Forms of Hire Purchase Agreement

Formalities Under the Common Law

Under the common law, there was no particular form for a contract of hire purchase. It could be oral or written, with or without seal. However, in practice most hire purchase contracts are in writing in order to adequately spell out all the necessary terms of the agreement.

Formalities Under the Hire Purchase Act of 1965

The hire-purchase agreement, unlike the position under the common law, all hire-purchase agreements which are intended to operate or fall within the provisions of the Act must comply with certain provisions or procedural requirements as to form and content stipulated under the Act. They can basically be categorised into the following.

Written Information on Cash Price of Goods

Before any hire-purchase agreement is concluded, the owner shall state in writing to the prospective hirer, otherwise than in the note or memorandum of the agreement, a price  at  which the goods may be purchased by him in cash.

The Note or Memorandum

Section 2 (2) (a) of the Act states that: “there must be a note or memorandum of the agreement made and signed by the hirer and by or on behalf of all other parties to the agreement.”

In this instance, what is required is that a note or memorandum must be in writing evidencing the agreement, and that it is not necessary for the hire-purchase agreement to be in writing. In commercial practice, hire-purchase is usually evidenced by a standard  form  agreement which  is required to be signed by the hirer, and any other party. Initially, the agreement may be made orally, but within 14days it must be followed by a signed memorandum.

Signature

The hirer must sign personally; The memorandum or note must be signed not only by the hirer but also by the other parties to the agreement while the other party may sign through their agents.

The non-compliance of the above provisions of the law on the formalities of Hire purchase agreement is not fatal to the agreement until it is proved that such con compliance is likely or has resulted into miscarriage of justice against the hire.

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