BL – Nov 2023 – L1 – SB – Q3c – Hire Purchase and Consumer Credit Transactions

Discusses the key elements of a hire purchase contract.

Question

A hire purchase is a contract in which the owner of goods gives another person called a hirer possession of the goods.

Required:
State FIVE elements of a hire purchase agreement. (5 Marks)

Answer

The five elements of a hire purchase agreement are:

Possession of goods: The owner transfers possession of the goods to the hirer.
Payment by installments: The hirer agrees to pay for the goods in installments.
Ownership remains with the owner: The owner retains ownership until the full price is paid.
Right to terminate: The hirer has the right to terminate the agreement and return the goods.
Option to purchase: The hirer has an option to purchase the goods after all payments have been made.