INTRODUCTION
Hire
Purchase Act 1967 is applicable to all business of hire purchase in Malaysia.
Hire Purchase Act 1967 was adapted from Hire Purchase Act 1960 New South Wales,
Australia and was amended several times down before this. All hire-purchase agreement
shall satisfy the procedures relating to the establishment of a hire purchase
agreement. Hire purchase also mentions conditions and warranties,
merchantability and fitness articles for the hire purchase agreement. It also
lists the statutory rights of tenants, secured rights and procedures for
repossession of goods under a hire purchase agreement.
Definition of hire
purchase
compliance
with Sections 2 of the act of hire purchase, hire purchase agreement included
allowing goods with an option to purchase agreement and an agreement for the
purchase of goods by instalments (whether the agreement stated instalments as
rent or otherwise) but does not include any agreement:
a) In
which the property in the goods passes contained within the agreement or during
or at any time prior to the delivery of goods or
b) People
renting or buying goods is a person engaged in a trade or business of selling
the same goods or description of the items contained in the agreement.
Hire
purchase concept as specified in Section 2 means tenants will only receive
title to the goods after all instalments have been paid to the owner.
Definition
of hirer in accordance with the Act is the person who takes or has taken goods
from the owner under a hire purchase agreement and include the person to whom
the rights or liabilities, the liabilities of the tenant under a hire purchase
agreement have been assigned or enforced by law.
While
the definition of the owner is the person who authorized or allowed goods to
the hirer under a hire purchase agreement and include the person to whom the
rights or liabilities of the owner under the agreement have been assigned or
enforced by law. In the case of Arab-Malaysian
Finance Bhd v Samian Bin Sabin & Anor[1].
The Court stated that the owner means a person who hire out or has hire out
goods (buses in this case) under hire purchase agreements and these include one
to which the rights and liabilities under the agreement has been given the
assignor or by law.
The
owner has the right to take back the goods if the instalment is not paid
according to the hire purchase agreement. In the case of Tractor Malaysia Bhd v Kumpulan Pembinaan Malaysia Sdn.Bhd[2].
A hire purchase agreement has been made between appellant and respondents to a
bulldozer. Respondent fails to pay the agreed instalment and the bulldozer was
taken aback by the appellant. Respondents later pay the original instalment in
arrears and bulldozer it is returned to the respondent. Respondents once again
failed to pay the instalment. Appellant demanding tray bulldozer taxable price
paid, boarding and compensation. Respondent denied on grounds that agreement
between the appellant and the respondents are regular sales and instead hire
purchase. The court ruled that the
transaction between the appellant and the respondent is hire purchase because
both parties agree that ownership will only move when full payment is settled.
With the appellant was entitled to enforce the rights of repossession if the
respondent fails to pay in instalments.
While
in the case of Credit Corp. (M) Bhd v
Industrial Finance Corp & others[3].
The High Court decided that the agreement between the plaintiff and the first
tenants are subject to hire purchase and Hire Purchase Act 1967. Therefore, the
ownership of the car will not move to the tenant until he made the choice to
buy a car that is by paying all the instalments set and comply regulation hire
purchase agreement.
Contained
in section 9-15 ASB, statutory rights of hirer are the right to obtain
information, rights to distribution fees, the right to move goods, the right to
assign the goods, the right to deliver the goods by operation of law, early
settlement, and termination of the agreement.
STATUTORY RIGHTS OF THE
HIRER
1.0 Duty of owners and
sellers to supply documents and information
Section
9.(1)
At
any time before the final payment has been made under a hire-purchase agreement
the owner shall, within fourteen days after he has received a request in
writing from the hirer, supply to the hirer a statement signed by the said person
or his agent showing—
(a)
the amount paid to the owner by or on behalf of the hirer (agent)
(b)
the amount which has become due under the agreement but remains unpaid;
(c)
the amount which is to become payable under the agreement; and
(d)
the amount derived from interest on overdue instalments:
However this right can only be exercised not
more than once in three month. If the hire makes such requests more than once
in three month, the owner can refuse the comply.
