In this article, I am going to give you the idea about hire purchase topic which comes under the Indian contract act, 1972.

The term Hire purchase is defined under section-2(c) in Hire Purchase act,1972.

Hire purchase is an independent act that came in the year 1972 and it is also treated as one of the special contracts.

I have one example to give you a full explanation about that topic.

Example- you want to buy a car and you go to a vendor and vendor says that car is coming to market which is 50 lakh rupees which has all features you looking at and this also gives you great mileage, so you can go for this car. Now you look at this car and it looks pretty and also it has multiple features and after knowing this all facilities you are keen to buy. Now there is a point to understand the term hire purchase.

So there are 3 procedure in purchasing the car:

1. full payment
2. Installment
3. hire purchase

Now I am going to brief introduction about all the three modes of payment Which above mentioned:

1. Full payment: In this, you give the full payment and vendor gives you a car. But after full payment vendor is not liable for anything or towards you.
2. Installment: you buy a car by making a down payment and then you start paying rest of the payment in installment mode.
3. Hire purchase: you make the payment in down payment mode and then you start paying the installment that's how to serve to hire purchase.

In this hire purchase looks as installment but there is thin line difference between Hire Purchase and installment..

Difference Between Hire Purchase And Instalment

Installments:

1. Down Payment made
2. Balance to be paid in installments
3. The vendor gets additional consideration - Interest
4. Ownership of the asset is transferred to the buyer while down payment made
5. On Failure in paying installments Owner can sue the buyer.

Hire Purchase:

1. Down Payment made
2. Balance to be paid in installments
3. The vendor gets additional consideration - Interest
4. Ownership of the asset is not transferred to hirer till the last installment paid
5. On Failure in paying the installments, the Owner can repossess the asset.

Meaning Of Hire:

Meaning of the hire which express that the sum payable periodically by the hirer under a hire - purchase agreement;
Hire-Purchase Agreement means an agreement under which goods are let on hire and under which the hirer has an option to purchase them in accordance with the terms of the agreement.

Parties:
There are only two parties when it is coming to hire purchase i.e., The hirer and The owner.

1. hirer means the person who obtains or has obtained possession of goods from an owner under a hire purchase agreement
2. owner means the person who lets or has let, delivers or has delivered possession of goods, to a hirer under a hire - purchase agreement.

Features Of Hire Purchase

1. Possession of goods is delivered by the owner to hire purchaser.
2. On a condition that such person pays the agreed am in periodical installments.
3. The absolute right of the goods is to pass to hire purchaser on the payment of the last installment.
4. Every installment is treated as hire charge for using the asset.
5. Hire purchaser can use the asset right after making the agreement with the hire vendor.
6. The hire vendor has the right to repossess the asset in case of difficulties in obtaining the payment of installment.

When To Do Hire Purchase

1. When the asset is not easily destroyable.
2. When the asset can be insured.
3. When the asset has good resale value.
   

In this topic there are some important case laws, that I have mentioned in below:

1. K.L. Johar &Co. V. Dy. Commercial Tax Officer A.I.R. 1965 S.C. 1082.
2. Shyam Kumar Verma V. S.P.Mishra AI.R. 1959 All. 498.
3. C.T. Faisal V. Official Liquidator A.I.R. 2007 Mad. 15.
4. Arindam Basu V. Amal Kumar Bose A.I.R. 2006 Cal. 295.
5. Ghanshyam Sharma V. State Of Assam A.I.R. 2008 (NOC) 1278 (Gau.).
   

Referred Books:

• The Indian Contract Act R.K. Bangia
• The law of Contract Avtar Singh.
  
  

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