What are the characteristics of a hire purchase agreement? Describe the rights of a hire under hire purchase agreement.
Answers
The characteristics of a hire purchase agreement are -
1. The hirer (buyer) pays the hiree (usually the vendor), in installments over a specified period of time.
2. The buyer can possess the goods immediately.
3. The ownership of the goods remains with the vendor till the last installment is paid.
4. In case of default the vendor can repossess the goods and the amount received as installments will be considered as hire charged for that period.
5. The installments include interest and repayments of principal.
6. Usually, the vendor charges interest at a flat rate.
The rights of a hirer -
1. The vendor has to give an advance written notice if he wants to terminate the agreement.
2. In certain cases the vendor cannot repossess the goods without the sanction of the Court.