Hire-Purchase Act Reform: Issues with motor vehicles

[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]In Nigeria, it is generally understood that the subject matter of hire-purchase transactions falls into two categories: goods other than motor vehicles whose value do not exceed two thousand naira, on the one hand, and motor vehicles, irrespective of their monetary value, on the other hand. In this article, we shall review the provisions of the Hire-Purchase Act, Cap. H4, Laws of the Federation of Nigeria 2004 (HPA) in respect of motor vehicles as subject matter of hire-purchase transactions in Nigeria. Some not-too-obvious limitations regarding motor vehicles as the subject matter of hire-purchase transactions are identified and a plausible solution to the identified challenge is proffered.

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The Background

By virtue of section 1 of the HPA, the provisions of the HPA shall apply in relation to: (a) all hire-purchase agreement (other than agreement in respect of motor vehicles) in which the hire-purchase price does not exceed two thousand naira; and (b) all such agreement in respect of motor vehicles, irrespective of the hire-purchase price. This provision clearly shows the two categories of the subject matter of any hire-purchase transaction under the HPA.

However, the crucial question which is often never asked or taken for granted is: what is a motor vehicle? Interestingly, the HPA has a definition for the term “motor vehicle”. In section 20(1) of the HPA, a motor vehicle is defined as “a mechanically propelled vehicle intended or adapted for use on roads or for use for agricultural purposes”.

Obviously, there are issues with this definition as it does not seem to be consistent with the general understanding of the term.

The Issues

The definition of the term “motor vehicle” in section 20(1) of the HPA does not seem to be completely consistent with the general understanding of the term “motor vehicle”. Form the definition in section 20(1), for an item to qualify as a motor vehicle it must have the following features: (1) it must be mechanically propelled; (2) it must be capable of being used on roads; (3) it may be usable for agricultural purposes.

These elements are somewhat vague. In the first place, does mechanical propulsion refer to combustion? This question is relevant because an item can be mechanically propelled without combustion occurring. To picturesquely illustrate the dilemma, one may ask, does a bicycle qualify as a motor vehicle? What of a cart? Or, even a horse-carriage?

Secondly, the item must be capable of being used on road either by its original design or a subsequent adaptation. This road-usage requirement completely excludes sea-going vessels whether mechanically propelled or not. The situation is not so straight-forward in respect of aeroplanes. Are they motor vehicles under the terms of the HPA? They are mechanically propelled and can be used on roads. In fact, they are used on roads, even though not all roads, unless it is claimed, and wrongly so, that a tarmac is not a road.

Evidently, the apparently innocuous definition of motor vehicle in section 20(1) of the HPA is not as straight-forward as it does seem on a cursory review. It leaves a lot of unanswered (or even unanswerable) questions. Little wonder, therefore, that there has been a stunted development of hire-purchase transactions in Nigeria; a situation that has occasioned the frequent emergence and rapid development of other forms of commercial transactions.

The Way Forward

There does not seem to be any defensible justification for the dichotomy in respect of the items that should be the subject matter of hire-purchase transactions. Consequently, the reform of the HPA should be such as to make hire-purchase transactions possible in respect of all and any lawful goods. What should be paramount is that the intentions of the parties to the transaction should be clear and the terms agreed by them should be clearly stipulated in their hire-purchase agreement.

In a subsequent article, we shall consider some not-too-obvious issues regarding the “other goods” which can be the subject matter of hire-purchase transactions.

You are welcome to share your thoughts on this issue.

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[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]

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6 comments on “Hire-Purchase Act Reform: Issues with motor vehicles
  1. Ebenezer Orumwense says:

    I align with the way forward as goods, at whatsoever amount or price should be recognised by the Act and not categorised in such an abrupt manner of motor vehicles and other goods of not more than N2000.

    • Jerry says:

      Agreeable, there should be no dichotomy in respect of items that should be the subject matter of HP transactions. Thus, the reform of the HPA should allow HP transactions possible in respect of all and any lawful goods; provided the intention of the parties is clear and the terms of the contract clearly stipulated in an agreement.
      As for the definition of motor vehicle as stipulated in section 20(1) of HPA, bearing in mind the problem of language in definitions, I wonder if there can ever be a perfect definition given. Even though I personally agree with my professor, Dr. Nat Ofo to some extent, on the vague nature of the present definition in the HPA, I also think a closer examination of it will give a more holistic understanding.
      Prof. emphatically outlines three features in the present definition of motor vehicle as specified by the HPA, which he judiciously evaluated, exposing some of its deficiencies which makes it inadequate. However elaborate as that may be, with due respect Sir, I suggest we also consider the use of the word “INTENDED” in the definition. It can be deduced from the conventional understanding of what a motor vehicle denote, that those who drafted the HPA anticipated its interpretation in the context of intention/purpose as well as appropriate use for it. In other words, apart from been mechanically propelled, adapted (capable) for use on roads or for use for agricultural purposes, a motor vehicle should most importantly be “INTENDED”, for use on roads, and not in the air or on water. An aeroplane, for instance, is capable for used on some roads but I doubt if it is intended for road use, except in order to take off. Likewise, a speed boat can be adapted for use on some roads when tyres are attached, yet it is not intended for use on roads but on water.
      Another question that may likely arise will be on the meaning of a road. Many English dictionaries as well as law dictionaries, regard a route, and also a railway as a road. In any case, I am of the view that a motor vehicle is one that is intended for use on roads.

  2. collins says:

    It is possible for a hirer to pay more than the monthly stipulated amount for a given property under a HPA. Because, in the event of exercising his right as a hirer, he has the discretion to decide to pay the entire amount of the HPA, or more than its monthly stated amount, as the case posits. Furthermore, where this occures without the hirer stating how the amount paid by him should be alloted, the owner of the property would do so, but if he does, it would be applicable as directed by the hirer. Haveingstated these facts, it is highly convincing that the hirer can exercise such form of payment in a given HPA. Thanks for such brilliant question.

  3. Ifeanyi Christopher Mbanefo says:

    @Anthony, yes you have an option to pay more than the stated amount each month (under the Hire-Purchase Act).

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