Under
normal circumstance, the owner is obliged to comply with the hirer’s request
within fourteen days of receipt of such request. If he fail to comply ‘without
reasonable cause’ and so long as such default continues, the owner cannot
enforce the agreement against the hirer or exercise any right to recover the
goods from the hirer or any contract of guarantee[4]
relating to the agreement. If the default aforesaid continues for a period for
one month, the owner shall be guilty of an offence and shall, on conviction, be
liable to a fine not exceeding RM200-section 9(2) and (3), Hire-Purchase Act
1967.
Section
9.(2)
In
the event of a failure without reasonable cause to comply with subsection (1)
then, while the default continues—
(a) the owner shall not be entitled to
enforce—
(i)
the agreement against the hirer;
(ii)
any right to recover the goods from the hirer
(iii)
any contract of guarantee relating to the agreement
(b)
any security given by the hirer in respect of money payable under the agreement
or given by a guarantor in respect of money payable under such a contract of
guarantee as aforesaid shall not be enforceable against the hirer or the
guarantor by any holder thereof.
Section
9(3) If the default aforesaid continues for a period of one month, the owner
shall be guilty of an offence and shall, on conviction, be liable to a fine not
exceeding one thousand ringgit.
Section
10
A
hirer who is liable to make payments in respect of two or more hire-purchase
agreements to the same owner shall, not with standing any agreement to the
contrary, be entitled, on making any payment in respect of the agreements which
is not sufficient to discharge the total amount then due under all the
agreements, to require the owner to appropriate the sum so paid by him in or
towards the satisfaction of the sum due under any one of the agreements, or in
or towards the satisfaction of the sums due under any two or more of the
agreements in such proportions as he thinks fit, and, if he fails to make any
such appropriation as aforesaid, the payment shall by virtue of this section be
appropriated towards the satisfaction of the sums due under the respective
hire-purchase agreements in the order in which the agreements were entered
into.
Based
on this provision, this distribution rights to payment exists when a hirer
enters more than a hire purchase agreement under the same owner. When the hirer
makes a payment in respect of the agreement not sufficient to release the full
amount payable under the agreement. The owner will use the money paid by a
hirer to a settlement amount payable under any agreement or in one or
settlement amount payable under two or more agreements in accordance with
section considers appropriate
The
goal is to provide facilities to tenants who entered more than a hire purchase
agreement to distribute payments to any agreement if he cannot pay all the sums
that have been set . Through this provision, hirer can apply from the owner to
distribute payments who felt he could afford to pay it.
Section
11
Where,
by virtue of a hire-purchase agreement, it is the duty of a hirer to keep the
goods comprised in the agreement in his possession or control at a particular
place or not to remove the goods from a particular place, a court of a
Magistrate may, on the application of the hirer, make an order approving the
removal of the goods to some other place, which place shall, for the purposes
of the agreement, be substituted for the place mentioned in the agreement.
Every
hire purchase agreement provides that hirer shall keep the goods purchased on
the spot agreed in the agreement. if the hirer move the goods to another place,
then it is considered as a breach of the agreement and consequently the owner
of the rights to repossess the goods. In
this case, if the tenant wants to move the goods to a place other than the
agreed then the application must be submitted to the Court of Magistrates as
described in section 10 of the Hire Purchase Act above.
The
hirer has the right to make an application to a court of a Magistrate to move
their belongings to another place. Therefore, if the Magistrate's Court to
allow the transfer, the new venue will be replaced with the place agreed in the
agreement.
4.0
Assignment
of right under hire purchase agreements.
Section
12(1)
provides
that the rights, title and interests of tenants under a hirer purchase
agreement may be assigned to another person with the consent of the owner, or
his consent is unreasonably withheld, without his consent.
