On 7 September 2009, Melody entered into a hire purchase agreement with Mudah Finance for a used Toyota Camry at the price of RM 65,000.
The law of hire-purchase is provided in the Hire-Purchase Act 1967 which came into force on 11 April 1968 and the Consumer Protection Act 1999 which came into force in November 1999.
A hire-purchase contract is basically an agreement whereby a person hires goods for a period of time by paying instalments, and can own the goods at the end of the agreement if all instalments are paid.
Hire purchase agreements usually last between 2 and 5 years, the most common last 3 years. Under a hire purchase agreement, the consumer does not actually own the goods until the last instalment is paid, although they have full use of the goods throughout the repayment period.
Hire purchase agreements can be held with banks, building societies, finance companies and certain retail stores, for example, garages. The store or garage is not actually providing the loan. It is acting as an agent for a finance company and earns commission from the finance company for arranging the loan.
Purchasing cars is the most common type of hire purchase agreement in Malaysia. The repayment usually served up to 9 years from the date of agreement been executed. There are two types of car loans currently offered in Malaysia: variable rate and fixed rate car loans. Fixed rate car loans are the most common type in the market, where there is no fluctuations in interest during the loan tenure. The payments on this loan are fixed and interest amount is calculated up front, thus additional payments do not reduce the principle or interest amount on the loan. The variable rate car loan is linked to a current account, whereby the funds deposited in your current account will reduce your payment on interest.
In hire purchase agreement, property in the goods does not pass at the time of the agreement whilst in a contract of sale, property in the goods passes at the time of the agreement or upon or at any time before delivery of the goods
a) The pre-contractual information was not given until 13 October 2009.
In the process of formation of the hire purchase agreement, there are three (3) different stages; (1) pre-contractual obligations (2) construction of hire-purchase agreement and (3) post-contractualobligations.
1. Pre-contractual obligations
It is a duty of the owner to give a prospective hirer a written statement in accordance with the form set out in the Second Schedule . This schedule requires information on the description ofgoods and a summary of the financial obligations of the prospective hirer. The prospective hirerhowever is not obliged to enter into a hire purchase transaction. The prospective hirer also is notbound to make any payment for the preparation or service of the above mentioned statement . If this is not been complied with by the owner, the hire-purchase agreement is void.
With the end goal of subsection above, “imperfection” incorporates deformity to the mechanical or operational system, development, structure and develop and fitting of the motor vehicle. According to Hire Purchase Act 1967, Section 5 (Copy of documents to be served on hirer) within twenty-one days after the making of a hire-purchase agreement, the owner shall serve or cause to be served on the hirer and the guarantors a copy of the agreement each .
Whenever before the last instalment has been made under a contract buy understanding the proprietor should, within twenty-one days after he has gotten a demand in composing from the hirer, supply to the hirer a duplicate of any notice or note of the understanding(a) on payment by the hirer of the prescribed fee or (b) where no fee is prescribed, one free copy, and there after a fee as may be prescribed shall be charged for the supply of a second or subsequent copy thereof. Thereof, pre contractual agreement needs to be given in writing form within twenty-one days and the owner should be served on the copy of the agreement.
According to the Section 4 of the Hire Purchase, a hire-purchase agreement in respect of any goods specified in the First Schedule shall be in writing and the agreement shall be in the national language or English language. A hire-purchase agreement that does not comply with the condition shall be void. Section 4 (1) provides that before any hire-purchase agreement is entered into in respect of any goods (a) in a case where negotiations leading to the making of the hire purchase agreement is carried out by any person who would be the owner under the hire purchase agreement to be entered into, or any person, other than the dealer, action on his behalf, such person shall serve on the intending hirer a written statement duly completed and signed by him.
Section 5 (1) of the said Act provides that the owner must serve a copy of the hire-purchase agreement on the hirer and the guarantors within fourteen days after the making of the agreement. Failure to do so would render the hire purchase agreement unenforceable by the owner. At any time before the final payment has been made under a hire purchase agreement the owner shall, within fourteen days after he has received a request in writing from the hirer, supply to the hirer a copy of any memorandum or note of the agreement.
b) The agreement expressly negated Mudah Finance’s liability for fitness and merchantable quality of the car.
