Hire Purchase Agreement

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Hire Purchase Agreement is the modern day inception of the concept of bailment. Essentially, a hire purchase agreement is an agreement of hire with an option to purchase available at the disposal. Chitty defined and characterized a hire-purchase agreement as an agreement under which an owner lets chattels out on hire. And further concurs that the hirer of such chattel has an option open. To either restore the products and end the procurement or choose to purchase the merchandise. When the instalments for hire have achieved an entirety equivalent to the measure of the purchase cost.

Hire purchase agreements were originate in England and thereafter introduce to India by the British. Most of the time, such agreements were govern under the English law. Until a specialise act to govern the same viz. the Hire Purchase Act passed in 1972. But was never enforce and finally got repeal in 2005.

The pioneering hire-purchase company back in the time was the Madras-based Auto Supply Company Ltd. which later known as Commercial Credit Corporation. Other prominent companies included the Motor and General Finance Company and the Instalment Supply Company (c. 1925), headquartered in the North. Subsequently the hire purchase agreements gained a lot of popularity in the road transport industry and the automobile industry viz. financing commercial vehicles.

A hire purchase agreement is usually execute between one company and other party usually knows as a “hirer”. Various clauses of a hire purchase agreements include confirmation to hire from both parties, price of the equipment in question, payment to execute the agreements, monthly instalments payable by the hirer, remedies upon default of instalment by the hirer, dispute resolution clause etc. among other clauses governing the transaction.

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