This paper is an exposé on the legislation regulating hire-purchase transactions in Nigeria. The nature of hire-purchase transactions and their benefits to the parties in particular and the economy in general were highlighted. In the light of the tremendous advantages that hire-purchase transactions confer, the need to sustain the commercial practice cannot be over-emphasised. Consequently, the legal framework for such commercial transactions was critically reviewed with a view to spotlighting those provisions in the extant Hire-Purchase Act that are impediments to the rapid growth and development of hire-purchase in the country. Some recommendations have consequently been proffered. It was proposed that a new legislation that is more robust, relevant and well-suited for meeting present day challenges be enacted to repeal and replace the current legislation on the subject-matter.
Hire-purchase transactions are popular commercial activities in the country. In 1965, the first local statute to regulate this practice was enacted with a view to protecting the hirer who was adjudged the weaker party in the transaction. In spite of the tremendous changes and the general advancement in commerce and industry, the Hire-Purchase Act 1965 has only been amended once. In 1970, the then Hire-Purchase (Amendment) Act was made to deal with some peculiar problems confronting hire-purchase transactions then. Upon the recompilation of extant federal legislations into the Laws of the Federation of Nigeria 2004, the then Hire-Purchase Act, as amended, became the Hire-Purchase Act, Cap. H4, Laws of the Federation of Nigeria 2004. This is currently the statute regulating hire-purchase transactions in Nigeria. Sadly though, this recompiled Hire-Purchase Act did not amend the statute to incorporate overdue amendments to the legislation. The recompiled Hire-Purchase Act “is nothing but an old statute in a new statute book as the amendments begging for attention in the statute were not effected.”
The dynamism in the business environment and the advancement in technology have nearly almost rendered the Hire-Purchase Act irrelevant, archaic and redundant. This is typified by the emergence of new models of commercial transactions to meet the challenges of the time and side-track the unhelpful, outdated and rigid hire-purchase legislation. Hire-purchase is still a useful form of commercial transaction which holds enormous benefits for the parties thereto. Thus, it is apt to keep its enabling statute contemporary to provide the enabling environment for it to thrive.
This paper highlights the numerous challenges of the moment which the extant Hire-Purchase Act is unsuited for. Consequent upon this, some recommendations have been made as inputs for an envisaged new, improved hire-purchase legislation which would be appropriate for the moment and better able to meet the dynamism of modern business environment.
II. DEFINITION, NATURE AND BENEFITS OF HIRE-PURCHASE
1. Definition of Hire-Purchase
Section 20(1) of the Hire-Purchase Act defines hire-purchase as “the bailment of goods in pursuance of an agreement under which the bailee may buy the goods or under which the property in the goods will or may pass to the bailee.” This definition of hire-purchase is strict. No transaction would qualify as a hire-purchase transaction unless it complies with the definition. A hire-purchase transaction involves an agreement for the delivery of goods under which the recipient of the goods pays a certain sum as deposit to the owner of the goods while promising to pay a certain sum as instalments at agreed intervals (for example, monthly) in consideration of being granted possession and use of the goods and an option to purchase them after a stipulated period, having paid the stipulated total sum. A judicial endorsement of the definition of hire-purchase was given by Okagbue, J. C. A. in the case of Samuel Aro v Joe Allen & Co. Limited, when he observed as follows:
...essentially, a hire purchase system is a system whereby the owner of the goods lets them on hire for periodic payments by the hirer upon an agreement that when a certain number of payments have (sic) been completed, the absolute property in the goods will pass to the hirer, but so however, that the hirer may return the goods at any time without any obligation to pay further balance of rent accounting after return; until the condition have been fulfilled the property remain (sic) in the owner’s possession.
It is noteworthy that in a hire-purchase transaction, the hirer must be given the option to terminate the agreement or purchase the goods. Where there is an obligation to purchase the goods, then the transaction is certainly not a hire-purchase. In the case of J. Allen & Ors Ltd. v Adewale, there was no right to return the goods, it was held that the agreement was a sale not a hire-purchase.
The essential nature of a hire-purchase transaction could be gleaned from the definition above. As a commercial transaction, hire-purchase has its distinguishing features which mark it out from other commercial transactions. A clear understanding of these is essential in appreciating the true nature of hire-purchase transactions.
2. Nature of Hire-Purchase Transactions
The general notion is that a hire-purchase transaction has five basic characteristics. These have been identified as follows:
a) It is a contract: A hire-purchase transaction is a contract between the owner of the goods and the hirer. It is a special contract which by law must be in writing and should include certain statutory terms.
b) It is a bailment: There is a bailment relationship between the owner of the goods and the hirer in which the owner is the bailor and the hirer is the bailee.
c) Property: The object of a hire-purchase agreement is to ensure that the property in the goods let on hire-purchase remains in the owner even though the owner parts with possession. Consequently, the hirer will be unable to pass good title to a third party during the continuance of the bailment. The hire-purchase agreement confers on the hirer an option to purchase the goods or return same during the continuance of the contract.