A contract of hire-purchase is characterized as an agreement of contract with a choice to buy under which the proprietor of the asset embraces to sell it to or that it should turn into the property of the hirer restrictively on his making a specific number of instalments. However, no property in the goods passes until the making of the last payment.
From the prior, obviously a contract buy assentation is an agreement whereby the proprietor of a property lets it out on employ for an intermittent lease with the arrangement that on due consistence with the different terms of the understanding and the finish of the concurred number of instalments of lease, the hirer either turns into the proprietor of the products consequently or might have the choice of acquiring the asset by the instalment of a small concurred sum .
The first evident condition is that the proprietor ought to have a decent title to the products. On the off chance that his title is effectively arraigned, it will add up to a total disappointment of thought as between the indicated proprietor and the hirer, qualifying the last for guarantee back all he had paid as harms. In expansion, there is an inferred warranty of calm delight along these lines, if the proprietor obstinately meddles with hirer’s ownership, the hirer can sue.
Another condition implied in a hire buy contract at common law is the fitness of the merchandise for the reason for which they were hired. It has been held that the suggested condition as to fitness for reason for which the merchandise are made does not stretch out to a hidden defect.
Where the hirer expressly or by implication makes known to the owner or the dealer or to any servant or agent of the owner or the dealer the particular purpose for which the goods are required, there shall be implied in the hire-purchase agreement a condition that the goods shall be reasonably fit for that purpose, but such a condition shall not be implied if the goods are second hand goods and the agreement contains a statement to the effect (a) that the goods are second-hand and (b) that all conditions and warranties of fitness and suitability are expressly negative, and the owner proves that the hirer has acknowledged in writing that the statement was broughtto his notice. Nothing in this section shall prejudice the operation of any other written law or rule of law whereby any condition or warranty is to be implied in any hire-purchase agreement.
Any important archive published by the guarantee or warranty supplier ought to likewise be given over to the customer.The customer ought to be informed with respect to what kind of guarantee or warranty is being given, for instance, producers, free broadened makers or dealers, protection supported or merchants own particular guarantee or certification. The buyer ought to be inform of the character of the guarantee or assurance supplier and the address to which claims might be directed. The distinctive type of guarantee or ensure and any critical contrasts between them ought to be disclosed to customers as fitting.
Mudah Finance should have an accessible, appropriate and user friendly after-sales procedure to ensure that all consumer enquiries are dealt with in an honest, fair, professional and reasonable manner. They should ensure that warranty work is carried out promptly and that your estimated timescale for completion is made clear to the consumer before any work has commenced. They should keep the consumer informed if it is subsequently discovered that the work has to take longer, for example, because further problems have been discovered.
c) The agreement contained a clause stating that Mudah Finance would not be liable for any misrepresentation or statement made by the dealer or his servant or agent.
According to the segment 8 of the Hire purchase, each portrayal, warranty or articulation made to the hirer or planned hirer, regardless of whether orally or in writing, by the proprietor or the merchant or any individual following up for the benefit of the proprietor or the merchant regarding or over the span of arrangements prompting the going into of a contract purchase agreement should give on the hirer (a) as against the proprietor, the same right to rescind the agreement from the hirer would have had if the portrayal, warranty or statement had been by a specialist of the proprietor and (b) as against the individual who made the portrayal, warranty or statement, and any individual for whose sake the individual who made the portrayal, warranty or articulation was acting in making it the same right of activity in damage as the hirer would have had against them or both of them if the hirer had bought the goods from the individual who made the portrayal, warranty or statement or the individual for whose sake the individual who made the portrayal, warranty or statement was acting (by and large) because of the negotiations .
Without bias to some other rights or on the other hand solutions for which a proprietor might be entitled, a proprietor should be qualified for be repaid by the individual who made the portrayal, warranty or statement, and by any individual on whose sake the portrayal, warranty or statement was made against any damage endured by the proprietor because of any such portrayal, warranty or statement.
If the owner made a misrepresentation in the course of negotiations leading to the hire-purchase Agreement, the hirer has the right to rescind the agreement and sue for the damages according
Section 8 (1) (a), Hire Purchase Act. It is a breach of the law to mislead consumers by failing to give them the information they need in order to make an informed decision before the sale such as misleading omission.
