A hire purchase agreement is a legally binding contract between a seller and a buyer, where the buyer agrees to make payments to the seller over a period of time, usually in instalments, in exchange for the right to use the seller`s property. Hire purchase agreements are commonly used in Malaysia for the purchase of vehicles, machinery, and other types of equipment.
In Malaysia, hire purchase agreements are governed by the Hire Purchase Act 1967, which outlines the rights and obligations of both the seller and the buyer. The agreement must be in writing and signed by both parties, and it must contain several key provisions, including:
1. Description of the goods: The agreement must include a detailed description of the goods being purchased, including the make, model, and serial number.
2. Purchase price: The agreement must state the total purchase price of the goods, as well as the amount of any deposit or down payment required.
3. Payment terms: The agreement must specify the payment terms, including the amount of each instalment, the frequency of payments, and the due date for each payment.
4. Interest rate: The agreement must state the interest rate charged on the outstanding balance, as well as any other fees or charges that may be added to the balance.
5. Default provisions: The agreement must detail the consequences of default, including the seller`s right to repossess the goods and the buyer`s liability for any outstanding balance.
Here is an example of a hire purchase agreement in Malaysia:
HIRE PURCHASE AGREEMENT
Date: ___________
Seller: ___________
Buyer: ___________
Description of Goods: ___________
Purchase Price: RM ___________
Deposit/Down Payment: RM ___________
Balance: RM ___________
Interest Rate: ___________
Payments: ___________
Due Date: ___________
Default Provisions: ___________
This agreement is made between the Seller and the Buyer for the purchase of the goods described above. The Buyer agrees to make payments to the Seller in accordance with the payment terms and interest rate specified above. In the event of default, the Seller has the right to repossess the goods and hold the Buyer liable for any outstanding balance.
By signing below, the parties acknowledge and agree to the terms of this agreement.
Seller: ____________________
Buyer: ____________________
In conclusion, a hire purchase agreement is a crucial contract that should be carefully drafted to avoid any disputes between the buyer and the seller. The agreement must contain all the necessary provisions, including the description of goods, purchase price, payment terms, interest rate, and default provisions. In Malaysia, the Hire Purchase Act 1967 provides the legal framework for hire purchase agreements, and it is essential to understand its requirements when drafting these agreements.