The point must be made that property in the goods, the subject matter of a hire-purchase transaction, does not pass to the hirer at the time the contract was entered into. It will only pass to him when the stipulated period has expired and certain agreed or stipulated conditions have been satisfied (for example, electing to purchase the goods and paying the agreed amount). This point was succinctly adumbrated upon by Akpata, J., of the High Court, Benin, in Onojefegwono v Agunbiade & anor. when he said:
One of the features of a hire-purchase agreement is that until the hirer has paid the last of a certain number of payments specified in the agreement, no property in the goods passes to the hirer. In fact, until the hirer pays the last instalment the property in the goods...does not pass to him. He is nothing but a hirer who pays from time to time for the hire.
d) Determination of Agreement: The hirer has the inalienable right to determine the agreement and return the goods to the owner. Any provision in a hire-purchase agreement which excludes or restricts the right of the hirer to determine the hire-purchase agreement is void and, ipso facto, unenforceable. Upon the determination of the agreement, the hirer ceases to be liable to make further payments to the owner except for sums already due and unpaid.
e) Option to Purchase: The hirer may elect not to return the goods, but opts to purchase them. This option to purchase is available to the hirer upon the expiration of the agreed hiring period and the payment of the total sum agreed or when the payments for the hire have reached a sum equal to the amount of the total hire-purchase price stipulated in the agreement. Upon the hirer exercising his right to purchase the goods, the title of the owner thereto devolves to him. Consequently, the hirer becomes the new bona fide owner of the goods and therefore entitled to enjoy all the rights of ownership and be liable for all the duties of same.
The above are the basic features of a typical hire-purchase agreement. These are not exhaustive as they do not represent all the features that distinguish a hire-purchase transaction from other commercial transaction. Hire-purchase transaction cannot be fully differentiated from other commercial transaction unless its full features are established. The ten Ps test have been formulated to fulfil the requirement for a comprehensive distinguishing template for hire-purchase transaction as elucidated upon in an earlier research work on this matter.
3. Benefits of Hire-Purchase
The relevance of hire-purchase is not without a reason. Hire-purchase confers tremendous benefits to the parties in particular and the economy as a whole. The benefits derivable from hire-purchase confer on it tremendous endearing complexion. These benefits, therefore, deserve to be appraised.
a) Credit facility: Hire-purchase is a form of credit granted to the hirer by the owner. This is manifest from the fact that full payment for the hire-purchase goods is not made immediately. Upon entering into a hire-purchase agreement, the hirer is obligated to make an initial deposit and make subsequent payment by instalment at agreed intervals. For the owner, this promotes his business as his customers would not be required to make immediate payment of the full price of the goods. For the hirer, there are also enormous advantages in the arrangement. Firstly, he is afforded the opportunity of being in possession and active use of items he could not or does not wish to, make full payment for. This could be a great financing option for his business where the goods bought on hire-purchase are to be employed in his business. Secondly, he is better able to manage his cash flow since the sum to be paid to the owner at the agreed interval is known and fixed. This puts the hirer in firm control over his cash flow. This position is further fortified by the fact that the date for the payment of the installments is either pre-determined or the means of computing same is pre-agreed by the parties to the transaction. Thirdly, being in firm grip of his cash flow enables him plan better which could have tremendous positive impact on his budgeting. In the end, the impact of their activities on the economy cannot but be positive, stimulating and developmental.
b) Simplicity: The hire-purchase transaction offers the parties a very simple business model that is easy to grasp yet very powerful and beneficial. The controversies that are usually associated with the calculation of the interest element of overdrafts or other form of loan facilities are not present in hire-purchase transactions. Also, there is no doubt as to the party in whom property to the goods, the subject-matter of a hire-purchase transaction, vests.
c) Affordable alternative: Hire-purchase transaction is without an iota of doubt an affordable alternative to other commercial transactions from the perspective of the hirer most especially. This is so because all aspects of the transaction are either agreed upfront by the parties or are provided for by the Hire-Purchase Act. This eliminates any real controversy as to legal obligations or stipulations arising out of the transaction. In some other commercial transactions, some important elements are left undecided. For example, determining whether property has been transferred in a sale of goods situation is not as straightforward; especially, in a credit sale situation.
d) Security of asset: The retention of property by the owner in a hire-purchase transaction gives him comfort and security concerning the goods, the subject-matter of a hire-purchase transaction, as the hirer would be unable to pass good title since he does not have legal title to the goods. This is in conformity with the legal maxim nemo dat quod non habet, that is, you cannot give what you do not have.
III. STATE OF THE LAW ON HIRE-PURCHASE IN NIGERIA
It is disheartening to note that the Hire-Purchase Act in use in the country is about 45 years old having been originally enacted in 1965. Matters are even made worse if cognizance is taken of the fact that the Hire-Purchase Act enacted in 1965 was modelled after the Hire-Purchase Act of the United Kingdom enacted in 1938; that is, 72 years ago. Little wonder therefore that the Hire-Purchase Act has become inadequately suited to cater for the challenges in the modern world of business. Consequently, it is stating the obvious to remark that the Hire Purchase Act is overdue for substantially amendment, if not complete re-enactment, that would ensure that the legislation has adequate provisions to meet the needs of business people and entrench an enabling environment for sustainable and rapid growth in commercial activities.
So many criticisms against the Hire-Purchase Act in its present state are not difficult to proffer. Such a task must be undertaken to point out those matters which should be modified in the task of getting the Hire-Purchase Act into shape for current and future challenges.
Monetary limit for goods other than motor
vehicles: The first major
criticism against the Hire-Purchase Act is the monetary limit for goods, other
than motor vehicles, to which that Hire-Purchase Act applies. By virtue of
section 1 of the Hire Purchase Act, the subject-matter of a hire-purchase
agreement can be goods (other than motor vehicles) whose value are not in
N2,000 and motor vehicles. In
practical terms, only motor vehicles can presently be the subject-matter of a
hire-purchase agreement under the Hire-Purchase Act. It is only a matter for
the imagination for anybody to undertake hire-purchase agreement for goods,
other than motor vehicle, valued at not more than N2,000. The monetary limit of N2,000
is most certainly unreasonable, unrealistic and awkward. This is by far the
most singular limiting factor to the growth of hire-purchase practice in the
country. The absence of hire-purchase transactions in respect of goods other
than motor vehicles is attributable to this grave lapse. It is long overdue to
have this lapse which arose from the conversion of the original monetary limit
in the original Hire-Purchase Act when it was enacted in 1965.
