1. [HIRE PURCHASE AGREEMENT] December 12, 2010
HIRE-PURCHASE AGREEMENT
Hire purchase agreement is an agreement of installment.
For Example: A sells a refrigerator to B with a stipulation that B shall pay A a fixed sum every
month by way of installments till the full price of the refrigerator is paid.
Now till B pays the full amount to A by way of installments, he does not become the owner of
refrigerator. He can discontinue payments of further installments. In such a case, A takes back
the refrigerator. B has no right to recover installments already paid by him to A because the
amount paid by him is adjusted towards the hire charges of refrigerator. This is called a hire-
purchase agreement.
Note: The buyer agrees to pay the price of the goods in certain installments. The ownership of
the goods passes to the buyer after the full price of goods is paid. The ownership till then remains
with the seller.
Difference between agreement to sell and hire-purchase agreement
1. Agreement to sell is a step to contract 1. Hire-purchase agreement becomes a
of sale. sale only after the payment is made in
2. In agreement to sell conveyance of full.
goods may take place subsequently. 2. In a hire-purchase agreement
3. In an agreement to sell the buyer can conveyance is immediately transferred
take advantage of implied conditions while ownership remains with the
and warranties. seller.
4. Agreement to sell is regulated by sale 3. In a hire-purchase agreement the hirer
of goods Act,1930 Cannot so claim the benefits of implied
conditions and warranties unless it
becomes a sale.
4. Hire purchase is regulated by Hire
Purchase Act, 1972.
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