Hire-Purchase Act Reform: Death of the hirer

[easyazon_block add_to_cart=”yes” align=”left” asin=”1112044760″ cloaking=”default” layout=”left” localization=”default” locale=”US” nofollow=”default” new_window=”default” tag=”thecorpro-20″]The Law Relating to the Hire-Purchase System : With An Appendix of Forms[/easyazon_block]The repossession of hire-purchase goods by the owner has been discussed in a previous post [see here] where suggestions were proffered on how to improve the statutory provisions on such matter in order to ensure that any new, improved hire-purchase legislation in Nigeria has robust provisions on the issue. Another factor that could affect the provisions of the hire-purchase legislation in respect of repossession of hire-purchase goods is the death of the hirer before the termination of hire-purchase relationship. In this article, we shall review the present position of the Hire-Purchase Act, Cap. H4, Laws of the Federation of Nigeria 2004 (HPA) on the issue and make some recommendations for consideration in any attempt to reform the HPA.

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Effect of the hirer’s death under the HPA

The HPA does not take into account the premature death of the hirer which could occasion an unintended default by the hirer in complying with the hire-purchase agreement. For example, by virtue of section 9(5) of the HPA, the owner is empowered to repossess a motor vehicle, the subject matter of a hire-purchase agreement, where the hirer has defaulted in the payment of three or more instalments. This repossession is clearly purposive; being to protect the motor vehicle from damage or depreciation pending the determination of any action. This provision applies irrespective of what may be the cause of the default. Thus, where the unexpected, unintended and premature death of the hirer occasions the default, the owner technically and legally, can repossess the hire-purchase goods once there has been default in the payment of three or more instalments.

This could occasion grave injustice on the hirer; especially so, if prior to the death of the hirer he had been regular with his payment of the periodic instalments under the hire-purchase agreement. This repossession could deny the estate of the hirer of the right to benefit from the hire-purchase agreement even when the estate is willing and able to step into the shoes of the hirer to continue the relationship.

This negates the provision of section 20(1) of the HPA where the term “hirer” is defined to include “a person to whom the hirer’s rights or liabilities under the agreement have passed by assignment or by operation of law”. The implication of this expansive definition is that the owner can proceed against the estate of the hirer if he obtains a favourable judgment against a deceased hirer. Consequently, for purposes of equity and fairness, the estate of the deceased hirer should be able to assert some rights against the owner on account of the hire-purchase agreement entered into by the hirer with the owner before the death of the hirer.

The impact of the hirer’s death

The death of the hirer should be accommodated. Where it is established that the hirer has died and prior to his death the hirer was not in default regarding his obligations under the hire-purchase agreement, then it may be necessary for the HPA to provide that the estate of the deceased hirer be notified of the obligations of the hirer under the hire-purchase agreement before enforcing the terms of the agreement against the hirer (or his estate). In the case of default in the payment of the periodic instalments, the estate should be given the opportunity to make the payment. The HPA could prescribe a time period within which the payment should be made by the estate of the hirer commencing from the date when the notice of the outstanding payment is brought to their attention.

Also, provisions of the extant HPA which empowers to owner to repossess hire-purchase goods on account of default in the payment of the periodic instalments, such as section 9(5) of the HPA, could be made to be subject to a demand for the payment having been made of the estate of the deceased hirer. A time period also could be stated in the HPA for the estate of the deceased hirer to make the payment failing which the owner can enforce his rights under the hire-purchase agreement or the HPA.

Benefits of the proposal

The above proposal will enable the estate of the hirer enjoy the benefits of the hire-purchase agreement which the hirer had laboured to keep faith with before the death of the hirer. This is particularly fair where the hirer has paid a substantial fraction of the hire-purchase price. As is well-known, the hire-purchase price is a combination of the purchase price (cash price) of the item and the interest for the period of credit granted. Consequently, the periodic instalment is a repayment of part of the cash price and the interest. Thus, where substantial part of the instalment has been paid by the hirer, it would be unfair to deny him or his estate of the opportunity to complete the transaction. This can only be achieved if the HPA makes some provisions to accommodate situations where default by the hirer is occasioned by the death of the hirer.