The monetary limit problem of the Hire-Purchase Act raises two critical issues.
The first issue relates to setting a realistic and reasonable monetary limit
for hire-purchase transactions in respect of goods other than motor vehicles.
The second issues relates to devising a scheme to ensure that a new monetary
limit devised do not easily become obsolete and irrelevant in future either on
account of inflation, currency devaluation, re-denomination or conversion.
An escape route for tackling this problem could be to set the monetary limit in respect of other goods against some agreed and acceptable price index. While this price index method appears to have the potential of solving the problem, it suffers the drawback of introducing undue complication into a simple commercial transaction. This is more so if cognizance is taken of the fact that price index is neither stable nor easily predictable. Another approach to solving the monetary limitation is by stipulating a fixed sum as a minimum value for goods other than motor vehicle that are the subject-matter of a hire-purchase transaction. The main difference between this approach and the current situation is that the value stipulated is the minimum value for the goods as opposed to the current situation where the value stipulated is the maximum value for the goods. Thus, it seems to be an improvement over the present position. Nevertheless, it still has the potential of being hampered by inflation, currency devaluation, re-denomination or conversion. Though it can be argued that since it stipulates the minimum value, this challenge can be easily surmounted. As true as that may seem, the potential still exists for the minimum value to be ridiculous, unrealistic and unreasonable for being too small; though in this case, it does not constitute an impediment to the conclusion of hire-purchase transaction in respect of goods other than motor vehicles. Perhaps, the real solution to the problem is to remove the monetary limit completely for any item being procured through hire-purchase. It is difficult to fathom the essence of the monetary limit imposed for goods other than motor vehicles. It would serve the interest of business people and the economy better to promote healthy commercial engagements. This, it is humbly submitted, can best be achieved if people are allowed to decide what items they wish to procure through hire-purchase without being unduly fettered by some difficult to comprehend monetary limitation of nearly almost nil utility. The Hire-Purchase Act should be made applicable to all goods, including motor vehicles, without monetary limit on the value of the goods concerned.
b) Signing of hire-purchase agreement: Another significant criticism of the Hire Purchase Act is in respect of the requirement that the hire-purchase agreement or the note or memorandum in respect thereof must be signed by the hirer personally otherwise the owner would be unable to enforce same. The requirement for personal signing by the hirer is strict. It is not within the proviso to section 2 which empowers the court to dispense with the requirement of section 2 if the court is satisfied that a failure to comply with any formality mentioned in section 2 did not prejudice the hirer and that it would be just and equitable to dispense with the requirement, subject to any condition the court deems fit to impose in the circumstances of the case. The requirement that the hire-purchase agreement or the note or memorandum in respect thereof be personal signed by the hirer is out of tune with modern business practice and inconsistent with the growing usage of agents in concluding business deals. The attack on this provision is further fortified by the fact that other parties to the agreement are permitted to sign personally or have some other person sign on their behalf. The differential treatment of the parties on the issue of signing the hire-purchase agreement or note or memorandum in respect thereof is unjustifiable. It should, therefore, be modified.
c) Delivery of the hire-purchase agreement: Still on the formality for hire-purchase, the provision of section 2(2)(d) of the Hire-Purchase Act is unclear. By virtue of that provision, a copy of the note or memorandum should be delivered or sent to the hirer within 14 days of the making of the agreement. The inelegance in the drafting of the paragraph is made visible by the confusion in interpreting the paragraph. The paragraph could be taken to imply that the note or memorandum is made after the agreement has been entered into. That is, implying the awkward situation of executing a note or memorandum after a hire-purchase agreement has been executed. If a hire-purchase agreement has been executed, there is no need for the parties to draw up any note or memorandum in respect of the same agreement. Thus, it does appear that the right interpretation of the paragraph is that the note or memorandum is executed prior to the execution of a formal hire-purchase agreement by the parties. The implication is that the note or memorandum will not be necessary where the parties are able and willing to execute the hire-purchase agreement following their negotiation or so soon thereafter. An amendment of this provision is necessary to put all confusions to rest.
Perhaps, it is also appropriate to mention at this point the numerous reference to “note or memorandum” of a hire-purchase agreement in the Hire-Purchase Act. The reference to note or memorandum is confusing, misleading and unavailing. The phrase inaccurately pre-supposes that there would be an agreement to be subsequently entered into by the parties thereto different from the note or memorandum. This obviously irritating anomaly needs to be rectified. Reference should at all times be to the hire-purchase agreement.
d) Impact of technology: The amendment to the Hire-Purchase Act should reflect the present pervasive influence of technology in business transactions. Thus, the Hire-Purchase Act should be modified to take account of online transactions relating to hire-purchase. It is not difficult to imagine a situation where the hire-purchase agreement can be entered into online, especially in relation to standard form hire-purchase agreement. The issue of the admissibility of electronic document is yet to be fully resolved, but the amendment to the Evidence Act that will address the matter is still pending before the National Assembly.
