THE MINIMUM PAYMENT CLAUSES UNDER THE ACT
CONTENTS
1.0. Introduction.
2.0. Objective.
- Main Body.
- The Minimum Payment Clauses under the Act
- Mode of Assessment of Amount Payable by the Hire
- Effect of Minimum Payment Clauses
4.0. Conclusion
5.0. Summary
6.0. Tutor Marked Assignments (TMA)
7.0. References/Further Readings.
INTRODUCTION
The law stipulates the amount required as percentage for the initial payment of the hire- purchase agreement. The mode of calculating the amount payable by the hirer is also one of the areas of concern in this unit along with how much is payable by the hirer as a installments payment for that purpose. The Act also regulates the amount required for payment. The effect of the minimum payment clause is the right of the hirer to be able to terminate the agreement. These and more are the issues for discussion here in this unit.
OBJECTIVE
The main objective of this unit is to enable learners to know about the minimum payment clause in a hire-purchase agreement.
MAIN BODY
The Minimum Payment Clause Under the Hire-Purchase Act
The minimum payment clause is usually for the protection of the hirer. It could assume all sorts of forms. There are also cases of stipulation for payments of a fixed percentage of the hire purchase price or an amount payable by way of agreed depreciation of the goods.
Mode of Assessment of Amount Payable by the Hirer
Section 8 (1) of the Act gives the hirer a right to terminate the agreement. However, in the event of termination of the agreement, the hirer is liable to effect a fifty percent minimum payment. If the hirer has paid more than half of the hire purchase, he will not be expected to bear further financial burden by reason of his terminating the agreement, except such installments which have accrued as arrears.
The assessment of the hired liability under section 8 (1) contemplates that any stipulation with regard to minimum payment clause in the hire-purchase agreement by the parties will be valid, if the amount specified therein is less than the amount payable.
Possible Liabilities on Hirer Following Termination
Once the hirer exercises his right of termination of the hire-purchase agreement, then a statutory duty to take reasonable care of the goods is imposed on him. However, if the goods are either damaged or destroyed then the owner has a remedy in damages.
In a situation where the hirer has terminated the agreement but wrongfully retains the goods, he will be liable to action for damages in detinue. In such a situation, he shall be compelled to deliver the goods to the owner without being given the opportunity to pay for the value of the goods.
Effect of Minimum Payment Clause Stipulation Agreement Governed by the Act
The Act statutorily recognizes the hirer’s right to terminate the hire-purchase agreement. In the event of such termination, the collective effect of the provisions of section 8 (1) and section 3 (b) and (c) is that any sum stipulated by way of minimum payment clause will be rendered void.
Successive Hire-Purchase
The hirer may sometimes, for some reason, elect to cancel the old agreement and substitute it with a new one for the payment of the balance of the hire-purchase price.
Credit Sale Agreement
Section 20 (1) of the Act states that Credit –Sale means the sale of goods in pursuance of an agreement under which the whole or part of the purchase price is payable by five or more installments and credit sale shall be construed accordingly.
CONCLUSION
Once the minimum payment clause is inserted in the hire-purchase agreement, it will provide a fixed amount payable during the hire period. For this reason, the hirer has the right to terminate the hire-purchase agreement by himself while he still has hire amount to pay. In this situation, the balance is rendered void.
SUMMARY
In summary the minimum payment clause is inserted for the purpose of ascertaining the actual amount to be paid during the hire period. It is important to also note further that the hirer can terminate the agreement and with the provisions of the Act, the balance to be paid once the minimum amount clause has been inserted will be terminated.
TUTOR MARKED ASSIGNMENT
- What is the effect of the minimum payment clause?
- Briefly explain the possible liabilities of the hirer following the termination of the agreement
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,