A hire purchase agreement is defined as “the bailment of goods in pursuance of an agreement under which the bailee may buy the goods or under which the property in the goods will or may pass to the bailee.”

Essential features include:
(i) It is a contract: A hire purchase agreement is first and foremost a contract between the owner of the goods and the hirer. As such, it must satisfy the rules regarding the creation of enforceable rights and obligations.
(ii) It is a bailment: The relationship between the owner of the goods and the hirer is that of a bailor and bailee.
(iii) Passing of property: The object of a hire purchase agreement is to ensure that the property in the goods bailed or hired remains with the owner until conditions are met.