Power of Recovery of Possession of Goods
The hire purchase act 1965, CAP H4 LFN 2004 was passed to regulate hire purchase transaction and it possesses 21 sections. It has been described as the hirer’s act as it is revolutionary and highly protective of the hirer.
Most of the injustices that has characterized the hire purchase system at common law were eliminated. Hire purchase is defined as the bailment of goods in pursuance of an agreement under which the bailee may buy the goods.
The act applies to hire purchase agreement and credit sales agreement of goods where the hire purchase price does not exceed 1000pounds. For hire purchase to be valid under the agreement, there must be a note or memorandum in writing setting out the terms of agreement and signed by the hirer.
HIRER’S RIGHT OF TERMINATION
The hirer has a right to determine the agreement after giving due notice in writing to the owner. This he can do at any time before the final installment falls due. The hirer must then pay
- The areas of payment due but which are unpaid at the date of termination.
- Any further amount necessary to complete payment of half the hire purchase price unless this has already been paid. This is provided for in section 8. The hirer will also pay damages if he has not taken reasonable care of the goods. According to section 8(2) on termination, the hirer must return the goods to the owner and make the payment stated. This is also evident in section 8(3) of the 1970 amendment. According to section 8(3) in any circumstances where:
a. A hirer determines or has determined a hire purchase agreement under this section, he shall immediately upon the determination return the goods to the owner and settle all outstanding liabilities subject as prescribed in the foregoing provisions of this section, &
b. (when amended). Section 8(4) also provides for the rights of the hirer to terminate apart from as provided in this section.
RECOVERY OF POSSESSION BY THE OWNER (SECTION 9)
The act prohibits the owner from enforcing a right to repossess otherwise than by action when relevant. Proportion of the hire purchase price has been paid or tendered unless he had himself terminated the agreement or the hiring as seen in section 9(1) & (3). Relevant proportion means in the case of goods other than motor vehicle (1/2) and in the motor vehicles (3/5) of hire purchase price as evident in section 9(4).
Once the relevant proportion, the owner can only recover possession by action. Failure to do this will lead to the determination of the hire purchase agreement and hirer or any guarantor can recover from the owner all sums already paid by them under the agreement without any deduction.
The hirer will sue for money had & received by the owner and the guarantor can recover any paid under any security given by him as in section 9(2).
Section 9(5) gives the owner a limited right to repossess the goods even though the relevant proportion has been paid. This right exists in the case of agreement relating to motor vehicles only. It arises only when three or more instalments are due and unpaid and only after the owner has commenced proceedings. That is the effect of the words “pending the determination of any action” in the sub section. Thus, if an action is not pending when the owner removes the vehicle, the act of the removal will be unlawful. This is illustrated in the case of tabansi agencies ltd v. incar motors (nig) ltd.
Except as provided from subsection (5) below, in the application of the foregoing provisions to motor vehicles where three or more instalments of the hire purchase price of a motor vehicle under the agreement and unpaid, the owner may removes the motor vehicle to any premises under his control for the purpose it from danger and retain it there pending the determination of any action and the owner shall be liable to the hirer for any damages or loss caused by the removal. This equivalent to section 2 of the hire purchase act (amendent) Decree no 23 of 1970.
Contributed by: Abdulganiyu Ismail (AKA) Mastermind
Prepared and Written by: Ucheakonam Chijioke Joshua (CJ)