e) Owner’s right to sell: The disputation surrounding the implied term provided for by section 4(1)(b) of the Hire-Purchase Act would have to be resolved with finality through an amendment to the statute. By virtue of section 4(1)(b), there is an implied condition on the part of the owner, in every hire-purchase agreement, that “he shall have a right to sell the goods at the time when property is to pass”. A possible interpretation of the provision could be that the owner’s right to sell should exist at the time the hire-purchase agreement is entered into. However, it can be canvassed, and rightly too in my view, that the owner’s right to sell is only relevant at the time the hirer exercises his option to purchase. Thus, it is immaterial whether the owner has a right to sell at the time the hire-purchase agreement was entered into. What is important is that he must have a perfect title to the goods at the time the hirer exercises the option to purchase. The contention seems justified in view of the use of the phrase “at the time when the property is to pass” in the paragraph. The contention is strengthened by the nature of hire-purchase transaction which in reality is two transactions in one: it is a bailment and a sale; albeit, the sale is optional. As a bailment, there is no question about title transfer as between the bailor and the bailee. In fact, the bailee has no right to contest the title of the bailor. In relation to the sale element, it must be pointed out that the requirement is that title should exist when property is to pass and not necessarily when the agreement is entered into. It would amount to conferring a greater right to a hirer than what a purchaser gets under a sale agreement. This would be anomalous because the hirer’s right to property in the hire-purchase goods materialises after he has exercised the option to purchase the goods and has fulfilled all the conditions stipulated in the agreement in that regards. This underscores the rationale for the owner’s title to the goods to be relevant when he is to pass property to the hirer who has opted to purchase the hire-purchase goods. There is neither a convincing nor a reasonable justification for any insistence that the owner should have title to the hire-purchase goods when the agreement is entered into because the hirer may opt not to purchase the goods. It is when property is to pass, that the title of the owner is relevant. Nevertheless, to resolve this matter with finality and certainty, perhaps an amendment to section 4(1)(b) of the Hire-Purchase Act might be necessary.
f) Wrongful recovery of possession: Furthermore, the provision of section 9(2) of the Hire-Purchase Act deserves to be reviewed. The text of the provision reads as follows:
If an owner recovers possession of goods in contravention of subsection (1) of this section, the hire-purchase agreement, if not previously determined, shall determine and -
(a) the hirer shall be released from all liability under the agreement and shall be entitled to recover from the owner in an action for money had and received all sums paid by the hirer under the agreement or under any security given by him in respect of the agreement; and
(b) any guarantor shall be entitled to recover from the owner in an action for money had and received all sums paid by him under the contract of guarantee or under any security given by him in respect of that contract.
The consequence of the section 9(2) is that where an owner wrongfully recovers possession of goods let out on hire-purchase for which the relevant proportion of the hire-purchase price has been paid, the hire-purchase agreement would automatically be brought to an end and the hirer would be entitled to recover all the payments made to the owner pursuant to the hire-purchase agreement. It is conceded that the Hire-Purchase Act was enacted to protect the hirers from exploitation by heartless owners, but section 9(2) appears to be a gross overkill. It completely ignores the essence and structure of a hire-purchase agreement. Making the owner liable to refund to the hirer all previous instalments paid in respect of the goods is to unduly confer some undeserved financial advantage on the hirer. The instalments paid by the hirer were for the periods in which he had possession and use of the goods. That being the case, he had received value for the payment of the instalments. Compelling the owner to refund the instalment paid on account of a wrongful repossession of goods, the subject-matter of a hire-purchase agreement, cannot be said to meet the justice of the matter. It is exceeding harsh, unduly disadvantageous and most certainly unsupportable. It may be argued that the essence of the provision is to compel owners to desist from such wrongful repossession of goods, the subject matter of hire-purchase agreement. Even then, it does seem to have gone too far. The hirer could be compensated by way of damages for wrongful repossession. The exact amount is subject to the circumstances of the case and the discretion of the court.
g) Protective interim re-possession: Section 9(5) of the Hire-Purchase Act requires some modification for greater certainty and simplicity. This provision which was introduced into the Hire-Purchase Act in 1970 provides thus:
In the application of the provisions of this section to motor vehicles, where three or more instalments of the hire-purchase price of the motor vehicle under the agreement are due and unpaid, the owner may remove the motor vehicle to any premises under his control for the purpose of protecting it from damage or depreciation and retain it there pending the determination of any action, and the owner shall be liable to the hirer for any damage or loss which may be caused by the removal.
This provision, quite obviously, has tremendous usefulness justifying its introduction in 1970. This can be gleaned from the statement of the Supreme Court in Ebohimi v Nigeria Technical Co. as follows:
Prior to the amendment...the provision of the principal Act worked considerable hardship on the owner of a hired vehicle who, as the law then stood, was unable to re-possess the same from a mischievous hirer having contrived to pay three-fifths of the hire-purchase price, albeit with considerable difficulty and by irregular instalments even if in breach of the hire-purchase agreement, deliberately embarks upon complete abuse and misuse of the hired vehicle, until he can bring an application to court pursuant to the provision of sub-section (1) of that section. It is undoubtedly the intention of the legislature, by promulgating Decree No. 23 of 1970, to remedy this situation and give the owner of the hired vehicle the necessary power to re-possess and keep the same in a state of repair pending the intervention of the court under the provision of section 9(1) of the principal Act. This we think is the raison d’être of sub-section (5) of the principal Act.
