CHAPTER 5;

Law of Hire Purchase

Hire Purchase Act 1967

Prepared by;
Alizah Ali
Department of Law
UITM Bandaraya Larkin

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At the end of the class, students are able to

understand
The definition of HP
The definition of owner, hirer, price and goods
The formation of HP (b4 & during the
agreement-6)
Liability of owner in the case of
mispresentation
Statutory Rights & Duties of Hirer(8)
Statutory Duties & Obligation of Hirer(3)
Right of owner in repossession
Right or Hirer After Repossession
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The definition of HP
Hire Purchase

Sect 2(1) of Hire Purchase Act 1967

Letting of goods with an option to purchase

or

Purchase of goods by installment

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The definition of HP
Ownership is
not transfer to
the Hirer

At the time
contract is
made

Hirer only
obtain the
possession of
the goods
The ownership will
remain with the
Owner until
payment is
complete

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The definition of HP
Concept of HP
Credit Corporation (M) Sdn Bhd vs
The Malaysian Industrial Finance
Corp

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definition of owner, hirer,

price and goods

owner

Sect 2(1)
HPA 1967

hirer

price

goods

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definition of owner, hirer,

price and goods
Sect 2(1) HPA 1967

goods

Consumer
goods

1st Schedule of
HPA 1967

Motor
vehicles

Case : Kesang Leasing Sdn Bhd Vs Mohd Yusof Ismail

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formation of HP
1. B4 agreement Giving 2nd Schedule Notice
2. Agreement must be in writing

3. Agreement must be signed

4. Content of HP agreement
5. Separate agreement for every item of goods
6. Copy of agreement must be served on the Hirer
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formation of HP
1. Giving

2nd

Schedule Notice

Sect 4(1) HPA

1967

Before agreement of HP is made

A must Sec 4(1)(a) of HPA 1967
Owner made a complete set of 2nd Schedule
Sect 4(1)(b)(i) & (ii) of HPA 1967
Sort of quotation description of the goods
summary of financial obligation

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formation of HP
1. Giving

2nd

Schedule Notice

Method of service

No need
to pay any
considera
tion

In person

NO ..
YES .. Sect 46
RM3000 @ 6
months
imprisonment
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Sect 4(1) HPA

1967
Acknowledge
receipt

No
obligation
to enter
into the
contract

formation of HP
1. Giving

2nd

Sect 4(1) HPA

1967

Schedule Notice

Contract is void
If no 2nd Schedule
Notice

Sect 4 (4) of HPA

1967
Affin Credit (M) Sdn
Bhd vs Yap Yuen Fui

Guilty Sect 46 of
HPA 1967
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formation of HP
2. Agreement must be in writing

Sect 4A HPA
1967

Contract is void
If not in writing

Guilty Sect 46 of
HPA 1967

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formation of HP
3. Agreement must be signed

Sect 4B HPA
1967

All parties to the agreement must sign Sect

4B(1) HPA 1967
Sign a complete agreement and not a blank
agreement Sect 4B(2) HPA 1967
Contract is void
If not sign

Guilty Sect 46 of
HPA 1967
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formation of HP

Specify

4. Content of HP agreement

Sect 4C HPA
1967

oDate of agreement
oNo of installment
oAmount of each installment\time for
payment
oDescriptions of goods
oAddress where the goods placed
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formation of HP
Tabular form

4. Content of HP agreement
oCash price
oDeposit price
oVehicles registration
oInsurance amount
oBalance original payable
oTotal amount payable
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Sect 4C HPA
1967

formation of HP
Sect 4C HPA
1967

4. Content of HP agreement

Contract is void
If not contain

Guilty Sect 46 of
HPA 1967

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formation of HP
5. Separate agreement for every item of goods

Sect 4D HPA
1967

Contract is void
If not contain

Guilty Sect 46 of
HPA 1967

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formation of HP
6. Copy of agreement must be served on the Hirer
Sect 5(1)
HPA 1967
Within 14 days after making the contract
Sect 5(3)
HPA 1967

Sect 5 HPA
1967

hirer
guaran
tor

A copy of
insurance
policy

A copy of HP
agreement
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formation of HP
6. Copy of agreement must be served on the Hirer

Contract is void
If not get a copy

Sect 5(1A)
HPA 1967

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Sect 5 HPA
1967

Liability of owner in the case of

mispresentation

owner

Sect 8(1)(a) HPA 1956

RESCIND the contract

Mispresentation
Hirer may
Lau Hee
Teah vs
Hargill
Engineering
Sdn Bhd
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dealer

Sect 8(1)(b) HPA 1956

Claim for DAMAGES

Liability of owner in the case of

mispresentation

Exemption
clause

Sect 8(2)
HPA 1957

Exclude, limit
& modify

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Contract
is VOID

Liability of owner in the case of

mispresentation
Right of innocent owner
Dealer mispresentation
Innocent
owner may
be
indemnified
by the Dealer
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Statutory Rights & Duties of Hirer

