Table of Contents

Table of Contents.........................................................................................1
Table of Contents.........................................................................................1
Bibliography.................................................................................................1
INTRODUCTION ............................................................................................2
General Principle of Hire-Purchase.............................................................2
REPOSSESSION ............................................................................................5

Table of Contents
Table of Contents.........................................................................................1
Table of Contents.........................................................................................1
Bibliography.................................................................................................1
INTRODUCTION ............................................................................................2
General Principle of Hire-Purchase.............................................................2
REPOSSESSION ............................................................................................5

Bibliography
Ida Rosnita Ismail. (2005). Businees Law. Shah Alam: Institut Perkembangan
Pendidikan.
Mei Pheng, L., & Jeron Detta, I. (2009). Businees Law. Shah Alam: Oxford
Fajar Sdn. Bhd.
Salleh Buang. (2001). Malaysian Law On Hire Purchase (Second ed.).
Selanngor: Sweet & Maxwell Asia.

INTRODUCTION
General Principle of Hire-Purchase

Hire Purchase is a system of business things on credit whereby the seller of

the goods is regarded as the dealer, the purchaser is regarded as the hirer
and the finance company is the owner. As a hirer, you will have to repay the
financier based on the agreed duration while you have possession of the
vehicle. When all the installments are paid up, ownership is then transferred to
you.The ownership of the goods bought on hire purchase does not pass to the
hirer at the time of the hire purchase agreement or upon delivery of the goods.
The ownership of the goods remains in the owner until the hirer has fully paid

the price agreed upon in the hire purchase agreement. Under Hire-Purchases
Act 1967 (Act 212) in the first schedule of Act the scope are limited thus not
cover all transaction (Ida Rosnita Ismail, 2005).
Before April 11, 1968 there was no exact bill to control and regulate hire
purchase transaction in Malaysia (Mei Pheng & Jeron Detta, 2009). Prior to
this date there was no legislation to control and regulate hire-purchase in
Malaysia and agreements came under scope of the ordinary law of contract
and were covered by the Sale of Goods Ordinance 1957 as agreement to
sell.
The goods you can purchase is purchaser goods on hire purchase as well as
motor vehicles such as invalid carriages, motorcycles, motor cars including
taxi cabs and hire cabs, good vehicles where the maximum permissible laden
weight does not exceed 2540 kilograms, and also buses including stage
buses (Salleh Buang, 2001).

Earlier to the 1992 amendment, apart from motor vehicle as describe above,
the Hire Purchase Act only applied to the following good:1. Radio set, television sets, gramophone sets, tape recorders and any

combination thereof;
2. Refrigerators and deep-freeze food preservers and any combination

thereof;
3. Sewing machine other than those used for industrial purpose;
4. Washing machine;
5. Vacuum cleaner;
6. Air-conditioning units other than those used for industrial purpose;
7. Electric or gas cookers and oven;

8. Video tape/ cassette recorders;

9. Typewriters;

10. Organs and pianos;

11. Photostat machines/ copier;
12. HiFi systems.

The Hire-Purchases Act sets out the forms and contents of Hire-Purchases
agreements, the legal rights, duties, obligations of hirers and financiers. All the
parties must sign a hire purchase agreement and the agreement, among other
things, must specify the date when the hiring commences, the number of
instalments, the amount of each instalment, the time for the payment of each
instalment, the description of the goods and where the goods are kept. Note
that the agreement must be in writing. An oral agreement is not a valid hire
purchase agreement.
Under no circumstances doesnt sign a blank hire purchase agreement form.
The owner may require you to provide information on or more guarantors to
guarantee the performance of your obligation under the hire purchase
agreement.
The interest, often referred to as 'Terms Charges', shall not exceed 10% per
annum. The deposit should not be less than 10% of the cash price of the
goods bought. This means that the parties can agree to a deposit of more
than 10% and the deposit may be paid in cash or in goods, or partly in cash
and partly in goods. As a guide, your monthly repayment on your financing
should not exceed 33% of your monthly household income.