This might, for example, be by precluding or stowing away imperative information you know about or giving essential information in an indistinct, confused, uncertain, or untimely manner, where this is probably going to make the normal consumer take an alternate choice.The key elements of a warranty or guarantee should be clearly drawn to the attention of consumers prior to sale. This includes, for example details of what are covered and what is not covered, claim limits, and conditions that need to be followed for the warranty/guarantee to remain valid, the geographical scope of the warranty/guarantee and the claims procedure.
d) On 28 December 2009, Melody was transferred to a branch office in Thailand and she took the car with her without informing Mudah Finance.
As the statement Melody has entered into a hire purchase agreement with Mudah Finance on 7 September 2009 for a used Toyota Camry at the price of RM 65,000. On 28 December 2009, Melody was transferred to a branch office in Thailand and she took the car with her without informing Mudah Finance.
In a hire-purchase agreement, property in the goods does not sit back of the agreement while in an agreement of offer, property in the goods goes at the time of the agreement or upon whenever before conveyance of the goods. Both Mudah Finance and Melody need to close down definite agreement with respect to the last instalment, insurance and other document. A proprietor should be guaranteed for the sake of the hirer against any risk he supposes fit in regard of the following (a) motor vehicle comprised in a hire purchase agreement for the first year and (b) all other goods comprised in a hire purchase agreement, for the duration of time that the goods remain under hire purchase according section 26(1), Hire Purchase Act, 1967.
It is the duty of Melody to inform Mudah Finance with respect to the development or changes of current place of the vehicle. As the hirer, Melody needs to inform Mudah Finance when she was exchanged to a branch office in Thailand and she brought the car with her. It is wrong if Melody did not inform the Mudah Finance.
Section 37 of Hire-Purchase Act states that the hirer is required to state where goods are. Section 37 (1) states the owner of any goods comprised in a hire-purchase agreement may, at any time by notice in writing served on the hirer thereof, require him to state in writing where the goods are, or if the goods are not in his possession, to whom he delivered the goods or the circumstances under which he lost possession of them, and any hirer who does not within fourteen days after the receipt of such a notice give to the owner such a statement or who give statement containing any information that is to the knowledge of the hirer false shall be guilty of an offence under this Act .
Section 37 (2) states where (a) a hirer removes the goods comprised in a hire-purchase agreement from the address specified or (b) goods comprised in a hire-purchase agreement are lost or are removed from or are taken out of the hirer’s possession, the hirer shall inform the owner in writing or state in the presence of the owner (i) the new address where the goods are kept or (ii) the date and circumstances in which the goods were lost or (iii) the date and circumstances in which the goods were removed or taken out of his possession, and any hirer who does not within fourteen days of the removal or loss comply with the provisions of this subsection shall be guilty of an offence under this Act .
As expressed in section 37 of Hire-Purchase Act the hirer is dependable to answer the composed notice of proprietor with respect to the position of the goods. For this situation Melody is dependable to educate Mudah Finance the area of Toyota Camry. Section 37 (2) is expressing if Melody is move the car from the address indicated in the agreement, she have to inform Mudah Finance the new address of the vehicle in written form.
Section 11 of Hire-Purchase Act is regarding power of court to allow goods to be removed. Section 11 states where, by virtue of a hire-purchase agreement, it is the duty of a hirer to keep the goods comprised in the agreement in his possession or control at a particular place or not to remove the goods from a particular place, a court of a Magistrate may, on the application of the hirer, make an order approving the removal of the goods to some other place, which place shall, for the purposes of the agreement, be substituted for the place mentioned in the agreement.
According to Section 11 of Hire-Purchase Act, Melody does not have the privileges of removing the vehicle from the real place. If Melody move the good to another place, then it is considered as breach of agreement an consequently Mudah finance have the right to reposses the goods. Melody should keep the vehicle at the specific place as expressed in the agreement and does not should convey the car to Thailand without informing Mudah Finance. In term of removing the car from genuine place to Thailand, Melody can apply to the Court of Magistrate. At the Court of magistrate Melody may make a request approving the evacuation of Toyota Camry to Thailand.
To put it plainly, the way Melody took Toyota Camry to Thailand without informing Mudah Finance isn’t permitted. Melody may allude to Section 11 of Hire-Purchase Act and section 37 of Hire-Purchase Act in a method for moving the car from real place to Thailand. This will avoid Melody from violate the Hire-Purchase Act of Malaysia and stay away from pointless offenses.