In spite of the benefits of the provision of section 9(5), it still requires some fine-tuning to enhance its relevance and usefulness. Firstly, it should not be limited to motor vehicles alone. The present limitation to motor vehicles is consistent with current practice whereby hire-purchase transactions are only in respect of motor vehicles due to the previously discussed unrealistic and unreasonable monetary limit on the value of goods, other than motor vehicles, that are the subject-matter of hire-purchase agreements in the country. If the recommendation made herein for the removal of the monetary limit is adopted, there would be hire-purchase agreements in respect of goods other than motor vehicles. It becomes pertinent consequently to afford an owner the benefit of the protective provision of section 9(5). The hirer cannot be said to be unduly prejudiced since the owner would be “liable to the hirer for any damage or loss which may be caused by the removal”.
Secondly, there have been some controversies as to the interpretation of the provision in relation to the institution of a court action by an owner to take advantage of the benefit of this exception to section 9(1) of the Hire-Purchase Act. The crucial question concerning this has been whether an action must have been instituted by the owner against the hirer before the owner can exercise the right conferred on him by section 9(5)? According to Professor O. Achike (as he then was), “pendency of an action in court is mandatory to ground a valid exercise of the owner’s right under section 9(5).” This position is disputed by Professor Igweike because “the critical words in the sub-section are ‘any action’ and not ‘the action’. This is not suggestive of any particular action which a pending action presupposes but includes any action which may be instituted subsequently.” In attempting to reconcile this controversy, it has been contended in an earlier article as follows:
With the greatest respect to both learned Professors, I think there is no need for this controversy. I do not think that the issue is whether it is white or black; rather it is as to what has to be done to make the owner act within the contemplation of the law. It is my contention that since the removal of the motor vehicle is “pending the determination of the action”, then an action must be in contemplation. Where the owner has instituted an action before removing the vehicle, then clearly and incontrovertibly, he is within the ambit of the sub-section. However, it is my further contention that the owner can still remove the vehicle even before he has instituted the action against the hirer. Though in this case, he must institute an action against the hirer within a reasonable time. The test as to what amounts to a reasonable time is objective depending on the circumstances of the case. It would be against the spirit of the law to allow the abuse by the hirer that the provision seeks to mitigate to continue unabated simply because an action is yet to be instituted by the owner. It is further contended that to insist that an action must be instituted before an owner can take advantage of the benefit of sub-section (5) would be to introduce some useless, tautological provision into the Act. This position is fortified by the fact that section 10(3) expressly gives the owner the right to apply to court for an order to re-possess the goods pending the hearing of the action to protect the goods from damage or depreciation. Thus, such narrow and restricted interpretation of sub-section (5) only makes it valueless in view of the provision of section 10(3). Putting it differently, unless section 9(5) is interpreted to cover situations where the owner has not instituted a court action against the hirer, the provision would be nothing but a worthless provision merely occupying vital space in our statute book.
The benefit the provision is designed to confer is clear. It should therefore be interpreted in a manner as to ensure the achievement of the desired and desirable purpose.
Thirdly, the word “removal” in the subsection is the subject of another controversy among academics. Whereas Professor C. U. Ilegbune contends that there is a clear legal distinction between “recovery” under sub-section (1) and “removal” under sub-section (5), Professor Igweike holds a contrary view, quite appropriately. According to the learned Professor:
It is pertinent that whether the owner recovers the goods under section 9(1) or removes them under subsection (9), (sic) he thereby physically takes them from the hirer unto himself. In either case, intrinsically or technically, there is a movement of the res from where they were immediately preceding the recovery or removal to another place.
The above position canvassed by Professor Igweike enjoys judicial support. In the case of Tabansi Agencies Limited v Incar Motors (Nigeria) Limited, the court stated that the word “remove” in sub-section (5) is synonymous with “recover” because one cannot remove a property without recovering it.
Finally on this provision, there is also the issue of whether the three or more instalments due and unpaid must be consecutive before the owner can exercise the right of interim re-possession?
Undoubtedly, section 9(5) of the Hire-Purchase Act is a beneficial provision, but arising from the controversies surrounding the provision, there is a clear and present danger in failing to modify the provision with a view to resolving the controversies. This task should be for the new Hire-Purchase Act.
h) Separate legislation for hire-purchase: Without inquiring into the reasoning behind and the benefit derivable from, the inclusion of credit-sale provisions in an enactment clearly, by its nomenclature, designated to cater for hire-purchase, it is contended the time is right to separate hire-purchase from credit-sale. The two commercial transactions may be similar in some areas, but they are most certainly dissimilar in nature, operation, consequence and utility. Legally speaking, there is a well-defined distinction between hire-purchase and credit-sales. As already noted, a hire-purchase is a variant of bailment by which the hirer is given possession and use of the goods with an option to purchase same at a future date upon the fulfilment of some stipulated conditions. The hirer is not under any obligation to purchase the goods the subject matter of the hire-purchase transaction. In fact, he has an unfettered right to terminate the hire-purchase agreement at any time. Where the hirer exercises the option to purchase the goods and fulfils the stipulated conditions, then title to the goods passes to him. Where he declines to exercise the option to purchase the goods, he would be required to return the goods to the owner and terminate the hire-purchase agreement. On the other hand, in a credit sale the buyer has no right to terminate the agreement at his option. If he terminates the agreement, he would be in breach of same and liable in damages to the seller. A major consequence of the distinction between the two commercial transactions is that in a credit-sale, the buyer can transfer title to a subsequent sub-buyer in good faith and without knowledge of the rights of the true owner whereas in the case of a hire-purchase, a purchaser from the hirer cannot get a better title than that of the hirer.
