Under hire purchase contract, the general rule is that the hirer cannot pass a good title in the goods to a third party.
Required:
Explain briefly TWO exceptions to this rule. (4 Marks)

The general rule in a hire purchase contract is that the hirer does not own the goods until the final payment is made, and therefore cannot pass a good title to a third party. However, there are exceptions:

  1. Sale by a Mercantile Agent:
    If a mercantile agent, who is in possession of the goods with the consent of the owner, sells the goods to a third party acting in good faith and without notice of the hire purchase agreement, the third party can acquire a good title. This exception is governed by the law on mercantile agents.
  2. Sale under the Factors Act:
    Under the Factors Act, if the hirer is in possession of the goods and acts as though they are the owner (for example, by selling them), and the buyer acts in good faith without knowledge of the hire purchase agreement, the buyer may obtain good title to the goods.