Brief notes on hire purchase agreement in Malaysia Please kindly email to me at hidayahtul@tarc.edu.my or comment your email if you would like to have a copy of my slides. Thank you! Copyright © 2020, Nur Hidayahtul Nabihah Binti Manas

1. LAW 299: BUSINESS LAW
Hire Purchase Agreement
Prepared by:
Nur Hidayahtul Nabihah binti Manas
90019806
UiTM Raub, Pahang

2. What is a Hire Purchase
Agreement?
Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016

3. Section 2(1) of HPA 1967
“includes a letting of goods with an
option to purchase and an agreement
for the purchase of goods by
installments…”
Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016

4. Hire Purchase
Types of
payment:
Section 2(1)
Installment
Formality:
Section 4A
In writing either in
Malay or English
Possession of
Goods:
Section 2(1)
Hirer
Ownership of Goods:
Section 2(1)
Owner->Hirer
Credit Corporation (M) Bhd v
The Malaysian Industrial
Finance Corp & Anor
Law:
HPA 1967
Types of Agreement:
Section 2(1)
Letting out of goods with an
option to purchase
Parties Involved:
Section 2(1)
Types of Goods:
First Schedule
1. Consumer goods -Section 2(1)
2. Motor vehicles [Invalid carriages, motorcar]
Kesang Leasing Sdn Bhd v Mohd Yusof bin
Ismail & Anor
Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016
Dealer
Owner Hirer

5. How to Form a Valid Hire
Purchade Agreement?
Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016
3 Stages
Before During After

6. Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016
• Negotiation as pre contractual
information
• Section 4(1): Notice of 2nd
Schedule
(Owner/dealerHirer)
• -Description of goods, deposit,
insurance, duration of
agreement, installments, cash
price etc
• Affin Credit (M) v Yap Yuen
Fui
Before
1st Stage

7. Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016

8. Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016
• Section 4A: In writing
• Section 4B(1), (2): Signed
by all parties after
document completed
• Section 4C: Contents
• – date, installments, time
for payment, description of
goods, address
• Section 46: Penalty fine of
RM100,000.00 or
imprisonment 5 years,
agreement is VOID
During
2nd Stage

9. Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016
• Section 5(1): within
21 days, the owner
shall serve on hirer a
copy of agreement
• Effect non
compliance:
Agreement VALID
but unenforceable
by the owner
After
3rd Stage

10. What are the Protections
Available for the Hirer?
Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016
Implied Warranties
• Section 7(1)(a):
Enjoy quiet
possession of the
goods
• Section 7(1)(c): The
goods free from any
charges
Implied Conditions
• Section 7(2):
Merchantable quality
• Section 7(3):
Reasonable fit for the
purpose
• Exceptions: Hirer
knew the defect &
acknowledge its
inapplicability in
writing

11. What are the Rights of Hirer?
Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016
Section 9(1):
Right to be supplied with
information at any time
Section 10:
Right to appropriation of
payment
Section 11:
Right to apply for an order
to remove the goods.
Section 12:
Right to assign his rights,
title and interest to
someone else
Section 13:
Right to pass the title,
right and interest to the
personal representative on
death or bankruptcy
Section 14:
Right to early completion of
agreement
Section 15:
Right to terminate the
agreement at any time

12. What Happen if there was
Misrepresentation During Negotiation?
Misrepresentation may be in the form of statement, representation
or warranty which is not true.
Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016
Section 8
By Dealer
Terminate
contract
Claim
damages
By Owner
Terminate
contract
Claim
damagesLau Hee Teah v Hargill Engineering Sdn Bhd

13. What are the Right of the
Owner?
Hirer must pay regular installments.
Failed to do so, the owner entitled
to recover the possession of the
goods.
Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016

14. What are the Procedures for
Repossession?
Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016
3 Stages
Before During After

15. Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016
Day 1:
Owner serve 4th Schedule Notice to hirer
Day 14:
Owner serve second notice of repossession to hirer
Day 21:
4th Schedule Notice expired
Day 22:
Repossession can take place
Day 43:
Last day for Owner to serve 5th
Schedule Notice to hirer
Day 54:
5th Schedule Notice Expired
B
E
F
O
R
E
D
U
R
I
N
G
A
F
T
E
R
Phang Brothers
Motor v Lee Aik
Seng
1) Not more than
75%
2) More than 75%
3) Deceased

16. Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016
Not more than
75%
• Section 16(1)
HPA:
• Default 2
successive
payments
• 4th Schedule
Notice
• Regulation 3
HPR: Permit by
the Controller
• Regulation 15:
Send another
notice
More than 75%
• Section 16(1A)
HPA:
• Default 2
successive
payments
• 4th Schedule
Notice
• Order from the
Court
Deceased
• Section 16(1C)
HPA:
• Default 4
successive
payments
• 4th Schedule
Notice

17. Kahoot.it
-Form a group of TWO
(It’s a TEAM MODE!)
- and name your group with your favourite MOVIE
GOOD LUCK & THANK YOU!
Prepared by: Nur Hidayahtul Nabihah binti
Manas, UiTM Raub Pahang, June-Oct 2016