A further justification for the proposed separation of credit-sale from hire-purchase legislation is the fact that the extant Hire-Purchase Act has sparse provisions concerning credit-sale. The only section of the Hire-Purchase Act that are applicable to credit-sale are section 2 (which prescribes the formalities for entering into a credit-sale agreement), section 3 (which provides that the seller is liable for the acts or defaults of his agent in the formation or conclusion of a credit-sale agreement), section 6(1) (which imposes an obligation on a seller to, on demand and payment of requisite fees, supply to the buyer a copy of the note or memorandum of the credit-sale agreement and statement of particulars relating to it), sections 15 to 17 (dealing with control of advertisement) and section 20(1) (which is the interpretation provision of the statute). These provisions deal with matters of form rather than the substantive rights of the parties to a credit sale agreement which would rightly be dealt with by the Sale of Goods Act 1893. Consequently, credit-sale should quite appropriately be excluded from hire-purchase legislation.
i) Control of advertisement: All the provisions relating to the control of advertisement in the Hire-Purchase Act should rightly be deleted from the legislation. In this age, advertising has attained a truly specialised and professional status with its own statutory framework. It does not need to squat under a hire-purchase legislation for relevance and influence.
j) Assignment by the hirer: The definition of the terms “hirer” and “owner” in section 20(1) of the Hire-Purchase Act made reference to a person to whom a party’s “rights and liabilities under the agreement has passed by assignment”. Beyond this tacit indication of the possibility of assigning a hire-purchase agreement, the Hire-Purchase Act is silent on the assignment of hire-purchase agreements. The implication of this lacuna is that assignment of hire-purchase agreements would be governed by common law. Under common law, a person with an option to purchase goods has a kind of proprietary interest in the goods that is capable of being transferred in the absence of any prohibition against such transfer in the agreement. It has, therefore, been held that when a hirer assigns his right under a hire-purchase agreement, the assignee succeeds to all his rights and obligations under the hire-purchase agreement. The situation is the same even where there is a restriction on the right to assign the goods. However, where there is a prohibition in the agreement against its assignment, any transfer of the goods by the hirer confers no rights on the assignee. A specific provision in the statute on the assignment of hire-purchase agreement is an opportunity to establish the rights of the parties in conformity with commercial practice with a view to providing an enabling environment for the development of commerce and industry while securing the position of the owner. The text of the provision could be couched in a way as to permit the hirer to be able to assign the hire-purchase agreement without the interest of the owner being unduly prejudiced. This can be achieved by requiring the owner to consent to such assignment before it can be valid, but with a proviso that the consent of the owner be not unreasonably withheld. Furthermore, it could also be stipulated that neither the hirer nor the surety would be discharged from their obligations to the owner on account of the assignment.
There is a tremendous benefit derivable from providing for the assignment of hire-purchase agreements. This would provide relief to a hirer who has made substantial payments in respect of the hire-purchase agreement, but is unable to continue with the agreement either due to financial difficulties or as a result of change in business orientation operation. In such a case, the option of returning the goods and terminating the agreement would cause the hirer substantial financial loss. To obviate this, he could assign the agreement to someone else and recover some part, if not all of his investment on account of the agreement. This certainly would be a great boost to commerce.
k) Insolvency of the hirer: Closely related to the issue of assignment by the hirer is the issue of the hirer’s insolvency. The Hire-Purchase Act has no direct provision on this except that in section 20(1) thereof, the definition of a “hirer” is in reference to any person to whom the hirer’s “rights and liabilities under the agreement has passed by operation of law”. The law is that the property of an insolvent passes to the Official Receiver by operation of law. Under common law, goods which are in the possession of an insolvent in trade or business on the date of the insolvency petition with the consent of the true owner thereof would vest on the Official Receiver, in the absence of other conditions. Following this doctrine, hire-purchase goods can pass to the Official Receiver by operation of law. The potential of this doctrine to work against the interest of the owner is not difficult to conjecture. This is so because the general law as to reputed ownership will apply to hire-purchase goods in the hirer’s possession. This will result in the owner losing his property, but with a right to prove in insolvency for the value of the goods. This has adverse impact on the rights of an owner over the hire-purchase goods. The remedy for this harshness on the rights of the owner is to pro-actively through legislation limit the impact of the reputed ownership doctrine to hire-purchase goods.
Furthermore, the Official Receiver should also be conferred with the power to be able to assign a hirer’s right under a hire-purchase agreement, even where there is a prohibition in the hire-purchase agreement against such an assignment. The benefit of such provision lies in the fact that the Official Receiver might be unable to make further payments of the instalments in respect of the hire-purchase due to tight financial situation. In that case, it would be more appropriate for him to assign the hirer’s rights under the hire-purchase agreement to a third party. Such assignment would enable him generate fund while excusing him from paying further instalments of the hire-purchase price for the goods.
l) Computation of damages: The Hire-Purchase Act has a plethora of provisions made concerning the liability of one party to the other in damages arising from a breach of or failure to comply with, obligations contained in the hire-purchase agreement. Nevertheless, nowhere in the legislation is a provision made for the method of computing these damages. The new legislation should fill this lacuna.
For the avoidance of doubt, defaults in hire-purchase transactions for which damages are to be computed have dual dimensions. The first is default by the owner (as, for example, the quality of the goods). The second is default by the hirer (as, for example, non-payment of instalments). Whereas the first situation in the example above is similar to what obtains in ordinary sale transaction where the seller defaults in delivering goods of the agreed quality and therefore liable under the Sale of Goods Act 1893, the second situation in the example above is peculiar to hire-purchase transactions.
The damages contemplated in a hire-purchase transaction would be claimable against the owner in respect of deficiency in the quality of the goods, wrongful recovery of possession of the goods, and wrongful interim re-possession of the goods. On the flip side, damages claimable against the hirer would be in respect of failure to pay the agreed instalments as and when due, wrongful detention and/or use of the goods, and failure to take reasonable care of the goods.
