Hire-purchase -The business of work and pay  

Road transport is the main mode of passenger movement in the country. To make it convenient for people to move from one place to another, government, private companies and individuals provide commercial buses, mini-buses and taxis services. Since there is always a high demand for transport services in the main cities, the hire-purchase business usually referred to as ‘work and pay’ is also rising. This is one of the types of credit transaction whereby drivers who are unable to buy their own vehicles enter into an agreement with individuals, companies – including financial institutions – which make the vehicles available to them on commercial terms. They use the vehicles to work, make periodic repayments and then after settling all the debts or the instalment payments become the bona-fide owners of the vehicles.

The nature of this business activity is defined by the Hire-Purchase Act 1974 (NRCD 292) and recognised as a finance lease by the Borrowers and Lenders Act 2008, (773) currently under amendment. Since these transactions do not involve disbursing physical cash to the applicant as is usually done in the ordinary loan deals, the terms and conditions governing the contract should be considered in line with provisions of the Hire-Purchase Act.

The Agreement

Unlike the financial institutions and some other companies which formalise the relationship with drivers in writing as required by law, many individuals who provide the same services agree on verbal terms and conditions. The oral arrangement brings in its wake challenges about enforcement of the rights and obligations of each party. To appreciate this terse article, the experience of a taxi-driver who approached a savings and loans company that was offering the work and pay’ to interested persons will suffice.

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After satisfying the application requirements, he entered into a 3-year agreement involving a Hyundai Getz 2010 model. With the enthusiasm and commitment to own the vehicle, he worked very hard to meet the monthly repayment schedule – but with occasional challenges which were attributable to mechanical faults. Unfortunately, at the tail-end of the contract, he was unable to honour his obligations for two consecutive weeks – leading to termination of the contract by the company. In the ensuing melee, the company sent its officers to his residence to take the vehicle away despite his protests. Did the company follow due process? What does the Hire-Purchase Act say in respect of such an occurrence?

Indeed, the Act stipulates thatany provision in a hire-purchase or conditional sale agreement shall be void to the extent that it provides that an owner or seller or any person acting on his behalf is authorised to enter upon any private land or premises for the purpose of taking possession of goods which have been let under a hire-purchase agreement or sold under a conditional sale agreement or is relieved from liability for such an entry”.

Implications

With the understanding that a hire-purchase agreement should not include the stated provision or clause, it equally and by extension prohibits the practice of entering the hirer’s premises to repossess the items in question without following the legal process. In effect, repossessing the vehicle in this case from the driver when he apparently breached the agreement flouts the law. Notwithstanding, the repossession can be done peaceably by obtaining a court order or obtaining the hirer’s consent.

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In establishing further facts for this write-up, it came to light that some service providers do not comply with the legal process in repossessing vehicles. This exposes them to legal risk with dire consequences. But the hirers are unable to act on their rights when violated, thus causing the owners to act with impunity.

The inference one can draw from these occurrences is that the service providers behave in that manner because many of the hirers (drivers) are ill-informed due to their inability to read or write. The bottlenecks in the hire -purchase business which have disadvantaged and dashed the hopes of many young drivers from owning their personal commercial vehicles can be addressed through public education, or the hirers seeking independent advice before entering the transactions.

Dear readers, I am once again grateful for your time. Keep reading. Your views are invaluable and enrich the discussion. May the light of His face shine upon us all. God Bless!

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