Question

Difference between hire purchase and ordinary sale

Answer 1

The main points of distinction betweenthe 'sale' and 'hire-purchase' are as follows: 1. In a sale, property in thegoods is transferred to the buyer immediately at the time of contract, whereas in hire-purchase, the property in the goods passes to the hirer uponpayment of the last installment.

Answer 2

Definition of hire purchase :

"Hire purchase is the system of trade in which one party pays for the price of the asset in a number of regular payment while making use of that asset."

Definition of Sale:

"In a contract of sale of goods, the salesman transfers or agrees to transfer the property in goods to the purchaser, for a definite return i.e) price. It represents the usual agreement between the parties, i.e) purchaser and salesman"

The following are the difference between hire purchase and ordinary sales,

Hire purchase:

• Ownership of the product is transferred only after the payment of last payment. Money paid in regular basis.
• If the payment is delayed by the buyer then the seller has the right to reposses the product.
• The buyer has the right to terminate the contract at anytime intended without having to pay any additional cost.
• The repair work of the product lies with the seller.
• Buyer cannot resale the product before the completion of payment.

Ordinary sales:

• Ownership of the product is immediately transferred. Single payment of money.
• If the payment is failed by the buyer then the seller cannot reposses the product but can only take legal actions.
• The buyer is obliged to pay the entire sum of money and cannot terminate the contract.
• The repair work in the product lies with the buyer.
• The buyer can resale the product immediately after the purchase.