In
section 12(2),
there
are no payment or any other consideration can be required by an owner of his
consent as mentioned in the subsection (1) except than what is provided under
this section. When an owner needs payment or any other consideration for his
consent, that consent should be categorized as unreasonably withheld.[7]
Under
subsection (3),
if
the hirer requested under the hire purchase agreement that the hirer does not
want or refuse to give his consent to the tenant or his right, title and
interest, then the hirer may apply to the High Court to get a declaration that
the agreement to the hirer of the assignment are reasonably withheld and where
the order made that consent must be categorized as unreasonably withheld.[8]
As
a condition of granting consent to an assignment of the rights, title and
interest of the hirer under a hire purchase agreement, the owner may stipulate
that all defaults under the agreement should be made good and may require the
hirer and assignee –
a) To
execute and deliver to the owner of the assignment in a form that has been
approved by the owner where it should not affect the continuity of personal
liability of the hirer in those respects, the assignee agree with the owner to
be personally liabl to pay the remaining instalments that haven’t been paid yet
and to perform and observe all other stipulations and conditions of the
regulated agreement during the residue of the term and whereby the assignee
indemnifies the hirer in respect of those liabilities and;
b) To
pay reasonable cost that incurred by owner in stamping or registering the
assignment agreement or counterparts.[9]
To
explain this section, the hirer under a regulated agreement may, by notice in
writing to the owner require the owner to assign his right, title and interest
under the agreement to another person. As a condition, the owner may stipulate
that all defaults under the agreement shall be made good and it requires the
hirer and the assignee to deliver to the owner of a form of assignment where
assignee is agree to pay to the owner of the net balance due under the
agreement and to pay the owner any reasonable cost that incurred by the owner.
Except
as stated in this section, no payment or any consideration should be required
by owner for an assignment referred to in subsection (1) where an owner who
fails or refuses to assign his rights, title and interest under the agreement
as required by the hirer in accordance with this section then the hirer may
apply to a court for an order requiring the owner to assign his rights, title
and interest under the regulated assignment.[10]
Section
13 described :
The
right, title and interest of a hirer under a hire-purchase agreement shall be capable
of passing by operation of law to the personal representative of the hirer and
if the hirer is a company the liquidator may exercise the same right under the
agreement as the company but nothing in this section shall relieve any personal
representative or liquidator from compliance with the provisions of the
agreement.
In
the case of death, the tenant becomes insolvent and unable to pay the amount of
the payment to be solved on the rented goods, then all these rights can be
transferred to a representative, trustee or beneficiary of tenants through the
process of law enforcement.
Means
that, the hirer possesses the right to have his right, tittle and interest
passed on to his personal representatives in the event of his death. And if the
hirer is a company, if it is being wound - up, the hirer’s right, tittle and
interest possess on to the liquidator. The personal representatives and
liquidator would then be bound by and have to comply with the terms of the
agreement.
6.0
Early
completion of the agreement.
In
section 14(1),
the
hirer under a hire purchase agreement may complete the purchase of the goods by
paying or tendering to the owner the net balance due under the agreement id he
has given notice in writing to the owner of his intention to do so on or before
the day specified for that purpose in the notice.
For
the purpose of subsection (1), the term charges in the hirer purchase agreement
should be at fixed rate where the net balance due is the balance originally
payable under the agreement less –
a) Any
amount paid or provided by or on behalf of the hirer under the agreement.
b) The
statutory rebate for term charges.
c) If
the hirer requires any contract of insurance to be cancelled, the statutory
rebat for insurance.
Besides
fixed rate, when the term charges is at a variable rate, the net balance due is
the outstanding amount financed and terms charges accrued and was calculated up
to the next due date of payment less, if the hirer requires any contract of
insurance to be cancelled, the statutory rebate for insurance.
If
the hirer requires any contract of insurance to be cancelled, the statutory
rebate for insurance.
It
is stated in the subsection (3) that the rights conferred on the hirer by this
section may be exercised him by at any time during the continuance of the
agreement or where the owner has taken possession of the goods, upon payment to
the owner within twenty-one days after the owner has served a notice in the
form set out in the Fifth Schedule in addition to the net balance due together
with the reasonable costs including costs of storage, repair or maintenance of
the goods incurred by the owner incidental to his taking possession of the
goods or where the hirer has returned the goods to the owner within twenty-one
days after the service on him of the notice in the from set out in the Fourth
Schedule, upon payment to the owner within twenty-one days after the owner has
served a notice in the form set out in the Fifth Schedule the net balance due
under the Act.[12]
7.0
Power
of hirer to determine hiring
Section
15.(1)
Enables
the hirer to terminate the hire-purchase agreement at any time. This is done by
returning the goods to the owner during ordinary business hours at the place
where the owner ordinary business hours
at the place at which the owner ordinarily carries on business or to the place
specified for that purpose in the agreement. The Act does not require any
written notice to be given to the owner. However, if the terms of the agreement
stipulate such a procedure, then the hirer is required to comply with the said
procedure.
