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[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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CPT Law Hire Purchase Agreement - Revision Sheet

  • 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. vxplain 2 score more-- post your doubts to us at vxplain@gmail.com Page 1