Introduction
The paper focuses on Hire Purchase (HP) activity and its relationship to the legal environment. Understanding how business law operates proves essential for understanding the whole concept and guidelines within HP agreements. Commercial activities thrive in environments guided by legislation to enhance smooth performance, as well as maintenance of contracts by the parties involved in the business transactions (MacIntyre 65). Business law primary concern relates to the creation of new companies as well as dealing with the issues arising from the existing enterprises in the process of interacting with other business organizations, the public, and the government. The area also draws from a lot of legal subjects that include taxation, sales, real estate, and employment law among others. Ensuring an understanding of the business law environment proves essential as it helps to understand businesses as separate entities from their workers and owners. Like people living together within a society, companies also adhere to set legal rules aiming at giving all participants in the marketplace a fair opportunity of success (MacIntyre 67). An enforceable trade law system benefits the whole economy while also providing efficient transactions. For example, during sales agreements a supplier selling goods on credit becomes confident that the debtor will hold to the terms agreed to payments. The debtor retains a paying obligation provided the contract of lending is drafted and executed following the Uniform Commercial Code (UCC). The seller remains aware that they will enforce the contract against the debtor if situations demand that.
During HP transactions, the business law controls the agreements of the term of the contract. The buyer makes an agreement to pay for the goods and services through parts of percentage distributed over a number of months. The United States (U.S) refers the HP as an installment plan though it might differ slightly with the HP since in a HP the ownership of goods rests with the seller until the buyer makes the last payment (Salmon 111). The aim of developing the HP agreements was to enable customers suffering cash shortage to make expensive purchases that they will delay to forgo due to the limitation of money. For example, where the purchaser fails to make a lump sum but affords paying a percentage as a deposit. The agreement, therefore, allows the buyer the power to hire goods and pay monthly. After spending the amount equal to the initial full price and interest in equal installments, the buyer possesses an option to buy the goods at a predetermined price or even return the goods to the seller.
In situations where the buyer defaults or in simple terms fails to pay the seller through the agreed installments, the seller may repossess the goods. HP proves more advantageous to consumers as it provides them with room of spreading costly payment of items over a number of months. The consumers not only benefit from spreading payments for expensive projects, but also from exposable taxable income. HP installments reduce taxable income of individuals as the amount pod as payments remains untaxed. HP contracts involve inexpensive transactions like cars, high-value furniture and electrical goods where lump sum payments prove costly for buyers (Salmon 121). The law environment plays in ensuring validity of the HP agreements. Business law relating to HP dictates that for validity of the agreements, they will be written and signed by two parties. Consequently, the agreements need to follow a number of descriptions well written and readable by all sides. First, a precise description relating to the goods under HP. Secondly, the actual cash price of the goods. Third, the HP cost that amounts to the total the buyer will pay including the deposits and all monthly installments. Next, the deposit amount is written. Next, the monthly payments that call for disclosure of the interest rates charged. Next, a comprehensive statement of both parties’ rights and lastly, the hirer’s right to terminate the HP contract at will, but by providing a valid reason.
In some situations, the seller and the owner present two different individuals. Where the seller possesses the resources as well as the legal right that allows the seller to make credit sales, the owner, and the seller amount to one individual. The legal right to make credit sales depends on the licensing system in most nations. Since most traders prefer instant cash receiving, the sellers’ transfers’ form of goods ownership to finance companies, mostly at discounted prices and the companies hires and sells these products to buyers. The third party introduction complicates the transaction (Joske 77). For example, where the seller gives false claims relating to the reliability and quality of products and in return inducing the buyer, it becomes hard to hold the seller liable. In a conventional sales contract, the buyer holds the seller responsible for giving false representations regarding the goods. The third party introduction complicates the sale in that the seller only acts as the owner until when the buyer clears the last installment. To combat the mishaps, some jurisdictions like that of Ireland ensure the finance company and the seller become jointly liable to answer for matters relating to breaching the purchase contract. Different jurisdictions protect hirer’s using various measures an extent. These protections are referred to as implied warrants necessary for protecting the hirer. Although different jurisdictions portray and extend their security measures, the general orders and conditions of HP refer to: first, the hirer of the goods enjoys a quiet possession of the goods without disturbance from anyone during the term of contract. Secondly, the seller will pass ownership of the goods title after contract expiry. Thirdly, the goods sold to the hirer meets merchantable quality as well as fit for purpose. Lastly, where a sample presentation makes the hirer to purchase the goods, the supply must correspond with the sample provided (Joske 78).
Business law relating to HP consequently outlines the rights and obligations of the hirer. The hirer usually possesses the following rights: first, right to buy goods at any moment through notifying the seller as well as paying the HP balance minus a rebate (Macleod 413). Secondly, right to return the goods to the owner where the goods fail to meet the conditions explained in the contract. Thirdly, right to make agreements with the seller to transfer the assets to a third party. Lastly, right to recover the goods from r-the owner if illegal means of reprocessing the goods takes place. Among the obligations include: payment of hire installments and taking reasonable care of property in the possession. The hirer also has a duty of informing the owner where =storage of the goods occurs. The owner of the goods possesses the right to forfeit the deposit, recover the balance from the buyer and retain the deposit as well as repossessing and claiming for damages suffered.
In conclusion, business law enhances effective and efficient business transactions to occur. Without the existence of business law environment, activities like HP remain ineffective (Macleod 479). Therefore, business law environment remains a major structure for ensuring smooth business transactions take effect.
Works Cited
Joske, Percy Ernest. Sale of Goods and Hire Purchase; Being a Commentary on the Acts and Cases Relating to Sale of Goods and Hire Purchase of New South Wales, Victoria, Queensland, South Australia, Tasmania, Western Australia, New Zealand, and England. 2d ed. Sydney: Butterworths, 2011. Print.
MacIntyre, Ewan. Business Law. 4th ed. Harlow, England: Pearson Longman, 2009. Print.
Macleod, J. K. Sale and Hire Purchase,. London: Butterworths, 2010. Print.
Salmon, E. Hire Purchase and Credit Sales: Law and Practice. London: Pitman, 2012. Print.