REPOSSESSION
Under common law, the owner has the right to recover possession of the
goods if the hirers commit a breach of his obligation under the hirer-purchase
agreement. The Hirer-Purchase Act 1967 lays down different restrictions on
the power of the owner as a means of protecting the hirer. The relevant
provisions of the said Act are sections 16 to 19 (Salleh Buang, 2001). The
restriction imposed on the power of the owner when recovering possession.
The owner have the right to take possession of the goods if there have been
two successive defaults of payments or a default of the last payment. Then
the owner must serve on the hirer a notice in writing intending to repossess
the goods after a period of not less than 21 days after the service of the notice
of intention to repossess. Thus it is essential that you are prompt in your
instalment payments. When the owner repossesses the goods he must, within
21 days serve on you and the guarantor(s), if any, a notice in writing informing
you that if within 21 days after service of the notice, you pay the owner the
amount due or remedy any breach and pay the reasonable costs incurred, the
owner shall forthwith return the goods. If you do not make any attempt to
recover the goods, within the time provided for, from the owner after the goods
have been repossessed, the owner will sell the goods usually by public
auction or by tender. If the amount recovered forms such sale by the owner is
less than the amount due to the owner, then the owner shall sue you and the
guarantor for the deficit sum.

The Procedures Must The Owner Follow When He Comes to Repossess

The Goods.
If the owner comes personally to repossess the goods then he must produce
his identity card and provide the hirer with the name and address of the
company to which he belongs. If the owner sends his servant agent or
employee then the person concerned must produce and show his identity card
and his authority card. The authority card must bear the photograph of the
servant agent or employee, his name and address, the name and address of
the owner, the nature of appointment of the servant agent or employee and
the signature of the owner.

WHAT WILL HAPPEN IF THE GOODS ARE

REPOSSESSED?

CAN I COMPLETE PAYMENT OF THE INSTALMENTS

EARLIER THAN THE DATE AGREED UPON?
The hirer can complete the hire purchase agreement earlier than the date
originally agreed upon by paying the balance due at any time during the
existence of the agreement or where the owner has repossessed the goods
the hirer can complete the agreement by paying the owner within 21 days, the
net balance due as well as reasonable costs incurred by the owner for
storage, repair and maintenance of the goods repossessed.

INDEX
A
Act................................................3, 5
address.............................................6
agreement.............................2, 4, 5, 6
Air-conditioning.................................3
amendment......................................3
amount.........................................4, 5
appointment.....................................6
authority...........................................6
authority card...................................6

B
balance.............................................6
bill.....................................................3
breach...............................................5
business............................................2

C
company.......................................2, 6
complete...........................................6
costs.............................................5, 6
credit................................................2

D
dealer...............................................2
deficit................................................5
delivery.............................................2
deposit..............................................4
due...............................................5, 6

E
employee..........................................6

F
finance..............................................2

G
gas cookers.......................................3
goods................................2, 3, 4, 5, 6
gramophone......................................3
guarantors........................................4

H
Hire Purchase................................2, 3

I
identity.............................................6
identity card......................................6

incurred........................................5, 6

K
kilograms..........................................3

M
maintenance.....................................6
motor................................................3
motor cars.........................................3
motorcycles......................................3

N
name................................................6
nature...............................................6
notice................................................5

O
originally...........................................6
oven..................................................3
owner....................................2, 4, 5, 6
ownership.........................................2

P
paid...............................................2, 4
parties...............................................4
person...............................................6
photograph.......................................6
Photostat machines...........................4
produce.............................................6

R
Radio................................................3
recover.............................................5
Refrigerators.....................................3
remedy.............................................5
repair................................................6
repossess......................................5, 6
REPOSSESSION..................................5

S
seller.................................................2
servant agent....................................6
Sewing machine................................3
signature...........................................6
storage..............................................6
sum...................................................5

tape recorders...................................3
television..........................................3
Terms Charges..................................4
time.......................................2, 4, 5, 6
transaction........................................3
Typewriters.......................................4

units..................................................3

V
Vacuum cleaner................................3
vehicles.............................................3

W
Washing machine..............................3