1. Right to a copy of agreement
Sect 5 HP 1967
2. Right to a copy of Statement of

RIGHT
of
HIRER

current position
Sect 9 HP 1967
3. Right to appropriation of payment
made in HP agreement
Sect 10 HP 1967
4. Right to apply from court-to get

an order to remove the goods

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Sect
ali- 11 HP 1967

Statutory Rights & Duties of Hirer

5. Right to assign Hirers right which stated
in HP agreement Sect 12 HP 1967

RIGHT
of
HIRER

6. Right by Operation of Law Sect 13

I HP 1967
(personal-death & company-winding up)

7. Right to early completion of the

agreement
Sect 14 HP 1967

8. Right to terminate the agreement

Sect 15 HP 1967
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Statutory Duties & Obligation of

Hirer
1. Duty to continue payment

DUTIES

eventhough the goods hired

destroy
Ka Yim Credit & Leasing Sdn Bhd vs
Pang Kim Cha

of HIRER

2. Duty to inform Owner the position of the

goods

Sect 37 HP 1967

3. Fraudulant Sale or Disposal of

goods by the Hirer
Sect 38 HP 1967

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Right Of Owner In Repossession

RIGHT TO REPOSSESSION
Hirer defaulted to pay 2 successive

installment,

or

Hirer defaulted to pay the last installment

Death Hirer

default

4 successive

installment Sect 16(1) HPA 1967

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Right Of Owner In Repossession

procedure
Before

1 Sect 16 HPA 1967 / 4th Schedule

can repossess after 21 days from the date of
service of 4th Schedule notice.

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Right Of Owner In Repossession

procedure

Pang Brothers Motors Sdn Bhd vs Lee Aik Seng

19 days
United Manufacturers Sdn Bhd vs Sulaiman
Ahmad

repossess after 2 years from the date of the

service of 4th Shcedule Notice

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Right Of Owner In Repossession

procedure

Exemptionto serve 4the Schedule Notice

if the owner can prove
that there is a possibility
that the Hirer would
conceal or remove the
goods from the owner
Section 16(2) of HPA 1967
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Right Of Owner In Repossession procedure

During
Sect 16(7) HPA 1967
Required the owner/dealer to comply with regulation
as regard to the manner to repossess the goods

HP (Recovery of Possession And Maintenance of

Records by Owners) Regulations 1976
if
if

owner
owndealer

show ic/business card

show ic/authority card
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Cont
Right Of Owner In Repos
session

procedure

Can enter into Hirers Premise proper &

lawful manner
Failure to comply offence Regulation 9
Dealer commit offence owner is deemed
guilty unless ..

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Right Of Owner In Repossession

procedure

After

1. Sect 16(4) HPA 1967

Immediately Owner shall deliver to the

hirer a document of
acknowledge receipt of the
goods
Sect 16 (5) of HPA 1967 contain of document
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Right Of Owner In Repossession

procedure

After
2. Sect 16(3)n HPA 1967

Within 21 days of the repossession owner

serve 5th Schedule

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Right Of Owner In Repossession

require the owner
to redeliver the
goods to him
+ arear of
installment
+ installment due
+ interest due
+ cost of
repossession
+cost of storage
+ cost for
redelivery

5th Schedule
option

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procedure

Complete the
agreement by
paying the
balance due
under the
agreement + cost
repossess

procedure

Right Of Owner In Repossession

DO NOT take
the goods

Take the goods

Pay installment
due
Cost incidental
to
repossession
Cost delivery

Pay full
payment

5th Schedule
option

Cost incidental
to
repossession

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Cont

Right Of Owner In Repossession

procedure

owner will lose

his right under
HP agreement
and x entitle to
get remedy

If x 5th Schedule

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Cont

Right Of Owner In Repossession

procedure

3. Sect 16A HPA 1967

after receive 4th Schedule Notice, the Hirer is surrender the
goods to the owner, owner shall
for..

not impose payment

a) cost of repossession
b) cost incidental to
repossession
a) cost of storage
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Cont

Right Of Owner In Repossession

procedure

4. Sect 17 HPA 1967

After repossession, owner shall not

sell/dispose the goods without written
consent from the Hirer.
he shall be
guilty under
Section 17(2)
HPA 1967

If dispose without
consent

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hirer
5th
schedule
(option)
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Reject the goods

Take the goods

Right of Hirer After Repossession

Right of Hirer After Repossession

1. Take the goods
Require the owner to redeliver the goods to the hirer
i this can be made within 21 days after the service of 5th
Schedule Notice.
ii this can be made via written application to reinstate the
agreement

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Right of Hirer After Repossession

Take the goods
iii Hirer has to pay;
1) arear of installment + interest Sect 9(1)(a)HPA
2) remedy for breach of agreement Sect 19(1)(b)HPA
3) cost incidental to repossession Sect 19(c) HPA
4) cost of redelivery Sect 19(c) HPA

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Right of Hirer After Repossession

2. Reject the goods
Reject the goods and require the owner to sell the
goods to any person introduced by the hirer who is
prepare to buy the goods for cash.
Sect 18(4) HPA 1967

Public
Sect
18(4)(a)auction
HPA 1967
Owner serve a notice to the hirer
Not less than 14 days b4 the date
Of auction
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Private
auction
Sect
18(4)(b) HPA
1967
Owner give hirer an option
to buy the goods at the price
which he intends to sell