Kinyago, a small scale farmer agreed to take a television set and a radio from Malipo Rahisi Ltd., a hire purchase firm last year.
The hire purchase price for both items was Sh. 90,000. He paid a deposit of Sh. 30,000 and the balance was payable monthly instalments of Sh. 5,000. After paying instalments for six months, he defaulted. Malipo Rahisi ltd. Promptly repossessed the goods.
Discuss the legal position. (10 marks)
• This problem is based on repossession of goods the owner in a hire purchase agreement.
• In this case Kinyago had paid 23 of the hire purchase price but Malipo Rahisi Ltd repossessed the goods.
• The fundamental question is whether Malipo Rahisi Ltd was entitled to reposses the goods on account of Kinyago‟s default.
• The answer is in the negative as Kinyago has already paid 23 of the hire purchase price.
• The repossession of the goods the company is in contravention of the provisions of the Hire Purchase Act, which provide inter alia that in such a case, the goods cannot be repossessed otherwise than court action.
• In this case the contravention of the provisions of the Act attract certain consequences:
• The hire purchase agreement is terminated.
• The hirer is discharged from all liability under the agreement.
• Kinyago is entitled to recover action all sums paid under the agreement or under any security given.
• The guarantor is entitled to recover action from Malipo Rahisi Ltd, all sums paid under the contract of guarantee or under any security given.