Hire purchase contracts: conditions and warranties

Updated: Aug 20, 2021

Certain conditions and warranties exist by virtue of the Consumer Credit Act 1974 and apply to all hire purchase and conditional sale agreements. The conditions are, inter alia, that: (1) the owner shall have a right to sell when the time comes for the property to pass; (2) the goods will be of merchantable quality though if the hirer or buyer has examined them he cannot complain of defects he should have discovered; (3) where the purpose is made known to the supplier the goods will be reasonably fit for that purpose; (4) where the goods are sold by sample, that the bulk will correspond to the sample and the buyer or hirer will have an opportunity to find out that this is so; (5) if the goods are sold by deription, the goods will correspond to the description. None of these conditions may be excluded in the contract, with the exception of (2) where the goods are second-hand. The warranties are: (1) the hirer or buyer shall enjoy quiet possession of the goods; (2) the goods shall be free from any charge or encumbrance in favour of a third party when the title passes. Some of these conditions and warranties are confirmed by common law.

Reference: The Penguin Business Dictionary, 3rd edt.

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James Knight
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James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.