WARRANTIES AND CONDITIONS
4. WARRANTIES AND CONDITIONS
There are certain terms which are implied in a
hire purchase agreement. These terms may be warranties and conditions. Part III
of the Act lay downs various conditions and warranties to protect hirers and
guarantors.
a. Implied conditions
1. Right to sell
The owner shall have right to sell the
goods at the time when the property is to pass – s.7(1) (b). PUBLIC FINANCE BHD
v EHWAN BIN SARING [1996] 1 MLJ 331 – the Act does not differentiate between
new and second hand goods as far as ownership is concerned. The court also defines the meaning “at the
time when the property is to pass” – it means at the time when a hirer decides
to pay all sums due under a hire purchase agreement and not necessarily only
upon payment of the last instalment when it become due – at the time when a
hirer exercises his option to purchase.
2. Merchantable quality
The goods shall be of merchantable quality –
s.7(2), but such a condition shall not be implied:
(a) where the hirer has examined the goods or a sample thereof, as
regards defects which the examination ought to have revealed; or
(b) if the goods are second-hand goods and the agreement contains a
statement to the effect that—
(i)
the goods are second-hand; and
(ii)
all conditions and warranties as to quality are expressly negatived, and the
owner proves that the hirer has
acknowledged in writing that the statement was brought to his notice.
What is “merchantable quality”?
Lord Wright in GRANT v AUSTRALIA KNITTING MILLS
LTD [1973] 50 CLR 387:
Merchantable does not mean that the thing
is saleable in the market simply because it looks alright, it is not
merchantable … if it has defects unfitting it for its only proper uses but not
apparent on ordinary examination.
3. Fitness
S, 7(3)
Where the hirer
expressly or by implication makes known to the owner the particular purpose for
which the goods are required, there shall be implied in the hire-purchase
agreement a condition that the goods shall be reasonably fit for that
purpose, but such a condition shall not be implied if the goods are second
hand goods and the agreement contains a statement to the effect—
(a) that the goods are second-hand; and
(b) that all conditions and warranties of
fitness and suitability are expressly negatived, and the owner proves that the
hirer has acknowledged in writing that the statement was brought to his notice.
b. Implied warranty
1. Quiet possession of the goods
The hirer shall
have and enjoy quiet possession of the goods - s.7(1) (a)
2. Free from encumbrance
The
goods shall be free from any charge or encumbrance in favour of any third party
at the time when the property is to pass - s.7(1) (c)
5. LIABILITY OF OWNER AND DEALER FOR
MISREPRESENTAION
s.8(1) (a)
Every representation, warranty or statement made to the hirer,
whether orally or in writing, by the owner or the dealer in connection with or
in the course of negotiations leading to the entering into of a hire-purchase
agreement shall confer on the hirer as against the owner—the same right to
rescind the agreement as the hirer would have had if the representation,
warranty or statement had been by an agent of the owner;
6. STATUTORY RIGHTS OF HIRERS
Section 9 to 15 of HPA provide the rights of
hirers.
1. Right to be supplied documents and
information – s.9
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;
(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:
An
owner need not comply with such a request if he has sent the hirer a statement
within a period of three months immediately preceding the receipt of the
request.
2. Right to appropriation of payment (s.10)
A hirer who is liable to make payments in respect of two or more
hire-purchase agreements to the same owner shall, 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 the payment
shall 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.
3. Right to apply an order for goods to
be removed – s.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.
4. Right to assign – s.12
The right, title and
interest of a hirer under a hire-purchase agreement may be assigned with the
consent of the owner, or if his consent is unreasonably withheld, without his
consent
5. Rights by operation of law- s.13
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.
6. Right to early completion of agreement- s.14
The hirer under a hire-purchase agreement
may, if 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, complete the
purchase of the goods by paying or tendering to the owner the net balance due
under the agreement.
7. Right to terminate agreement- s.15
The hirer of any goods comprised in a hire-purchase agreement may
terminate the agreement by returning the goods to the owner during 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.
8. Right on repossession by owner- s.16
WARRANTIES AND CONDITIONS
Reviewed by Kamaruddin Mahmood
on
10:37:00 PTG
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