Hire Purchase System: Under this system the purchaser purchases
the goods on instalment and after paying the last instalment he become owner
of that goods until the ownership is in the hand of seller and he has a right
to forfeit that goods if the purchaser fails to pay any instalment. The seller
paid all maintenance expenses until the the ownership is in his hand. The
purchaser has to pay some cost of a goods immediately to seller which is
known as down payment. From next month his instalment periods will be started
and he has to pay agreed amount with interest to seller.In the agreement the
purchaser is known as hire-purchaser and seller is known as vendor.
Advantages of hire-purchase
system:
·
Hire-purchaser can purchase the luxurious
goods in easy instalments.
·
The instalments are not create burden
on purchaser's financial position.
·
The seller or vendor has a right to forfeit the goods if hire-purchaser
does not pay its instalment.
·
The sellers or vendor are able to sell
more goods by using hire purchase system.
·
It increases the demand and supply of costly
goods.
·
The ownership is in the hand of seller
or vendor until the hire- purchaser does not make the full payment of that
goods.
Disadvantage
of hire-purchase system:
·
The hire purchaser is not entitled for
ownership until he paid the last instalment.
·
All expenses paid by seller or vendor
until the purchaser pay all his instalments.
·
If the purchasers buy the luxurious goods
which they normally are not able to buy it and if they fail to pay the instalments
then seller suffers loss.
·
The seller suffers loss when the
purchaser is not able to pay any instalment and the goods return back to
seller’s hand in bad condition because he doesn’t has to pay any maintenance
expenses so, the purchaser uses freely.
Right
of Seller or Vendor on seize of goods:
If the purchaser has paid the definite proportion of
goods value to seller then the seller has no right to seize that goods because
the goods are now treated as protected goods and he can recover the remaining
amount from purchaser by submitting application in the court.
Right
of Hire-Purchaser on seize of goods:
If the seller seizes the goods then hire purchaser
has a right to recover the amount from seller that is the amount paid up to the date of seizing the goods and the
value of goods at the date of seizing the goods.
Termination
of the hire purchase agreement:
The purchaser has an option to terminate the hire purchase
agreement at any time but before the last instalment is become due. In that
case he has to give 14 days notice to seller. He has to pay agreed amount to
seller for terminating the contract as decided between them. But if he has paid
more or equal of agreed amount prior of terminating the contract to seller then
he will not pay any amount to seller.
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