Question

Important definition in hire purchase agreement

Answer 1

Hire purchase agreements are agreements whereby an owner of goods allows a person, the hirer, to hire goods from him for a period of time by paying installments. The hirer has an option to buy the goods at the end of the agreement if all installments are being paid. This is not a contract of sale but contract of bailment as the hirer merely has an option to buy the goods. Although the hirer has the right of using the goods, he is not the legal owner during the term of the agreement.