HIRE PURCHASE AGREEMENT

The word ‘hire purchase is not unknown to us all as it has found its way into our system and became popular as it allow to credit to someone who is unable to pay for the goods he wants and who would be happy to pay some deposit and thereafter pay balance install mentally at a stipulated rate of interest.

Hire purchase agreement is an agreement by an owner of goods to hire them   to a hirer and to give the hirer an option to purchase conditional on his completing the necessary payments for the goods and complying with the terms of the agreement.

The law governing hire purchase agreement in Nigeria is THE HIRE PURCHASE AGREEMENT ACT,1965The purpose of enacting the act is to regulate the hire purchase transactions which has hitherto has been executed under the ordinary law contract, and under which some owners have exploited the ignorance of the people to enforce oppressive agreements. the legislation is to strike root of many justices which were highlighted during the debate on parliament.

This agreement can be done orally or by writing, but because of the details of agreement involved it is advisable it is in written form so as to avoid any misunderstanding or misrepresentation of facts. it must contain a clause which says the owner agrees to let and the hirer agrees to hire the good to the hirer, this is an offer and acceptance between parties, a clause to determine hiring and return of goods and an option to purchase good for a nominal sum at the end of the hiring for the hire purchase agreement to be valid.

This contract of agreement is solely determined by the terms of agreement between the parties; it is what they agree on to guide and governs their transaction that becomes binding under law. 

it is the obligation of the owner to make delivery of good to the hirer which are the subject matter of the hire purchase agreement, the breach of these entitles the hirer t repudiate the agreement, physical transfer of the good is sufficient and it must be exactly the way the owner described the good to the hirer, it must be fitness for purpose as it was held in AMUSAN&THOMAS V. BENTWORTH FINANCE (NIG)LTD

it is also the duty of the hirer to take delivery of goods hired he will be liable in damage if he fails to take delivery within a reasonable time after he had been duly requested to do so i.e. he will be bound to pay installments for the period he failed to take delivery, a duty to make all necessary payment agreed by parties on the good hired, a duty to be in custody of the good for the purpose it was hired for.

The hirer has the right to terminate the agreement before the agreed period but a limit must be set to in agreement in order to ensure that justice is done among the parties to the hire purchase agreement, for a hirer to terminate he must have at least paid half of the hire purchase price and the hand the good over to the owner.

The injustice of retaking goods by the owner has been remedied by the restriction on the right of repossession by the owner other than by action after relevant proportion has been paid or tendered, particularly where there is minor slip in paying the installments.

The hire purchase agreement need to be properly handled so as not to fall victim by entering into an agreement that will be binding on the parties. Consult us for a proper review of hire purchase agreement before entering into one.

Thank you.

Oyenike ALLIYU-ADEBIYI LLB (hons)BL