CONTROLS OF HIRE PURCHASE AGREEMENT
CONTENTS
1.0. Introduction.
2.0. Objective.
- Main Body
- Adverse Possession and Conversion
- Control of Advertisement
- Sanctions
4.0. Conclusion
5.0. Summary
6.0. Tutor Marked Assignments (TMA)
7.0. References/Further Readings.
INTRODUCTION
This is an area where the hirer must give possession of the goods in his possession once he has received notice to do so or else he will be guilty of adverse possession and conversion of the goods especially where he sells to a third party. No doubt, the owner will still exercise his right to repossess the goods even if the third party has bought without notice of the owner of the goods because the law under the hire-purchase is not the same as under the Sale of Goods Act.
OBJECTIVE
The purpose of this unit is to enable learners to understand the concept of adverse possession of goods and that of conversion of goods by the hirer where the owner is unable to exercise his right of repossession of the goods to its fullest.
MAIN BODY
Adverse Possession and Conversion
Where section 14(1) of the Act applies, a hirer in possession of goods under a hire purchase agreement is deemed to be in adverse possession if the owner, in any action to enforce a right to recover possession of the goods from the hirer, proves that after his right to possession accrued and before commencement of the action, he made request in writing for the possession of the goods.
The purpose of this section is that where the hirer has defaulted, and a written notice has been issued on him, then if he refuses to deliver them up, the owner will have a cause of action for adverse possession against him. Giving of notice is mandatory, and if he refuses to deliver up the goods, his possession will be regarded as adverse, sufficient enough to ground the statutory cause of action in damages for adverse possession and could also be sued for conversion.
Recovery from Third Party
Where the hirer has wrongfully made a disposal of the goods to a third party, who receives the good bona fide and without knowledge of the owners right, such third party does not take a good title. It should be noted that this is hire-purchase agreement and not sale of goods transaction, because the property in the hired goods does not pass to a person who purports to purchase same from the hirer. For this reason, the owner’s right of repossession remains undisputed, and statutory conditions and warranties will be applied notwithstanding any agreement to the contrary.
Recovery of Possession after Death of the Hirer
Generally, on the death of the hirer, his rights and liabilities under the hire-purchase agreement pass to his personal representatives by operation of law, while such right terminates under common law. In hire-purchase agreement, the personal representatives of the deceased are expressly placed in the same position as the hirer.
Such rule that the goods can be passed to the personal representatives or to his spouse can be neutralised by inserting a clause in the agreement that it should terminate on the demise of the hirer.
Recovery without Restriction
Under listed are the conditions where the owner can recover the goods without any restriction or even litigation.
- Where the hirer has rightfully exercised his right to terminate the agreement or bailment
- Where less than the relevant proportion of the hire-purchase price has been paid or tendered
- Where the hirer has voluntarily consented to return the hired goods to the owner.
Control of Hire-Purchase Agreement
This is one of the statutory interventions for the purpose of checking the mischief perpetrated by the owners or dealers of goods subject to hire-purchase agreement, especially with regard to advertisements which are half truths and misleading.
The scope of control is where the Act regulates advertisements of goods as being goods available for display by way of hire-purchase or credit sale, if the advertisement includes:
An indication that a deposit is payable
Words indicating that no deposit is payable
An indication of the amount of any one or more of the installments payable.
The general information required under the Act for advertisement shall include the following information:
- The amount of the deposit directly expressed
- The statement that no deposit is payable
- The amount of each installment directly expressed
- The total number of installments payable
- The length of the period in which each installment is payable
- The number, if any, of installment payable before delivery of the goods
- A sum stated as the cash price of the goods
The Act further stipulates that each part of the information in an advertisement must be displayed and stated clearly and in such a way as not to give undue prominence or emphasis to any part of it in comparison with any other part.
Sanctions
Any contravention of the provisions requiring the furnishing of certain information in the advertisement shall amount to an offence punishable by a fine.
Section 17 (3) of the Act provides that if the offence is committed by a body corporate with the consent, connivance or neglect of any of its directors, managers, secretary or any other officer, he as well as the body corporate, shall be guilty of that offence and punishable by a fine.
CONCLUSION
In adverse possession, the hirer might be liable for conversion of the goods and the owner of the goods has a right to repossess the goods from the third party to whom the hirer has sold to, without notice of the owner because under hire purchase the hirer has no title in the goods as the goods has not passed to him. While the rule of advertisement of goods under hire purchase rule must be adhered to strictly, sanctions will be imposed in a situation where the rules laid down have been violated.
SUMMARY
The rule on adverse possession and conversion, state that where the hirer has refused to give possession despite the notice served on him by the owner before an action in court, and where he goes ahead to sell the goods then the bona fide purchaser without notice will not be protected as the rule in nemo dat quod non habet will avail.
TUTOR MARKED ASSIGNMENT (TMA)
- How realistic is repossession under the Hire-Purchase Act
- Explain the importance of notice under the rule of adverse possession of goods by the hirer
REFERENCES/FURTHER READING
- Hire Purchase Act. Cap 169, Laws of the Federation
- Sale of Goods Act, 1893
- Rawlings, Commercial Law, University of London Press,2007
- Okany, Nigeria Commercial Law, Africana-Fep Publisher, Limited,1992
- Sofowora, General Principles of Business and Coop Law, Soft Associates,1999