The major advantage in stipulating the method of computing damages in hire-purchase transaction would be to facilitate such computation, especially so, since such claims would best be made as special damages.
m) Rights and obligations of parties: There is no organised list of the rights and obligations of the parties to a hire-purchase agreement in the Hire-Purchase Act. Some of these rights can be gleaned from provisions scattered all over the Act while others are left to conjecture, usage and suppositions. This is not adequate. There should be an elaborate and adequate provision enumerating the rights and obligations of the parties to ensure specificity, accuracy and certainty.
n) Service of notice: The Hire-Purchase Act makes provision for the giving of notice for different reasons by the parties, but has no provision detailing where this notice should be given. In the absence of any express provision in the hire-purchase agreement itself on this matter, it would be left to conjecture, usual practice among the parties or mere preference. The potential of this occasioning hardship is very real. Thus, the Hire-Purchase Act should have a specific provision dealing with numerous issues concerning the service of notice, such as, the requirement for personal service, service by post, and other alternative forms of service.
o) Fines and penalties: The penal provisions of the Hire-Purchase Act require modification to reflect current realities and to adequately serve as deterrence to a breach of statutory obligations imposed by the Hire-Purchase Act. The current penal provisions are so ridiculously low that they have been described as being derisory. The monetary value for fines and penalties in the Hire-Purchase Act should be amended to reflect present day economic realities.
p) Definition of hire-purchase agreement: The definition of the term “hire-purchase agreement” in section 20(1) of the Hire-Purchase Act is accurate, but inadequate. It does not clearly, specifically and comprehensively elucidate on vital elements of a hire-purchase transaction.
q) Transitional provision: In view of the elaborate and numerous areas being proposed for inclusion in a new hire-purchase enactment, it may be necessary to stipulate in the enactment what would happen to hire-purchase agreements existing before the new enactment became operative. It could be provided in the new hire-purchase enactment, for instance, that its provisions are only applicable to hire-purchase agreements entered into after the commencement of the new legislation. This would enable the parties to previous hire-purchase agreements maintain the status quo ante in their business relationship before the coming into force of the new hire-purchase legislation.
From the above review, it is beyond question that the Hire-Purchase Act is inadequate for current business challenges and the need to promote rapid commercial activities among business people. Given the number, extent and degree of the modifications proposed, it does seem that the best approach to adopt in accomplishing this would be the enactment of a new legislation for hire-purchase.
IV. RECOMMENDED REFORMS
The extant Hire-Purchase Act has outlived its usefulness. It is now an impediment to the development of rapid commercial activities. This is because it contains some provisions which negatively impact on commercial activities or it does not provide for critical issues which have developed over time. Besides, some of its provisions are the basis of major controversies among academics and practitioners alike. The need for a new hire-purchase legislation is well-established. It is left to highlight these areas for reforms for clarity and simplification of the process. Firstly, by far the biggest drawback in the present legislation is the monetary limit for goods, other than motor vehicles, the subject-matter of hire-purchase. This limit should be removed. There should be no limit for any goods let out on hire-purchase.
Secondly, some formalities surrounding hire-purchase transactions should be modified. A typical example is the insistence on the personal signature of the hirer. The doctrine of agency is now well-established. No justification is tenable for the curtailment of this beneficial commercial practice in hire-purchase dealings. Another formality recommended for modification relates to the rule concerning delivery of the “note or memorandum” of a hire-purchase agreement. There is nothing magical about the 14 days stipulated. A reasonable time, with its inherent uncertainty, is most reasonable. Again, the reference to “note or memorandum” of the hire-purchase agreement is as misleading as it is confusing. Reference should simply be to the hire-purchase agreement.
Thirdly, the pervasive presence, dominance and influence of technology in the affairs of men in modern times cannot be over-stated. The envisaged hire-purchase legislation will do well to cover this matter in its provisions for contemporariness.
Fourthly, there are a host of provisions which require some tweaking to strengthen them. The definition of hire-purchase should be made more purposeful and inclusive of the vital elements of hire-purchase transactions. The point must be stressed that the owner’s title to the goods let on hire purchase is only relevant at the point of passing property. This should be emphasised in the provision to eliminate the current controversies on the matter. Similarly, the issue of re-possession as it relates to wrongful re-possession and protective interim re-possession should be revisited. It goes without saying that the fines and penalties in the legislation would have to be adjusted to reflect present realities.
Fifthly, there are some provisions which are necessary to make the legislation comprehensive and complete which are absent in the Hire-Purchase Act. These provisions should be included in the new legislation. The relevant areas identified are assignment of a hire-purchase agreement by a hirer, insolvency of the hirer, rights and obligations of the parties, the computation of damages and the service of notice.
Sixthly and conversely, there are some provisions in the Hire-Purchase Act which are no longer relevant in such statute in modern times. The provisions relating to the control of advertising is one such provision. Also, it is ill-advised to have the same legislation for both hire-purchase and credit-sale. Hire-purchase should be dealt with in a separate and unique piece of legislation.
Seventhly, there would certainly be the need to have transitional provisions given the ground-breaking modifications the new legislation would introduce vis-à-vis the extant Hire-Purchase Act.
