How does the Hire-Purchase Act protect consumers in Singapore?
A hire-purchase is a transaction where the hirer pays a certain instalment a month to the owner but enjoys the immediate use of a certain good. One example is when you arrange to pay for a car via monthly instalments, such that you get to enjoy the use of the car while still paying a certain sum every month. Only when the hirer pay the final instalment does ownership transfer from the owner to the hirer. The rights of hirers and owners alike are protected under the Hire-Purchase Act in Singapore.
To protect hirers, the following requirements must be fulfilled:
- The hire-purchase agreement must contain all the information prescribed in the Second Schedule, such as details of the price, interest rate, date of monthly payment, amount of instalment, number of instalments, processing fees, total payable amount, date of commencement, assignment details, and early settlement details;
- The agreement must be in writing, and be in English;
- The agreement must be signed by all parties;
- A copy of the agreement must be sent to the hirer within 7 business days; and
- The hirer must also be given notification of his rights under the Third Schedule, such as being able to make a request in writing for a copy of the agreement and/or the statement of account.
For more information on the form and content requirements of the agreement, refer to the Hire-Purchase Act.
Conditions and warranties under the Hire-Purchase Act which protect hirers:
- Quiet possession of goods;
- The right to sell the goods;
- The goods must be free from encumbrance of third parties;
- The goods are of merchantable quality; i.e. goods hired under the Hire-Purchase Act in Singapore are presumed to be fit for the purpose of which goods of that kind are usually bought, taking into account the price and description. Do note that if the hirer was given opportunity to examine the goods, and the defects ought to have reasonably been revealed by such examination, the owner will be absolved of liability for the quality of sub-par goods, if any;
- The goods must be reasonably fit for the purpose for which they are bought;
- There cannot be any misrepresentation (false statements pertaining to the good’s quality, condition, etc.) on the part of the owner to the buyer
The hirer also has certain rights under the Hire-Purchase Act:
- The hirer can request for information such as a copy of the agreement, the amount paid, the amount outstanding, and the amount owed, from the owner;
- The hirer can assign his rights to another person. This means that the other person can become the hirer instead and take over the hire-purchase;
- The hirer can choose to complete the agreement early, by paying the net balance remaining. For example, if there are 4 instalments still outstanding, he can pay the entire outstanding sum in one payment, such that ownership may be transferred to him immediately.
- The hirer can terminate the agreement by returning the goods. The agreement ceases upon termination, but the hirer may still have to pay an agreed sum as compensation for termination.
In return, the hirer is required to perform his obligations under the agreement. These includes acceptance of delivery, prompt payment of instalments, taking reasonable care of the goods, and informing the owner of the location of the goods when the owner makes such a request.
In the event that the hirer breaches any of the terms in the contract, the owner may have the right to terminate the agreement. The owner may even be entitled to repossess the good, if the agreement contains such a term. Examples of situations which can constitute breaches of contract include late or non-payment of instalments.