A logistics company acquired a commercial delivery truck under a hire purchase agreement. After paying 75% of the total hire purchase price, the company defaulted on two consecutive monthly installments. The owner immediately repossessed the truck from the company's premises without obtaining a court order. Under statutory provisions governing hire purchase, which statement correctly describes the legal position of the owner's action?
- The repossession is unlawful because once the hirer has paid at least two-thirds of the total hire purchase price, the owner can only enforce repossession through a court order.Answer
- BThe repossession is lawful because legal title automatically transferred to the hirer upon signing the agreement, giving the owner full right to seize the asset as collateral for unpaid debt.
- CThe repossession is lawful because defaulting on installment payments constitutes a breach of warranty that grants the owner an immediate statutory right to reclaim possession.
- DThe repossession is lawful because a hire purchase agreement functions merely as an invitation to treat, allowing the owner to revoke possession at any time prior to final payment.
Answer
The repossession is unlawful because once the hirer has paid at least two-thirds of the total hire purchase price, the owner can only enforce repossession through a court order.
Under statutory hire purchase law (specifically the Hire Purchase Act), once a hirer has paid a minimum statutory threshold of two-thirds of the total hire purchase price, the owner loses the right to repossess the goods through self-help. Any recovery of the hired property after this threshold must be obtained via a court order. Because the company had paid 75% (which is greater than two-thirds), the owner's self-help repossession without judicial authorization is unlawful.
Step-by-Step Solution
Key Concept
Statutory Restrictions on Repossession under the Hire Purchase Act