Repossession in the Hire-Purchase Act: Issues for Consideration

The present efforts towards the reform of the Hire-Purchase Act, Cap. H4, Laws of the Federation of Nigeria 2004 (HPA), has been hailed. [See here.] Certainly, there are several issues in the HPA which require attention and which any reform to the HPA in Nigeria should address. One area that has been identified to be in need of reform is the repossession of hire-purchase goods by the owner. [See here.] The provisions of the HPA on this issue presently are inadequate and somewhat confusing. This article addresses the inadequacies in the HPA on the repossession of hire-purchase goods by an owner.


In the first place, whereas section 9(1) of the HPA is explicit on the procedure for the repossession of hire-purchase goods by an owner when the relevant proportion of the hire-purchase price has been paid, the HPA is silent on the procedure for the repossession of hire-purchase goods when the relevant proportion of the hire-purchase price has not been paid by the hirer. This clearly is a lacuna which the reform of the HPA should address.

Secondly, the HPA is silent on who bears the cost of recovery of possession of hire-purchase goods where, for instance, the hirer is in default in the payment of the instalments. It is reasonable to expect that the hirer should bear this cost since it was his default that led to the owner having to repossess the goods.

Thirdly, when the hire-purchase goods are repossessed, there would be some costs to be incurred in keeping the goods in safe custody. The HPA is also silent on who bears this cost. In those circumstances where the repossession was ordered by the court, the court could make an order regarding such costs, but not all repossession cases involve court action. In such cases, the HPA is unhelpful. Thus, the HPA should be reformed to address such situations. Again, it is reasonable to provide that the hirer bears such costs for the same reasons given above.

Fourthly, section 9(4) of the HPA which defines relevant proportion of the hire-purchase price prescribed different rates in respect of motor vehicles, on the one hand, and other goods, on the other hand. The reason for this difference in rate is unclear. More so, a review of the HPA of some jurisdictions reveals that there is a uniformity of rate in respect of the goods that are the subject-matter of hire-purchase transactions. It is therefore appropriate to provide for a single rate for simplicity and clarity.

Fifthly, the present rate of the relevant proportion (60 per cent in respect of motor vehicles and 50 per cent in respect of other goods) prescribed in section 9(4) of the HPA is too low. This has occasioned grave hardship on owners with its attendant effect of making hire-purchase transactions unattractive to owners and financiers. It may be appropriate to increase the rate to not less than 75 per cent so as to motivate hirers to perform their obligations under hire-purchase agreements and to make hire-purchase transactions attractive to financiers and owners.

Sixthly, there are also some inadequacies in relation to notices being given by one party to a hire-purchase agreement to the other. The HPA is silent on where such notices are to be given. In fact, there is no provision in the HPA for parties to provide an address for the giving of such notice. This is a lacuna that should be filled. Also, there should be a provision regarding the proof of service of notices required to be given by either of the parties. Again, it is advisable that provision be made for such notices given to be in writing. However, it does not seem appropriate in view of the advancements in, and pervasive nature of, information technology in modern times that writing in relation to notices given under the HPA should be limited to inscription on physical papers using physical pens. Other forms of writing, such as through emails, short messaging services (SMS), Blackberry Messenger messages (BBM), etc should be provided for in a reformed HPA. This position is fortified by the fact that by virtue of section 84 of the Evidence Act 2011, computer-generated documents are now admissible in Nigerian courts.

It is believed that if these issues are taken into consideration in the reform of the HPA, the outcome would be a hire-purchase legislation that is commendably contemporary and comprehensive. That is the kind of hire-purchase legislation that should emanate from any reform efforts today as the reform of the HPA is a matter that has been long overdue.

Do you agree that the issues discussed here are appropriate in the reform of the HPA? Should you have any comments on the issues canvassed, kindly share them 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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4 comments on “Repossession in the Hire-Purchase Act: Issues for Consideration
  1. Ndubuisi christian says:

    I think the Hire-Purchase Act should be amended in such a way that the owner and the hirer are equally protected and not one party having advantage over the other party. For example, it is provided in the HPA that an agent can sign for the owner but an agent can’t sign for the hirer because the hirer is required to sign the hire-purchase agreement personally. My suggestion is that the HPA should also make room for the hirer’s agent to enter into a hire-purchase agreement on behalf of the hirer as is the case with the owner.

  2. thelma ubaike says:

    Nice article! I agree with you in the amendment of the hire purchase act. Great article uv got here!

  3. Henry says:

    Good, I am also of the opinion that the clause whereby an unsuspecting hirer who had regularly paid all the instalments as and when due eventually died and that the death will terminate the agreement because it is establised that a hirer cannot have an agent ought to be proscribed. The general rule should apply whereby upon the death of any person, his rights and obligations (excluding those personal to him) pass to his personal representatives as part of the deceased estate as the former is against equity and natural justice.

  4. Henry says:

    A situation where repossessed goods will be in the custody of the owner (though stated that it must be protected against damage or depreciation) pending the determination of the action may not be in the best interest of the hirer since depreciation in some goods is not quantifiable. I therefore recommend that seized goods should be in the custody of court pending the determination of the action.

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