With hire purchase becoming a popular payment option in Kenya, one might be eager to learn about the hire purchase agreements. In the case of cash purchases, one will only take a receipt home and assume ownership of the product immediately after making the purchase. However, in the case of hire purchase, you are hiring a product to use until you make all the payments. This makes a hire purchase contract necessary to govern the owner of the product as well as the buyer.
Clauses under hire purchase agreements
1. Nature of the agreement
This is the first clause in any hire purchase contract, and it states the purpose of the agreement. If you are purchasing household items such as TVs, microwaves, or dinner sets, the nature of the agreement will be for personal use. On the other hand, when purchasing items to utilize in your business such as commercial blenders, refrigerators, and other appliances, the nature of the agreement will be for commercial purposes.
It is in this clause that the dates for commencement and termination of the agreement are stated. Payment details are also indicated in this clause. It states how to make payments, when to pay, the name, as well as the address of the owner.
2. Delivery of goods
It is the duty of the owner to deliver the products to the buyer in the case of hire purchase agreements. This clause defines the date, time, and place of delivery.
3. Risk clause
This is the clause that defines any damages to the products, and who will bear the costs. If the products are damaged or defective before delivery, the owner bears the cost. On the other hand, after delivery, the hirer owes full responsibility for the damages.
4. An explanation of the rights of both parties
This clause will explain the rights of the owner, including the rights to repossess products and termination of the contracts. One can understand circumstances under which the owner can repossess the goods.
The rights of the buyers will also be explained under this clause. This includes the right to get the necessary information, and the right to termination.
5. Charges and total cost of the hire purchase agreement
In this part of the agreement, one learns the costs involved when purchasing a given product. This includes the down payment, interest, monthly installments, booking fees, maintenance, insurance, and other relevant charges. The owner has an obligation to disclose the fees to the buyer.