QUESTIONS 1

Suri went to Kedai Mudah (KM) and was interested in purchasing a television, a
microwave oven, a washing machine and a refrigerator for her new home. However, she
did not have enough cash and the owner of KM suggested that she enters into a hire-
purchase agreement with Ciku Finance Co (CFC) which provides financial assistance.
Suri agreed and was asked to sign a hire-purchase agreement. The agreement is for all the
goods but it does not state how much she has to pay monthly, the term charges and the
number of instalments she has to pay in total. When she enquired, she was told that the
details will be filled in later and that she should just sign it first. Suri requested a copy of
the agreement to be given to her. 5 weeks have passed since she signed the agreement but
she has not received a copy. Instead, CFC asked Suri to pay for the first monthly
instalment. Suri is not sure of the validity of the hire-purchase agreement. Advise Suri.

ANSWER

Whether the Hire purchase Agreement (HP Agreement) signed by Suri is valid?

Section s. 4B(1) provides that every hire-purchase agreement shall be signed by or on

behalf of all parties to the agreement. Section 4B (2) states that, the owner or the agent
cannot insist the hirer to sign incomplete HP agreement/ blank agreement and section
4B(2)(2B) appends that the owner cannot serve the agreement which not completed.

In the current case, Suri was asked to sign a hire-purchase agreement with CFC.
However, the agreement does not state the amount of monthly payment, the term charges
and the number of instalments she must pay in total. Thus, CFC has failed to follow the
procedures as mentioned in section 4B.

Section 4C(1)(a)(b) provides that every HP agreement shall specify the details.
Among the details are date, address, no of installments, time of payment, address, the
cash price, insurance and vehicles registration fees.
Suri signed a hire-purchase agreement with CFC which not contained the amount of
monthly payment, the term charges and the number of instalments she must pay in total.
Thus, according to section Section 4C (2), CFC has breached section 4C.

Section 4D states that if the hirer purchase more than one good there shall be a separate
hire-purchase agreement for each good purchased. In the current case, Suri purchased a
television, a microwave oven, a washing machine and a refrigerator for her new home.
However, she was asked to sign the agreement which is for all goods. Thus, Ciku Finance
Co has failed to follow section 4D

According to section 39, after a hire purchase agreement is completed and signed by the
parties, the agreement cannot be amended, altered, deleted or added. If the owner does all
the above such acts, it shall be no effect unless the hirer consent to it. In the current case,
Suri was told by the clerk of CFC that the details such as the amount of monthly
payment, the term charges and the number of instalments will be filled in later after Suri
has signed the HP agreement. This action is not permitted as mentioned in the section 9
of the HP Act.

Section 5(1) of the HP Act provides that, within twenty-one (21) days after the making of
a hire-purchase agreement, the owner shall serve or cause to be served on the hirer and
the guarantors a copy of the agreement. In this case, Suri requested a copy of the
agreement to be given to her. 5 weeks have passed since she signed the agreement, but
she has not received a copy. Instead, CFC asked Suri to pay for the first monthly
instalment. Thus, this clearly showed that, CFC has breached section 5(1).

CFC has failed to follow several procedures for the formation of the hire purchase
agreement. Thus, CFC will be guilty for the offence and the penalty is according to
section 46 and the penalty is fine not exceeding RM100,000

In conclusion, the HP Agreement signed by Suri is void.

Encik Cetak acquired a new computer through a hire purchase agreement for a duration
of 24 months from ABC Sdn Bhd. After paying the instalment for three months, Cetak
decided to let his brother Warna continue with the hire purchase agreement of the
computer. He went to ABC Sdn Bhd to ask for an assignment. ABC Sdn Bhd informed
that they will agree for assignment if Cetak could provide them extra monthly payment
and a new guarantor. Advise Cetak

ANSWER

The issue is whether Encik Cetak has a right for an assignment?

The hirer is not the owner of the goods. Therefore, he does not have the right to assign his
rights over the goods to another person. However, the hirer is entitled under section 12(1)
of the HP Act to assign his right, title or interest to another person with the consent to the
owner. But, if the owner’s consent is unreasonably withheld, the hirer may assign without
the owner’s consent. However, to do so, the hirer must first apply to the High Court for
an order declaring that the owner’s consent has been unreasonably withheld. As stated
under section 12(2) of HP Act, the owner’s consent is said to be unreasonably withheld if
the owner requests for extra payment or any other consideration for giving his consent.
Besides, under section 12(5)(a)&(b), the owner’s consent is said to be unreasonably
withheld if the owner requires other or additional guarantors to guarantee the assignee’s
obligation whereas the same guarantors who have guaranteed the hirer’s obligation under
the hire-purchase agreement have agreed to guarantee the assignee’s obligation under the
agreement; or where the assignee has furnished the same number of guarantors as was
furnished by the hirer to guarantee his obligation under the HP agreement as guarantors
for his obligation under the agreement.

In the current case, Encik Cetak would like to let his brother Warna continue with
the Hire Purchase agreement of the computer. However, the owner, ABC Sdn Bhd, only
will agree for assignment if Cetak could provide them extra monthly payment and a new
guarantor. This showed that ABC Sdn Bhd as the owner has provided unreasonably
condition to their consent. So, Encik Cetak may apply for the right of assignment to High
Court.

