EXCLUDED TERMS IN A HIRE PURCHASE AGREEMENT

Under the common law, the contents of a hire purchase agreement was drafted by the parties with no intervention from the law. The law presumed both parties to be on equal footing. However, this was wrong due to the fact that the owner usually had the upper hand when a hire purchase agreement is to be drafted. As a result of this, the owner usually took advantage of the hirer as has been seen throughout the application of common law.

It is due to this fact that the Hire Purchase Act of 1965 comes in to remedy the situation. The Hire Purchase Act is able to achieve this by excluding certain exploitative terms and by stating the implied terms and conditions of the hire purchase agreement.

The section of the Hire Purchase Act which specifically deals with the exclusion of certain terms is section 3. This section prevents some terms which when inserted could be to the detriment of the hirer. These terms are as follows:

Terms Granting the Owner the Right to Seize the Goods

The Hire Purchase Act in the provision of S. 3 (a) prevents the owner from inserting any term that would give him the right to enter into the premises of the hirer without authorisation in order to seize the goods. The provision states:

(a) Whereby an owner or a person acting on his behalf is authorised
to enter upon any premises for the purpose of taking possession
of goods which have been let under a hire‐purchase agreement
or is relieved from liability for any such entry

See: United Dominions Corporation (Nig) Ltd vs. Ladipo (1971) 1 All NLR 102.

Terms Excluding the Hirer’s Right to Determine the Agreement

The Hire Purchase Act in the provision of S. 3 (b) precludes the owner from inserting any term which would exclude the hirer from exercising his right to bring the agreement to an end. It also excludes terms which would impose on the hirer a liability higher than the one provided for in the Hire Purchase Act if he determines the agreement.

The provisions of this section are as follows:

(b) whereby the right conferred on a hirer by this Act to determine the hire‐ purchase agreement is excluded or restricted, or any liability in addition to the liability imposed by this Act is imposed on a hirer by reason of the termination of the hire‐purchase agreement by him under this Act; or

Terms Increasing Hirer’s Liability after the Determination of the Agreement

This is provided for in the provision of S. 3 (c). This provision excludes terms which would increase the hirer’s liability after the determination of the agreement. This provision is similar to the ending part of the S. 3 (b). However, this section also extends to situations in which the agreement was terminated other than by the hirer. This is better understood if the express provision of this section is provided. This section states:

(c) Whereby a hirer, after the determination of the hire‐purchase
agreement or the bailment in any manner whatsoever, is subject
to a liability which exceeds the liability to which he would have
been subject if the agreement had been determined by him
under this Act

Terms stating that the Agent of the Owner/Seller is the Agent of the hirer

According to the provision of S. 3 (d) terms which state that the agent of the owner/seller would also be the agent of the hirer are excluded from the hire purchase agreement. In some hire purchase agreements, a third party, usually the financier, acts for the owner. When disputes arise, the hirer normally sues the financier along with the owner. In order to checkmate this, a term naming the financier as an agent of the hirer is usually added to the agreement .This term has been excluded and made ineffective by the hire purchase agreement.

The wording of this S. 3 (d) are as follows:

(d) Whereby any person acting on behalf of an owner or seller in
connection with the formation or conclusion of a hire‐purchase or
credit‐sale agreement is treated as or deemed to be the agent of
the hirer or buyer

Terms which relieve the owner from Liability Occasioned from a Breach of the Agreement by his Agent.

This is provided for by the provision of S. 3 (e) of the Hire Purchase Act. This provision is complementary to the provision of S. 3 (d) and prevents the owner from inserting any clause that would make him escape liability due to a breach of condition or warranty by anyone acting ion is behalf.

In the case of Campbell Discount Co Ltd vs. Gall[1], there was a clause of such nature. The English court in using the provision of the English Act of 1968[2] rendered such clause null and void.

The exact wording of the provision are as follows:

(e) Whereby an owner or seller is relieved from liability for the acts
or defaults of any person acting on his behalf in connection with
the formation or conclusion of a hire‐purchase or credit‐sale
agreement

Terms Imposing on the Hirer the Services of an Insurer or Repairer

It is a common practice for owners to insert terms in the hire purchase agreement which mandates the hirer to make use of an insurer of the owner’s choice. The provision of S. 3 (f) puts an end to this practice. The wordings of this provision are as follows:

(f) Whereby a hirer or buyer is required to avail himself of the
services, as insurer or repairer or in other capacity whatsoever,
of a person other than a person selected by the hirer or buyer in
the exercise of his unfettered discretion.

References

[1] (1961) 24 MLR

[2] An equivalent provision to S. 3 (e) of the Hire Purchase Act