July 2001
The Hire Purchase Act and Repossession: Setting the Record Straight

Specific reference is made to Ms. Fulton's discussion of Section 25(2) (a) of the Hire Purchase Act, where she stated that;

"This section provides that the vendor can only repossess the goods, otherwise than by action, by giving the purchaser three months notice where not less than two-thirds of the purchase price has been paid. In other words, if you have paid two-thirds or more of the hire purchase price, the vendor, without taking you to court, can only repossess the goods if he has given you three months notice as prescribed by the Act".

It is incorrect for Ms. Fulton to state that the vendor without taking the purchaser to court can only repossess the goods after he has given three months notice.

Under the Hire Purchase Act, a vendor is authorized to repossess goods without going to court if the purchaser is in arrears but the Act does not require a three month notice period as Ms. Fulton claimed in the article.

The Consumer Affairs Commission notes that the Hire Purchase Act 1974 specifies that before a vendor can repossess goods, the following two conditions must be satisfied. Firstly, the purchaser must be in arrears beyond a specific period and secondly, the purchaser must be given notice by the vendor. However, Ms. Fulton has confused the notice period with the time that the purchaser is allowed by law to be in arrears. The three months referred to in the Act relates to the length of time the customer's account is in arrears after having paid at least two thirds of the purchase price.

This Act states that, where the purchaser has paid at least two thirds of the purchase price, repossession is not allowed unless the customer is in arrears for three months, or longer period as stipulated in the hire purchase contract. Before repossessing the goods, the vendor must issue notice of repossession to the purchaser.

The first notice should be a notice of default, which indicates the amount of the arrears on the account and the vendor's intention to repossess the item.

According to the Hire purchase regulation 1974, this notice must be for a period of not less than seven days. Where the purchaser pays at least 50 percent of the amount in arrears within the notice period, the vendor must extend the period. If the account remains in arrears for the full amount then a second notice, that is, a notice of repossession must be served before the act of repossession can legally take place.

Several complaints have been lodged to the Consumer Affairs Commission with respect to repossession of automobiles, furniture and appliances, contrary to this Act.

The Commission notes also that some businesses are unaware of the law and the rights of consumers in relation to repossession. Consequently, the Commission reiterates the point made by Ms. Fulton in the article, that where items are repossessed contrary to the law, the Act provides that the contract shall terminate and the purchaser and guarantor will be able to recover all monies paid to the vendor under the agreement.

The Consumer Affairs Commission provides information on hire-purchase agreements as well as other consumer related issues free of cost to the public.