In
Leong Weng Choon v Consolidated Leasing
(M) Sdn Bhd [1998] 3 AMR 3133[13],
the Court Appeal reiterated that ‘ the only way under the Hire Purchase Act for
a hirer to determine the agreement ahead of time, that is before all the
instalments have been paid, is to return the goods … to the owner under s 15(1)
of the Act. The section gives a hirer the right to terminate the agreement.’
In
that case, the hirer ( Enterpol Travel & Tours Agencies) had entered into a
hire purchase agreement with the owner ( the respondent in this appeal) on Feb
25,1985 in respect of a luxury air-conditioned coach ( the vehicle). The
appellant had guaranteed the repayment under a guarantee agreement bearing the
same date. When the hirer defaulted in his instalments, the owner ( respondent)
issued a notice on September 28, 1985 to repossess the vehicle. However,
unknown to the respondents, the vehicle had been seized by the customs
officials on August 28 on suspicion that it had been used to smuggle tin or
into the country. Upon realising later that repossession was no longer
possible, the owner took a different course of action. It proceeded against
both the hire and the guarantor. At the trial, the respondent obtained
judgement against appellant, who subsequently appealed to the Court of Appeal
In
allowing the appeal by the guarantor (appellant), The Court of Appeal said that
even if the hirer had repudiated the hire purchase agreement by refusing to pay
the instalment, “ that would not have terminate the agreement”. To put it in
another way, it is the owner (respondent) “ who could elect to treat the
contract as at an end by accepting the repudiation and terminating the
contract.
The
appeal by the guarantor was allowed because under the terms of the guarantee,
the guarantor (appellant) could be made liable for the debt of the hirer only
upon the following conditions.
(a) The
hire purchase agreement had been terminated by the hirer returning the goods (
which is not in the case here )
(b) The
owner had given 14 days written notice to the guarantor to buy the goods from
the owner by paying the sum due to the owner ( which was not given in the
present case).
Under
15(5), which has been inserted by Act A813 in place of existing provisions, it
is now provided that the hirer can require the owner to sell the goods to any
person introduced by him who is prepared to buy the goods for cash at a price agreed to by the owner.
Where the “ value of the goods at the time when it is returned to the owner” is
more than the “ balance outstanding under the hire purchase agreement”, the
hirer is entitiled to the difference ( this sum is recoverable as a debt due).
Conversely, where the value of the goods returned is less than the balance
outstanding, the owner is entitiled to recover the difference.
The
expression “ value of goods at the time it is returned to the owner” is defined
in s 15 (6)(b), a new provisions inserted by Act A813. This means either-
(a) The
best price which could reasonably be
obtained by the owner; or
(b) If
the hirer had introduced a person who had bought the goods for cash, the amount
paid by that person.
The
expression “ balance outstanding under the hire purchase agreement” is defined
in s 15(6)(a), a new provision inserted by Act A813. This means the total sum
payable by the hirer to complete the purchase of the goods (together with
interst on overdue instalments) less-
(a) the amount paid by or on behalf of the
hirer excluding deposit;
(b)
statutory rebate for terms charges; and
(c)
statutory rebate for insurance, if any;
CONCLUSION
Section
2 of the Hire Purchase Act 1967 defines a hire purchase agreement is included
allowing the goods in installments (whether the agreement stated installments
as rent or otherwise) but does not include any agreement in which the property
in the goods contained through the duration of the agreement or when or at any
time prior to the delivery of goods or under any, people renting or purchasing
goods are those which are bound in the trades or agreement to sell the same
goods or description of such goods contained in the agreement.
In
the Hire Purchase Act 1967, there are statutory rights for tenants. Sections 9
to 15 of the Hire Purchase Act 1967 has allocated statutory rights, namely the
right information which is all tenants are entitled to a full statement on the
status of payments made under hire purchase agreements, the right to the
distribution payment that give rights to tenants who do not have enough money
to pay all installments of hire-purchase agreement provided that the tenant
shall be entered several leasing agreement with same owner, the right to move
goods where the tenant is required to store the goods at the place specified in
the agreement, the right to assign the goods when ownership rights and
interests of the tenant under a hire purchase agreement may be assigned to
another person with the consent of the owner, the right to deliver the goods by
operation of law, which states that the property rights and interests of a
tenant under a hire purchase agreement may be discharged by operation of law to
the representatives of the tenant and if the tenant is a company, the
liquidator can also perform the same rights, early settlement in which the
tenant has the right to terminate the hire-purchase agreement earlier than the
period specified in the agreement with the owner paying the remaining amount
payable under the agreement and termination of the agreement when the tenant is
unable to pay installments under hire purchase agreement, he is entitled to
terminate the hire-purchase agreement .