[easyazon_block add_to_cart=”yes” align=”center” asin=”1112044760″ cloaking=”default” layout=”left” localization=”default” locale=”US” nofollow=”default” new_window=”default” tag=”thecorpro-20″]The Law Relating to the Hire-Purchase System : With An Appendix of Forms[/easyazon_block]

Next week, we shall consider another issue which deserves some attention in any attempt to improve the legislative stipulations for hire-purchase transactions in Nigeria. You may have some comments to make on the issue considered in this article. Kindly share such views by using the comments area of this post below. If you are already a registered user, you will be required to log in to comment on this post; otherwise, you will have to register before posting your comment. Registration is simple and FREE.

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6 comments on “Hire-Purchase Act Reform: Death of the hirer
  1. M.R. JOHNSON says:

    QUESTION: IF THE HIRER MAINTAINS THE RIGHT UNDER THE HPA TO DETERMINE THE HIRE PURCHASE AGREEMENT, IN THE EVENT OF HIS DEMISE, CAN HIS ESTATE EXERCISE SUCH RIGHT, EVEN WHEN THE DECEASED IS IN DEBT REGARDING HIS PERIODIC INSTALLMENTS?

    • Jerry says:

      It is obvious by virtue of section 20(1) of the HPA that the assignment of a HP agreement is contemplated by the Act, yet the HPA failed to make explicit provisions regarding such matter; whether upon the death of the hirer or while alive. And so, assignment of HP agreement will be based on common law where a person with an option to purchase goods has a kind of proprietary interest in the goods that is capable of being transferred in the absence of any prohibition against such transfer in the agreement. Consequently, when a hirer assigns his right under a hire purchase agreement, the assignee succeeds to all his rights and obligations under the hire purchase agreement, as in the case of Whitley v Hilt (1918) 2 K.B. 808.

      Note however that by virtue of section 9(5) of the HPA, the owner technically and legally, can repossess the hire-purchase goods once there has been default in the payment of three or more instalments notwithstanding the situation, even where the unexpected, unintended and premature death of the hirer occasioned the default.

      Lastly, on the recommendation of Barr. Nat Ofo, for purposes of equity and fairness, if upon the death of the hirer and prior to his death, he was in default in the payment of the periodic instalments, before enforcing the terms of the agreement against the hirer (or his estate), the estate of the deceased should be notified of the obligations of the hirer under the hire-purchase agreement and be given the opportunity, if they so desire, to make the payment and be able to assert some rights against the owner on account of the hire-purchase agreement entered into by the hirer with the owner before the death of the hirer.

  2. Ebenezer Orumwense says:

    If any reform is done to the HPA and the estate of the hirer is allowed to take charge of a HP agreement such law should be encompassing as to estoppe the estate of the hirer to act in a fraudulent manner and not just to be reformed in the estate’s favour.

  3. Semirah OKWILAGUE says:

    Upon the death of the hirer the estate of the hirer should take responsiblities:
    1.If the hirer has not defaulted in making payment three months before his death.
    2. It should be cleary stated in the hire-purchase agreement that in case of the death of the hirer, the estate of the hirer should be responsible for the goods; if this is not stated the owner should repossess the goods.
    On the other hand, if after three month of the hirer’s death, the estate of the hirer defaults in making payment the owner should retake possession of the goods.

  4. M.R. JOHNSON says:

    The HPA did not make provision such eventualities. However,it must be noted that the hirer must sign by himself and no one else can sign for him. Therefore the latin maxim “qui facit per alium facit per se” meaning “he who does something by another does it himself”, does not apply in this instance, because the hirer cannot have an agent or a representative on his behalf but himself by virtue of section 2 of HPA. Thus, my opinion will be that the death of the hirer, regardless of whether he is in debt of the periodic installments or not should bring the hire-purchase agreement to an end, and the owner should be allowed to take reasonable steps even without an action in court to recover possession of the goods in the custody of the hirer’s estates. However, suggestions for reform of the HPA should include this ambiguity…

  5. neeka beatrice says:

    QUESTION: CAN THE HIRE-PURCHASE AGREEMENT BE TRANSFERRED?

    IF YES, THEN THE DEATH OF THE HIRER SHOULD NOT BRING THE HPA TO AN END. BUT IF NO, THEN THE DEATH OF THE HIRER SHOULD BRING THE HPA TO AN END.

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