Hire Purchase

Hire purchase agreement includes a letting of goods with an option to purchase and an agreement for the purchase of goods by instalments (whether the agreement describes the instalments as rent or hire or otherwise), but does not include any agreement:

a)

b)

Whereby the property in the goods comprised therein passes at the time of the agreement or upon or at any time before delivery of the goods; or Under which the person by whom the goods are being hired or purchased is a person who is engaged in the trade or business of selling goods of the same nature or description as the goods comprised in the agreement

Nature of Hire Purchase

The business is limited to transactions that involve the owner and the hirer The ownership will not transfer at the time the contract being made
[Cf. Credit Sale Agreement]

Under hire purchase the hirer will have an option to buy the goods upon the completion of the necessary payments

Hire Purchase Act 1967

[Scope of Application]

Throughout Malaysia Goods as listed in the First Schedule

Kesang Leasing Sdn Bhd v Mohd Yusof bin Ismail & Anor [1990]

First Schedule
1.
2.

All consumer goods; and Motor vehicles, namely

Invalid carriages Motor cycles Motor cars including taxi cabs and hire cars Goods vehicles (where the maximum permissible laden weight does not exceed 2540 kilograms) Buses, including stage buses

Prior to the 1992 Amendment

Radio sets, television sets, gramophone sets, tape recorders and any combination thereof Refrigerators and deep-freeze food preservers and any combination thereof Sewing machines other than those used for industrial purposes Washing machines Vacuum cleaners

Cont.
Air-conditioning units other than those used for industrial purposes Electric or gas cookers and ovens Video tapes/cassette recorders Typewriters Organ and pianos Photostat machines/copiers Hi/fi systems

The Formalities

Before Agreement [Pre-Contract]

Section 4(1) (a) & (b)

During Agreement [Contract]

Section 4A, 4B, 4C & 4D

After Agreement [After Contract]

Section 5(1)

Before Agreement

Owner

Provide a written document, completed and signed Part I of Second Schedule

Dealer
Provide a written document, completed and signed Part I of Second Schedule Provide a written document (i.e. consent), completed and signed by both Part II of Second Schedule

Part I of the Second Schedule

A summary of the hirer financial obligations; and must set out the following;

Short description of the goods New/second hand Address the goods will be kept Cash price Deposit Freight charges, if any Insurance and registration (motor vehicle) Terms charges (rate per annum, total amount of the terms charges) Different between cash price and total amount payable The instalment payments

During Agreement

Section 4A In writing (@ void) Section 4B (2) Sign the completed form (@ void)

Ming Lian Corporation Sdn Bhd v Haji Nordin

Section 4C Content of the contract Section 4D Separate Agreement

After the Agreement

Section 5(1) A copy of the agreement should be sent to the hirer within fourteen (14) days failure will result to unenforceable

Repossession

Section 16(1) two successive defaults of payments or a default in respect of the last payment Serves a notice as set out in the Fourth Schedule the 21 days has expired

Public Prosecutor v Mohamed Nor

Without notice Notice less than 21 days Repossession before the 21 days lapses

Pang Brothers Motors Sdn Bhd v Lee Aik Seng

Siew Nguong Hin v Mayban Finance Bhd

After Repossession
Section 16(3) within 21 days, the owner will need to serve a notice [as set out in the Fifth Schedule] to the hirer Section 16(4) serves a document acknowledging the receipt of the goods