INTRODUCTION TO MALAYSIAN LAW OF CONTRACT
Select a hire purchase contract and compare the contract with a normal contract.
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A contract is an agreement between two or more persons (individuals, businesses, organizations, or government agencies) to do, or to refrain from doing, a particular thing in exchange for something of value. Contracts can generally be written using formal or informal terms, or they can be entirely verbal. If one side fails to live up to his part of the contract, there will be considered as a breach of contract and certain remedies for solving the differences are available. The terms of the contract, meaning, the who, what, where, when, and how of the agreement, define the binding promises of each party to the contract.
Hire Purchase is a type of consumer credit available to consumers. A hire purchase contract is a type of contract that is commonly entered by two parties namely individual or organization (hirer) and the loan facility provider. Hire purchase affairs in Malaysia are regulated by statute i.e. under the Malaysian Hire Purchase Act 1967. The Hire-Purchase Act 1967 is under the jurisdiction of the Ministry of Domestic Trade and Consumer Affairs and regulates the business of hire purchase financing which is normally carried out by Credit Companies licensed under the Moneylenders Act, 1951 (or being granted exemption) and Finance Companies licensed under the Banking and Financial Institutions Act, 1989 (BAFIA) (Lim, 2003,p.1). The Hire Purchase Act 1967 sets out the forms and contents of hire purchase agreements, the legal rights, duties, obligations of both hirer and financier.
Basically, hire purchase always deals with the hiring of goods with the option to buy the goods at the end of the hire purchase term. Therefore if a person takes on a hire purchase financing, he is the hirer and financier is the owner. In Malaysia, particularly, goods that be concluded under the Hire Purchase Act are all consumer goods, motor vehicles (including both types private and commercial vehicles)
For the purpose of this paper, a vehicle hire purchase agreement by Name withheld is selected and will be compared with normal contract. There are several differences between the hire purchase contract and normal contract as revealed by the comparison.
With regard to differences, the most fundamental difference between the two is the manner prescribed by statutes on how the respective contracts can come into being. Section 3 of the Malaysian Contracts Act 1950 provides that the making of a proposal and the acceptance of a proposal (i.e. a contract) can be made in any manner (verbal or in writing) as long as such proposal or acceptance of proposal can be communicated to the other party. However, for hire purchase contract, Section 4A of the Hire Purchase Act 1967 stipulated that the hire purchase contract must be made in writing and hire purchase contract can only be made in relation to good specified in the First Schedule of the Hire Purchase Act 1967 (i.e. consumer goods and motor vehicles including private and commercial vehicles. Section 4A also stated that hire purchase agreement which is not in writing is void.
This paper will now look into the Name withheld hire purchase agreement and compare the same with normal contract. The content of Name withheld’s hire purchase Agreement is regulated and basically the same with the content of hire purchase agreement of other bank. The interests of the hirer, as consumers is taken to be safeguarded by the Hire Purchase Act 1967. Regulating the content of hire purchase agreement is a method employed by the Hire Purchase Act to safeguard the hirer’s interests. The Name withheld hire purchase agreement is...