V. CONCLUDING REMARKS
Hire-purchase transactions are very popular commercial schemes available to business people. This is predicated on its numerous benefits and its simplicity and certainty of terms. Consequently, it would be beneficial to all stakeholders, including the society at large, for this unique and popular commercial transaction to be sustained and developed. The most severe impediment to the growth and development of hire-purchase transaction is the enabling statute itself. The Hire-Purchase Act in its present form has outlived its usefulness. It now constitutes a major obstacle to the growth and development of hire-purchase in the country, with all the adverse consequences for the economy. The grave obstacles in the Hire-Purchase Act have been spotlighted with a view to bringing these to the fore. Furthermore, it is hoped that this revelation would show the way in any attempt to amend or repeal and replace the Hire-Purchase Act. It amounts to stating the glaringly obvious to opine that the Hire-Purchase Act is overdue for modification. It is hoped that the Nigerian Law Reform Commission and the National Assembly will rise up to the occasion and do the needful. The extant Hire-Purchase Act is a relic of our colonial history. The time has come for us to keep it in the archives of history where it rightly belongs. This paper is a deft move in that direction. The Nigerian Law Reform Commission and the National Assembly should seize the momentum and give to business people a new, improved Hire-Purchase Act that would engender an enabling environment for rapid growth and development in commercial activities. The huge benefits in charting such a course should be a clarion call to action. And the time to do so is now.
 Hereinafter referred to simply as the “Hire-Purchase Act”. It is noteworthy that by virtue of section 1 of the Revised Edition (Laws of the Federation of Nigeria) Act 2007, the Laws of the Federation of Nigeria 2004 became effective in 2007. This statute also repealed the Laws of the Federation of Nigeria 1990.
 Nat Ofo, “Distinguishing Hire-Purchase Transactions from Other Commercial Transactions: The Ten Ps’ Test”, at 2. [WWW document] URL http://ssrn.com/abstract=1267665 (visited 2010, May 5).
  2 FNR 292.
 Ibid. at 295.
 (1929) 9 NLR 11.
 K. I. Igweike, Nigerian Commercial Law: Hire Purchase, (second edition, Lagos: Malthouse Press Limited, 1999), pp. 10-12.
 Hire Purchase Act, s. 2(1).
 (Unreported) High Court, Benin, Suit No. B/5/75. Cited in K. I. Igweike, op. cit. note 6, p.11.
 Hire-Purchase Act, s 3(b).
 See, Nat Ofo, supra note 2.
 Hire-Purchase Act, s. 2(2)(b)(i).
 The monetary limit in the original Hire-Purchase Act 1965 was one thousand pounds, which was the currency in use in Nigeria then. Following the change of the currency of Nigeria from pounds and pence to naira and kobo in the 1970s and applying the approved conversion factor of 1:2, the one thousand pounds in the original Hire-Purchase Act became two thousand naira in the post-pound era.
 Hire-Purchase Act, s 2(2)(a). See also Obisesan v. Adetoro (1995) 6 NWLR (Pt. 404) 687 where the Court of Appeal held that a hire- purchase agreement signed by the husband of the hirer was unenforceable.
 C.D.C. (Nigeria) Ltd. v. SCOA (Nigeria) Plc (2007) 6 NWLR (Pt. 1030) 300 S.C.
 See section 2(2) and 6(1) thereof.
 See the following Bills before the Senate of the Federal Republic of Nigeria: SB 291 - A Bill for An Act to Amend the Evidence Act, Cap. E14, Laws of the Federation 2004. See also SB 234 - A Bill for An Act to Provide for Legal Recognition of Electronic Messages in Commercial Transactions, the Use of the Electronic Messages to Fulfil Legal Requirements and to Enable and Facilitate Commercial Transactions Through the Use of Electronic Means and Other Matters Connected Therewith.
 See K. I. Igweike, op. cit. note 6, p.51.
 Sale of Goods Act 1893, section 12(1).
 Section 9(4) of the Hire-Purchase Act defines this to mean 50 per cent of the hire-purchase price, in the case of goods other than motor vehicles, and 60 per cent of the hire-purchase price, in the case of motor vehicles.
  4 S.C. 53.
 Ibid. at 61 - 62. See also Yekorogha v Nigeria Technical Co. Limited  1 F.C.A. 13.
 See O. Achike, ‘Limits to the Right to Retake Possession of Goods Under Hire-Purchase Agreements in Nigeria’, (1987) 13(1) Nigerian Law Journal, at 22. See also Tabansi Agencies Limited v Incar Motors (Nigeria) Limited, CCHCJ/7/74 at 923.
 K. I. Igweike, op. cit. note 6, at 84.
 Nat Ofo, supra note 2, at 8.
 See C. U. Ilegbune, ‘Commercial Law Controversies: Owners Interim Right of Removal of Motor Vehicles Under S.9(5) of the Hire-Purchase Act 1965’, (1987) 3 & 4 OAULJ 162.
 This should have been “subsection (5)” and not “subsection (9)”.
 I dare add, “at the instance of the owner and for the purpose of the owner and not the hirer.” See K. I. Igweike, op. cit. note 6, at 85.
 Supra note 22.
 See Ebohimi v Nigeria Technical Co. Limited, supra note 20.
 Lee v Butler (1893) 2 Q.B.D. 318; and Helby v Matthews (1895) A.C. 471.
 Whitley v Hilt (1918) 2 K.B. 808.
 Belize Motor Co. v Cox (1914) 1 K.B. 244.
 Trust Commercial Limited v Parkway Motors Limited (1955) 2 A.E.R. 557.
 Ex parte Haviside, Re Button (1907) 2 K.B. 180.
 F. Monye, Commercial Law, (Enugu: Chenglo Limited, 2006), p.136. For example, see sections 5(d), 6(2)(b), and 18(1)(b) of the Hire-Purchase Act for some of such ridiculously low fines.