Hire Purchase System - Definition - Law Dictionary Home Dictionary Definition hire-purchase-system

Definition :

Hire-purchase system. A system whereby the owner of goods lets them on hire for periodic payments by the hirer upon an agreement that when a certain number of payments have been completed, the absolute property in the goods will pass to the hirer, but so that the hirer may return the goods at any time without any obligation to pay any balance of rent accruing after return, until the conditions have been fulfilled, the property remains in the owner. The instrument by which the hire-purchase is effected does not ordinarily require registration under the Bills of Sale Acts [Ex parte Crawcour, (1878) 9 Ch D 419]; and the hirer is 'reputed owner' within the Bankruptcy Act [Ex parte Brooks, (1993) 23 Ch D 261]; but the hirer does not 'agree to buy' within the Factors Act or Sale of Goods Act so as to be able to sell or pledge the goods as if he were a 'mercantile agent', Helby v. Matthews, 1895 AC 471; Brooks v. Biernstein, (1909) 1 KB 98. Distinguish from agreements such as in Lee v. Butler, (1893) 2 QB 318, 'which are in fact a sale, the price being paid in installments with the condition that the property passes when all the installments have been paid; here there is a binding agreement for the party to purchase, whereas in Helby v. Matthews Agreements' there is not; this is the real test of a hire-purchase agreement. As to the stamping of a hire-purchase agreement, see s. 7 of the Finance Act, 1907 (7 Edn. 7, c. 13). As to a hire-purchase agreement, being a mere cloak for a bill of sale transaction, see Maas v. Pepper, 1905 AC 102.

Goods comprised in a hire-purchase agreement with a tenant do not appear to be protected from distress under the Law of Distress Amendment Act, 1908 [see Smart Bros. v. Holt, (1929) 2 KB 303]. A very usual form of evasion of a landlord's right is to make the hirer that one of husband and wife, in whose name the premises have not been taken. To avoid this, landlords should let the premises jointly--or prove that they were in the order and disposition (see that title) of the hirer with the consent of the true owner.