FORMATION OF A HIRE PURCHASE AGREEMENT IN CAMEROON – 2023 APPROVED GUIDELINES

INTRODUCTION

Hire purchase agreement terms and conditions in Cameroon are essential in the formation of a hire purchase agreement in Cameroon. A hire purchase agreement in Cameroon is one under which an owner of goods lets them out on hire to another person the hirer on condition that the hirer to makes a stipulated installment payment called rent, usually with the provision that the hirer will become the owner when he completes payment of the stated installments or when after completing payment, he exercises an “option to purchase” by paying a nominal option fee.

From the foregoing, a few points are worth nothing about is hire purchase transaction

1. A hire purchase agreement in Cameroon is a contract of hire not of sale or an agreement to sell
2. There is no obligation on the part of the hirer to complete the installment payment or to buy after payment of the installment.

The essential features of the hire purchase agreement in Cameroon may thus be summarized as follows:

1. It is a form of bailment
2. Hirer has an option not an obligation to purchase the goods
3. It is a possession that passes to the hirer, not ownership which rests with the owner.

Therefore, the hirer cannot sell. It is a credit business transaction like:

1. Credit Sale agreements
2. Conditional Credit Sale
3. Loan and Mortgage
4. Hire
5. Pledge

HIRE PURCHASE AGREEMENT TERMS AND CONDITIONS IN CAMEROON

To be valid and enforceable, the hire purchase agreement terms and conditions in Cameroon (like any other contract) must satisfy the essential ingredients for the formation of a valid contract. These include offer and acceptance, consideration, the capacity of the parties to the contract, contents, intention to create legal relations, etc.

PARTIES TO A HIRE PURCHASE AGREEMENT IN CAMEROON

Originally, the two parties to a hire purchase agreement in Cameroon are the OWNER and the HIRER. In other words, a hirer in the hire purchase transaction ordinarily thinks he has entered into an agreement with the owner. This is so in every case where a dealer in goods, as the owner of the goods, lets them out on hire purchase terms to a hirer.

LEGAL REQUIREMENTS FOR HIRE PURCAHSE AGREEMENTS IN CAMEROON

The legal requirements for hire purchase agreements in Cameroon will be discussed under the obligations of the owner and the hirer in Cameroon.

OBLIGATIONS OF THE OWNER

The obligation or duties of the owner under a hire purchase have to be ascertained from the express and implied term agreement itself and from the provisions of the Hire Purchase Act in circumstances where the agreement falls within the Act. However, the terms of the hire purchase agreement in Cameroon usually improve the following obligations on the owner.

1. DELIVERY OF THE GOODS: It is the duty of the owner to deliver the hirer, the goods which he has agreed to let on hire and the hiring commences only when the hirer has accepted the delivery. The prima facie rule is that the place of delivery is the owner’s place of business if he has one, and if not, his residence. The contract may be repudiated by the hirer if the owner fails to deliver the goods as stipulated by the law. For a breach of the obligation to deliver the goods, the remedy lies in action for damages not specific performance unless the goods are of a rare kind.
2. TITLE TO THE GOODS: There is an implied condition of the hire purchase agreement in Cameroon that the owner is capable of conferring a good title both at the time when the hiring commences (i.e. delivery of goods to the hirer) and at the time when the hirer ceases to exercise his option to purchase. Breach of this condition may give rise to total failure of consideration. It is therefore the duty of the owner of the goods to ensure that he had a good title to the goods let on hire. If therefore at any time the owner’s title to the goods is defective, the hirer is prima facie entitled to repudiate the transaction and recover from the owner all sums paid as money paid on consideration which has totally failed.
3. DESCRIPTION OF GOODS: The owner is under a duty to supply goods of the description which he has agreed to let on hire. Where there is letting by description, the goods turn out to the hirer must exactly correspond with the description which may go beyond the physical state of the goods and extend, for example to the way the goods are packed. If the owner fails to satisfy this condition the hirer may reject the goods for the breach of the implied condition or alternatively, he may elect to affirm the contract and sue for damages for breach of warranty.
4. FITNESS AND QUALITY OF THE GOODS: where a hire purchase agreement in Cameroon is entered into upon the strength of an express or implied undertaking given by the owner or his agent as to the fitness of the goods for the purpose for which they are hired, the hirer would be entitled to repudiate the agreement or sue for damages upon a breach of that undertaking. Ordinarily, for the condition to apply, a hirer must have made known to the owner, the purpose for which he wants the goods in circumstances that indicate that he relies on the skill and judgment of the owner.
5. QUIET POSSESSION: The owner is under a duty not to interfere with peaceful, quiet possession and the enjoyment of the goods by the hirer. Where the owner wrongfully interferes with the hirers’ quiet possession and enjoyment, then there is a breach of warranty as to quiet possession. The hirer in this event can only sue for damages.

THE OBLIGATION OF THE HIRER

The terms of the hire purchase agreement in Cameroon would usually also contain clauses that spell out the obligations towards the owner of the goods. The terms usually contain obligations relating to the following matters: –

1. ACCEPTANCE OF DELIVERY: It is the duty of the hirer to accept the delivery of the goods which he had contracted to hire. The hirer would be liable to the owner for any loss occasioned by his neglect or refusal to take delivery. This owner in these circumstances may maintain an action against the hirer for non-acceptance.
2. CARE OF THE GOODS: The contract usually provides that the hirer should have costively and control and not his expense put them in good order and repairs. A hirer must accordingly take reasonable care of the goods and may be liable for loss or damage due to wrongful use. A hirer is generally required to insure the goods in the name of the owner or in the joint names of the owner and the hirer since both of them have an insurable interest in the goods.
3. PAYMENT OF INSTALMENT: A hire purchase agreement in Cameroon usually contains damages as to the hire purchase price i.e. the total sum of the money payable in the transaction. The installments are usually of the stated number and the hirer is obliged to pay the installment as they fall due punctually. Defaults may lead to the termination of the agreement and the repossession of goods. The owner’s right to repossess is not affected by the fact that only a very small sum is left unpaid by the hirer.
4. RE-DELIVERY: The hirer is under common law to re-deliver the goods to the owner or his agent upon the termination of the hiring. He is not however obliged to send the goods back to the owner unless there is an express term to that effect. But he is obliged to deliver the goods to the owner when he comes for them and not to prevent the owner from collecting his goods. A failure to re-deliver the goods on demand would render the hirer strictly liable for any loss or damage to the goods which occurs while his failure continues.

ADVANTAGES AND DISADVANTAGES OF HIRE PURCHASE AGREEMENT IN CAMEROON

The advantages and disadvantages of a hire purchase agreement in Cameroon are the owner is certain to receive a fixed capital deposit on an agreed period while the hirer can be an owner at the end of the agreement.

TERMINATION OF HIRE PURCHASE AGREEMENT IN CAMEROON

The ordinary rules of termination of simple contracts apply to hire purchase agreements in Cameroon. Again, because it falls squarely under some specialized contract, it can also be terminated under certain peculiar circumstances. The well-known forms of terminating hire purchase agreements are as follows: – performance, agreement, repudiation, notice, frustration, the judgment of the court, the option to return goods, and the option to buy.

Article by MAFANY victor NGANDO

Kinsmen Advocates Law Firm

“The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.”