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In a contract of hire purchase, the different parties have obligations to each other.
Most of these obligations are stated under statutory provisions, while some are embodied in the common law which is case law developed from the decisions of Judges.

Obligations of the Owner

a) Duty to Make Delivery of the Goods or Chattel

This duty is trite because it is the responsibility of the owner of the chattel or goods to deliver them to the hirer, failing which the hirer may repudiate the contract. This is so  because a hire purchase agreement takes effect upon acceptance of delivery by the hirer. Delivery here is constituted by the voluntary transfer  of the possession from person to another . This may be done ordinarily  by the physical transfer of the goods to the hirer or agent or by the giving of the hirer the possession of the goods (example giving the key of the motor car, the subject matter of the hirer) or in a situation where the goods are in the possession of a third party, by the acknowledgement by the third party that he holds the goods on behalf  of the hirer.

b) Obligation implied in the contract:

In addition to the above duty or obligation, there are some conditions implied  in the contract. The first obvious condition is that the owner should possess a good title to the goods. If  his title is successfully impeached, it will amount  to a total   of consideration as between the purported owner and the hirer, entering the later to clam back all he had paid as damages. In addition, there is an implied warranty of quite enjoyment; therefore, if the owner willfully interferes with the hirer’s  possession, the hirer can sue. Another condition implied in a hire purchase contract at common law is fitness of  the goods for the purpose for which they were hired. The goods must be of merchantable quality and they must t the purpose for which they were hired. However, if there is any defect in the property, it should be something that the owner can easily discern.

c) Description of the Goods:

The owner of the goods must ensure that the goods are delivered according to the buyer’s description. Also, the goods must fit their description.

Obligations of the Hirer

A) Duty to take delivery of the goods.

The first obligations to be borne by the hirer is the  duty delivery of the chattel and this duty is to be exercised within a reasonable time. Accordingly, if the hirer refuses or neglect to take delivery, any loss arising from such refusal or neglect and such expenses that may be reasonably made for the care and custody of the goods will be payable by the hirer. As a general rule, delivery takes place at the owners’ premises or place of business or such other agreed place. This is because without delivery the hire-purchase agreement does not commence.

b) Duty to pay punctually.

It is also the duty of the hirer to pay punctually the various sums provided for in the agreement in accordance with the provision  of the agreement .The payment of the initial deposit and the rentals, that is to say the installment or periodic payment are compulsory or mandatory and must be complied with strictly.

c) Duty that relates to custody and care of goods.

The hirer also has a duty to use the goods for the purpose for which they are hired. For instance, a transport lorry cannot be used as if it is a tipper lorry. Thus, if the goods are used for a different purpose other than that which they were hired and sustains damages whether there hired and sustain damages whether there is negligence or not, the hirer will be liable. The hirer must provide for the safe custody of the goods, it is strict liability obligation and accordingly negligence cannot be pleaded. To safeguard this problem, most hire-purchase agreement do provide for place or places where the chattel/goods are to be kept and also the use to which the goods may be put, so that a breach of that stipulation will entitled  the owner to an action for damages against the hirer on the  know once there is a breach of terms.

d) Duty to re-deliver the goods to the owner

The hirer is under obligation to re-deliver the goods, the subject matter of the hirer, to the owner at the end of the hiring, where there is no option to purchase the subject matter of the agreement. His duty in this regard is to ensure that the owner is not prevented from getting back the goods and not to take positive step for actual re-delivery of the goods to the owner.

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This article was first published on 10th June 2019


Foluke Akinmoladun is the Managing Solicitor of Trizon Law Chambers. She has been a legal practitioner for 13 years and has experience in a wide range of commercial matters. She is a certified mediator, a member of the Chartered Institute of Arbitrators(UK), holds an Advanced Diploma in Accounting from the Association of Chartered Certified Accountants (UK) and is also a tax consultant. She is a dispute resolution expert, handling commercial disputes from negotiations all the way to litigation (if need be).

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