4- s 12(1)- H’s right to assign his right, title and interest under the HP agreement to another with the owner’s consent. Owner may give a reasonable reason for withholding the consent. This right cannot be modified by the HP agreement. It will be void. [s. 34(g)] e.g. If the terms of the agreement provide that an owner will require payment for his consent to allow the assignment – unreasonably withheld his consent. [s12(4)] – agreement void

  30. The section allows owner to require H to fulfill certain conditions before giving his consent to the assignment: e.g. i- H pays all the defaults; ii- H executes and delivers the assignment deed to the owner; and iii- the assignee agreed in the deed to be personally liable for the remaining installments, to perform his obligation under the contract, and to pay the cost of registering and stamping the deed

  31. 5- s. 13 - right by operation of law Right, title and interest of H under the agreement can be passed to his personal representative or liquidator (in case of company) when H died and/or declared bankrupted. 6-s. 14(1) -early completion of the HP agreement H has a right to complete the agreement earlier than the targeted date : give a written notice to the owner of his intention and pay the balance of the payment due under the HP agreement. (all payment – deposit, rebate, rebate for insurance)

  32. This right can be exercised any time. If the owner repossessed the goods – 21 days after the owner gave H a notice under schedule 5 of the HPA. Similarly if H returned the goods upon the owner’s demand he can exercise the right to early completion but w/in 21 days after the notice in schedule 5 was given to him by the owner.

  33. 7- s15(1)(2)(3)-right to terminate the agreement H who cannot afford to continue with the HP agreement may end the contract early. Return the goods at the owner’s place of business, or a place specified by the agreement during office hour, or other place suitable for the particular goods as agreed by both parties. Failed to agree- apply to court and get an order; • Fix a reasonable place; that the goods to be returned to the owner and that the agreement terminated on specific date.

  34. 8- s16 - s20 – right of H on repossession Default by H owner can exercise right to repossess. i- s16(1) – H defaulted in payment -involve two successive installments or the last payment. Owner must give notice in writing (4th Schedule) to repossess to H. Repossession can be made when the period given in the notice has expired. The period must be more than 21 days after the service of the notice.

  35. s16(1A) - In case H died – 4 successive installments must have been missed before owner can exercise right to repossess s.15(5) – H may require owner to sell the goods to anyone introduced by H and that person prepare to buy by cash. S.(18(1)(a)(b) If the value is higher than the balance due under the agreement – H can claim the difference; If less owner can claim the difference as debt due from H.

  36. s16(2) - Owner may disregard the above rule if he has reasonable grounds to believe that the goods will be removed or concealed contrary to the agreement. ii- s16(3) 21 days after the repossession owner must give H a notice in writing in accordance with the 5th schedule. s. 16(6) - Failure to give the notice, owner’s rights under the HP agreement ceased to exist and determine except to the extent that it give H the right to recover the goods.

  37. iii- s. 16(4) – owner must personally deliver or caused to be delivered an acknowledgement of the receipt of the goods to H if he exercise the repossession personally, if he was not present at the time repossession was exercise he must send an acknowledgment that he had received the goods. iv- s. 16(5) - the acknowledgement must contain the description of the goods, date, time and place where the repossession took place.

  38. v- s. 16(7) – owner, its servant or agent must follow any other regulations relating to the mode of repossessing HP goods vi- s. 17(1) - owner cannot resell the goods or part with their possession until 21 days expire after he gave H a notice under s. 16(3) or that H gives the owner a notice to request the return of the goods; or require the owner to sell the goods to anyone introduced by H on cash term under s. 18(1)(a).

  39. Failure to give notice: repossession invalid - Siew Nguong Hin & Ors v Mayban Finance Bhd. Notice less than 21 days invalid – Pang Brothers Motors Sdn Bhd v Lee Aik Seng vii-s. 19(1)(a)(b)- H has the right to regain possession - w/in 21 days after giving the notice in s. 18(1)(a) – H pay or tender payment to owner of the amount due or remedies breach of agreement, or pay the owner’s cost of remedying the breach if he is unable to remedy the breach; or pay or tender the cost of repossession-Owner must return the goods to H.

  40. Once the goods are return owner cannot sue H for breach of contract except: the notice specifying the breach and the request that H remedy the breach had been given at the time the goods were return to H and H failed w/in 21 days or the time specified in the notice to remedy the breach. If the owner failed to give the notice required by s. 16(1) – owner cannot exercise his right to repossession. H may prevent the owner and/or its agent from enforcing the right to Repossession. H may ask the owner and or its agent to leave his premise using a reasonable force.

  41. Public Prosecutor v Mohamed Nor M was a hirer under a HP agreement with KUBB. Several agents (repossessers) went to H’s house to repossess the car although the notice in 4th schedule was not given to M. M invited them to enter his house. Later when he knew their purpose he chased them out of house blood and said, “if you did not leave my house there will be blood flowing” while holding a samurai sword in his hands. Held: failure to give notice under s. 16(1) gives H right to ask the owner and/or its agent to leave his house and to use reasonable force in forcing them to leave his house.

  42. Hirer’s obligations 1- s. 37-goods to be stored in the place specified by the HP agreement lost, move or taken from his possession he must inform the owner upon receiving a notice from the owner– failed to follow the rule w/in 14 days – an offence. if the owner did not send a notice but the goods have been moved to other place

  43. H must inform the owner w/in 14 days from the date the goods were moved or lost about the removal or loss. 2- pay regular installments 3- cannot sell, remove, or dispose the goods because he has no title to the goods. It is an offence to act contrary to this provisions. S. 38

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