The conclusion is Encik Cetak may assign his brother Warna to continue the HP
Agreement.
Rizal entered into a hire purchase agreement with Maju Finance Ltd for the purchase of a
car. He failed to pay the hire purchase instalment for two consecutive months and the
finance company wishes to repossess the car. Ten days after sending the required notice
under the fourth schedule the company sent one of their agent , Hassan to reposes the car.
Hassan went to Rizals house to take the car but Rizal refused to corporate. An argument
ensured between them and Hassan become very angry. He hit Rizal and snatched the car
key from him and drove away the car. Next day Rizal went to the office of the finance
company and demanded the return of the car. He also insisted that the company pay him
damages for the injuries he had suffered. The company refused to entertain Rizals
demand and told him to settle the arrears immediately or face losing the car. Advise
Rizal.

ANSWER

Whether repossession taken by the Maju Finance Ltd is valid? Whether Rizal has a rights
to take action against Maju Finance Ltd?

Under S 16 (1) before the repossession can be done by the owner, there must be at
least 2 successive defaults in payment of the monthly instalments or a default of the last
instalment before repossession can be done. Under S 16 (1a) if the hirer is deceased there
must be successive default of payment of the monthly instalments by the representative
of the deceased hirer before the repossession can be done. In this case Rizal has failed to
pay the hire purchase instalment for two consecutive months that means his have fit the
criteria for the repossession.

When there is a default as stated above , S16(1) imposes a duty on the owner and
or the dealer to serve the hirer with the fourth schedule notice. It is a written notice of
intention to repossess. Not less than 21 days must be given after the notice is served
before repossession can be carried out. Maju Finance Ltd has given the required notice
under the fourth schedule before they repossessed the car. Apart from the 4th schedule
notice, a notice of intention to repossess under regulation must be served on the hirer not
earlier then 14 days from the 4th schedule notice. This means that the second notice i.e the
notice under Regulation 3, is to be served 14 days after the 4th schedule notice.

However under S16(2) where the owner believe that the hirer would abscond , remove or
conceal the hirer purchase goods if the 4th schedule notice is served the notice need not be
given. According to S 16(A), if within 21 days of the service of the 4 th schedule notice,
the hirer return the hire purchase goods, hirer would not be liable for the costs of
repossession, the cost incidental to taking possession and the costs of storage .In the
current case, Ten days after sending the required notice under the fourth schedule the
company sent one of their agent , Hassan to repossess the car. This clearly showed that,
Maju Finance Ltd failed to observe the 4th Schedule notice and reluctant to serve the
Regulation 3. They failed to give 21 days to Rizal to pay the default payment.
Before repossession can be taken place, the owner must observe on whether the hirer has
paid monthly payment for more than 75% of the total cash price of the goods or not. The
owner must obtain an order from court to repossesses the goods if the hirer has paid more
than 75% of the purchase price of the good. However, the owner can straightly repossess
the car.

Upon failure of the hirer to pay the defaults and upon the expiry of the 21 days notice,
repossession can be carried out. S 16( 7 ) requires the repossession to be done lawfully
and according to the manner prescribed in the regulations. The regulations can be found
in the Hire Purchase Regulation 1976. The owner or his agent must produce and show his
identity and/or authority card. If entering the premises, the owner or his agent must
observe the rules. According to s 48 if there is any force or criminal act involved during
the repossession the owner or the agent shall be guilty of an offence. S 16 (4) provides
that immediately upon repossession an owner must also serve or cause to be served on
the hirer personally a document acknowledges receipt of the goods or the hirer is not
present at that time send to the hirer immediately after taking possession of the goods. S
16 (5) states that such document must contain a short description of the goods of the
goods and the date, time and place where the owner look possession of the goods.

In the current case, Hassan as an agent of Maju Finance Ltd has repossessed the car
before the period of 21 days. Hassan went to Rizal’s house to take the car, but Rizal
refused to corporate. An argument arose between them and Hassan become very angry.
He hit Rizal and snatched the car key from him and drove away the car. He failed to
show his identity card and the repossession has involved criminal force. Therefore,
Hassan has breached S 16( 7 ) the Hire Purchase Regulation 1976.

S 16(3) requires the owner, within 21 days after repossession of the goods , to serve on
the hirer and every guarantor a written notice in the form set out in the 5 th schedule to the
HP Act 1967. This notice gives the option to the hirer either to exercise the hirer’s right
to resume possession of the goods within 21 days and pay the arrears as well as the
penalty for breaching the agreement or to terminate the hire purchase agreement and pay
the balance sum payable under the said agreement. According to s 16 (6) if an owner fails
to serve the 5th Schedule Notice the owner right in the hire purchase agreement ceases
and determines. The owner will lose all rights under the HP agreement and would not be
entitled. The owner will lose all the right under the HP agreement and would not be
entitled to get any remedies unless the hire has exercised his right to recover the goods so
taken possession. In the current question, Maju Finance Ltd has failed to serve the notice
of 5th schedule to Rizal as requested by the HP Act.

S 17(1) provides that an owner cannot sell or dispose of the reposed goods without
written consent of a hirer until the expiration of a hirer until the expiration of 21 days
after the date of service of the 5th Schedule Notice on the hirer or if notice of re delivery
of the goods pursuant to s.18(1)(a) has been given by the hirer has been given by the hirer
until the time for payment or tender pursuant to that notice has expired whichever is later.
Maju Finance Ltd cannot simply sell off the car. They need to inform Rizal before they
can sell the car either through private treaty or by auction.
In conclusion, the repossession is null, and void and Rizal has a right to take action
against Maju Finance Ltd.