HIRE PURCHASE

• HIRE PURCHASE PART ONE
• BUSINESS LAW/FINANCIAL SERVICES AND MARKET
• DR. SHASHI AGGARWAL
• HIRE PURCHASE ACT 1972

1. WHOLE OF INDIA EXCEPT THE STATE F JAMMU AND KASHMIR
2. THE BUYER ACQUIRES THE POSSESSION OF THE GOODS IMMEDIATELY
3. AGREES TO PAY THE TOTAL HIRE PURCHASE IN INSTALMENTS
4. EACH INSTALMENT IS TREATED AS HIRE CHARGE
5. UN TILL THE PAYMENT OF THE LAST INSTALMENT WHEN OWNERSHIP OF THE GOODS PASSES THROUGH SELLER TO BUYER

• FEATURES
• IS AN AGREEMENT BETWEEN THE SELLER AND PURCHASER
• THE POSSESSION OF THE GOODS IMMEDIATELY PASSES FROM THE SELLER TO THE BUYERS ON SIGNING THE AGREEMENT
• MAKING OF PAYMENT IN INSTALLMENT OVER A PERIOD OF TIME
• TREATMENT OF  IT HIRE CHARGES TILL THE LAST INSTALMENT IS PAID
• THE BUYER HAS THE OPTION TO RETURN THE GOODS TO THE SELLER AND CAN TERMINATE THE AGREEMENT
•  IN CASE OF DEFAULT IN PAYMENT OF ANY INSTALMENT.THE SELLER HAS A RIGHT O REPOSSESS THE GOODS SOLD ON HIRE PURCHASE AND FORFEIT THE AMOUNT ALREADY RECEIVED EITHER AS DOWN PAYMENT IN INSTALMENTS.
• HIRE CHARGES

·         HIRE PURCHASE PRICE = CASH PRICE + INTEREST

·         SPLITTING OF HIRE PURCHASE PRICE INTO TWO PARTS:-

• PAYMENT TOWARDS CASH PRICE TO BE TREATED AS CAPITAL EXPENDITURE FOR THE PURCHASE OF AN ASSET
• INTEREST TO BE CHARGED TO PROFIT AND LOSS ACCOUNT TREATING AS A REVENUE EXPENSE
• ESSENTIALS OF HIRE PURCHASE AGREEMENTS

1. WRITTEN AGREEMENT : SHOULD BE IN WRITING
2. SIGNED BY THE PA RITES :-SIGNED BY ALL THE PARTIES

• WHERE THERE IS CONTRACT OF GUARANTEE,THE HIRE PURCHASE AGREEMENT SHALL DESIGNED BY THE SURETY ALSO AND IF IT IS NOT SIGNED THE HIRE PURCHASE AGREEMENT SHALL BE VOIDABLE AT THE OPTION OF THE OWNER

• CONTENTS OF HIRE PURCHASE ( SEC 4)
• EVERY HIRE PURCHASE AGREEMENT SHALL STATE:-
• THE HIRE PURCHASE PRICE OF THE GOODS TO WHICH THE AGREEMENT RELATES
• CASH PRICE OF THE GOODS
• THE DATE
• THE NUMBER OF INSTALMENT
• WHERE ANY PART OF THE HIRE PURCHASE IS OR IS TO BE PAID OTHERWISE THAN IN CASH OR BY CHEQUE

• IMPLIED WARRANTIES AND CONDITIONS IN HIRE PURCHASE AGREEMENT( SEC 6)
• IMPLIED WARRANTIES

1.     QUIET POSSESSION

2.     FREE FROM ANY CHARGE OR ENCUMBRANCE

·         IMPLIED CONDITIONS IN HIRE PURCHASE

1. RIGHT TO SELL THE GOODS
2. GOODS MUST BE OF MERCHANTABLE QUALITY
3. EXCEPTIONS TO THE MERCHANTABLE QUALITY
4. OWNER NOT AWARE
5. DEFECTS ARE SPECIFIED IN THE AGREEMENT
6. HIRE HAS EXAMINED THE GOODS
7. SECOND HAND GOODS

• FOR PARTICULAR PURPOSE OF THE GOODS
• SALE BY SAMPLE
• IMPLIED CONDITIONS IN HIRE PURCHASE AGREEMENT ( SECTION 6)
• FOR PARTICULAR PURPOSE OF THE GOODS :-
• WHERE THE HIRER WHETHER EXPRESSLY OR BY IMPLICATION :
• HAS MADE KNOWN TO THE OWNER THE PARTICULAR PURPOSE FOR WHICH THE GOODS ARE REQUIRED OR
• IN THE COURSE OF ANY ANTECEDENT NEGOTIATION.HAS MAD THAT PURPOSE KNOWN TO ANY OTHER PERSON BY WHOM THESE NEGOTIATIONS WERE CONDUCTED THERE SHALL BE AN IMPLIED CONDITION THAT THE GOODS BE REASONABLY FIT FOR SUCH PURPOSE

·         SALE BY SAMPLE : WHERE THE GOODS ARE LET UNDER A HIRE PURCHASE AGREEMENT BY REFERENCE TO SAMPLE THERE SHOULD BE :

• IMPLIED CONDITION THAT BULK WILL CORRESPOND WITH THE SAMPLE
• ALSO AN IMPLIED CONDITION THAT HIRER WILL HAVE A REASONABLE OPPORTUNITY OF COMPARING THE BULK WITH THE SAMPLE
• IMPLIED CONDITIONS IN HIRE PURCHASE AGREEMENT ( SECTION 6)
• SALE BY DESCRIPTION AND SAMPLE :-
• GOODS ARE LET UNDER A HIRE PURCHASE AGREEMENT BY DESCRIPTION THERE SHALL BE AN IMPLIED CONDITION THAT THE GOODS WILL CORRESPOND WITH THE DESCRIPTION
• IF GOODS ARE LET WITH REFERENCE TO DESCRIPTION AS WELL AS SAMPLE THEN IT SHOULD CORRESPOND WITH DESCRIPTION AS WELL AS SAMPLE
• LIMITATION OF HIRE PURCHASE CHARGES ( SECTION 7)
• CASH PRICE INSTALLMENT : IN RELATION TO HIRE PURCHASE INSTALLMENT MEANS AN AMOUNT WHICH BEARS TO NET CASH PRICE THE SAME PROPORTION AS THE AMOUNT OF HIRE PURCHASE INSTALLMENT BEARS TO TOTAL AMOUNT OF HIRE PURCHASE PRICE
• DEPOSIT : MEANS ANY SUM PAYABLE BY THE HIRER UNDER THE HIRE PURCHASE AGREEMENT BY WAY OF DEPOSIT OR ANY OTHER INITIAL PAYMENT OR CREDITED OR TO BE CREDITED TO HIM UNDER THE AGREEMENT ON ACCOUNT OF SUCH DEPOSIT
• NET CASH PRICE : LESS DEPOSIT
• NET HIRE PURCHASE CHARGES : TO COVER THE EXPENSES OF DELIVERING THE GOODS,TO COVER REGISTRATION OR OTHER FEES AND INSURANCE
• STATUTORY CHARGES
• HIRE PURCHASE AGREEMENT
• PASSING OF PROPERTY ( SEC 8)
• RIGHT OF HIRER TO PURCHASE AT ANY TIME WITH REBATE ( SEC 9)
• RIGHT TO HIRER TO TERMINATE AGREEMENT AT ANY TIME ( SECTION 10)