BIBLIOGRAPHY
Hire-Purchase Act 1967 (Revised
1978), Law of Malaysia Act 212
Hirer-purchased Act 1967
(January1,2006)
:http://www.commonlii.org/my/legis/consol_act/ha19671978215/
(accessed October 1, 2014).
Hirer Purchase Act. (n.d.). Retrieved November 9, 2014, from Hirer
Purchase Act:
http://www.mti.gov.sg/MTIInsights/Documents/app.mti.gov.sg/data/article/23763/doc/Annex%20D%20-%20Proposed%20Amendments%20to%20HPA.pdf
Lee, M .P, and Ivan , J . D ,
Business Law : Statutory Right of Hirer. New York : Oxford
University Press , 2009 .
Mumtaz Hassan,
Khuzaimah Mat Salleh, Zuryati Mohamed Yusoff. (2003). Undang-Undang
Perniagaan Di Malaysia. Malaysia: UUM-COLGIS.
Pheng, L. M, and Ivan J. D. Business Law: Statutory right of hirer’s; To have his right, tittle and interest passed on by operation
law. New York: Oxford University
Press, 2009
Salleh
Buang , Malaysian Law on Hire Purchase : Termination of Hire Purchase Agreement
.
Selangor : Sweet & Maxwell , 2001 .
Scribd.
(n.d.). Hire Purchase -DBF. Retrieved November 9, 2014, from Scribc:
https://www.scribd.com/doc/87422129/Hire-Purchase-DBF
The Commissioner of Law Revision, M. (2013, March 1). Hire Purchase Act
1967. Retrieved November 9, 2014, from Law of Malaysia:
http://www.agc.gov.my/Akta/Vol.%205/Act%20212.pdf
[2] [1979] 1 MLJ 129 Tractor Malaysia Bhd v Kumpulan Pembinaan Malaysia
Sdn.Bhd
[3] [1967] 1 MLJ 83 Credit Corp. (M) Bhd v Industrial Finance Corp
& others
[4] In Wong Ai Sung v Orix
Credit Malaysia Sdn Bhd, [2007] 5 MLJ 39; the High Court held that any person
who did not strictly comply with the provisions of the Hire-Purchase Act 1967
or attempt to contract out of the strict provisions of section 22 of the HPA
1967 or if the conduct of the parties to the hire –purchase agreement did not
strictly comply with the procedural requirements such as getting the signatures
of the hirer or guarantor in empty forms without filling in the particulars or
not getting it properly attested may be fatal and the instruments may be
declared void. For a case on forged signatures on guarantees, see Mayban
Finance Bhd v Otahulu Industries(M) Sdn Bhd & Ors, [2008] 7 MLJ 616, High
Court.
[5] Hire-purchased 1967(revised 1978) , Law of Malaysia reprint Act 212 Hire-purchase Act 1967,
http://www.commonlii.org/my/legis/consol_act/ha19671978215/ (accessed October
1,2014)
[6] Hire-purchased Act
1967(Revised 1978) Law of Malaysia
reprint Act 212 Hire-purchase Act 1967,
http://www.commonlii.org/my/legis/consol_act/ha19671978215/ (accessed October
1, 2014)
[9] (The Commissioner of Law Revision, 2013)
[10] (Hirer Purchase Act)
[11] L. M. Pheng and Ivan J. D, Business Law: Statutory right of
hirer’s; To have his right, tittle and interest passed on by operation law(New
York: Oxford University Press, 2009), 372.
[12] (The Commissioner of Law Revision, 2013)
[13] Salleh Buang , Malaysia Law on Hire Purchase : Termination of Hirer
Agreement ( Petaling Jaya : Sweet & Maxwell Asia , 2001) , 30 .
thank for the info. really helpful :)
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