Assignment (15 Marks)

Group PBA7A

Arul is the owner of a shop selling all types of uniforms. Recently he entered into a contract
with Mr Ronald, the PIBG chairman of a local primary school. Mr Ronald had ordered 100
jackets on behalf of the PIBG. He told Arul that the jackets have to be made of cotton, which
was more comfortable to wear in hot weather. However when the jackets were delivered, he
realized that they were made of polyester and not cotton. Advise Mr Ronald, as to his rights
under the Sales of Goods Act 1950.

Group PCA7A

Treating the question on its own, answer the following:

a) Ani’s husband, Osman, bought a car on hire purchase by getting a loan from Sykt.
Kewangan Maju. The agreement was for a period of 48 months with a monthly
instalment of RM520. After paying for a period of 24 months, Ani’s husband suddenly
died. Can Ani proceed with the hire purchase agreement?

b) What happen if Osman does not wish to continue with the hire purchase agreement?
What should he do?

c) Can Hamidon, Osman’s friend, take over the hire purchase agreement when Osman
is no longer interested in continuing with the hire-purchase agreement?

Instruction:

1. Maximum two (2) students per group.

2. Format of assignment: font: Arial, font size: 12, 1.5 paragraph spacing.
3. Assignment must contain the following:
• Cover page: Course title and students’ matric number only.
• Content: Question for the assignment, issues, relevant provision of
Companies Act, elements/principle of law, relevant decided cases, application
of law to the question, remedy (if any), conclusion.
• Footnotes/References must be included.
4. Date of submission:19th October 2010 (tuesday) by 7 p.m.
5. No mark will be awarded to those who fail to submit the assignment on the stipulated date.
 UNIVERSITI TEKNOLOGI MARA

FACULTY OF ADMINISTRATIVE SCIENCE

& POLICY STUDIES

BUSINESS LAW
(LAW 503)

PREPARED BY

2007118375 (AM225)
2007118333 (AM225)
There are three issues arise from this case:

a) Ani’s husband, Osman, bought a car on hire purchase by getting a

loan from Sykt. Kewangan Maju. The agreement was for a period of
48 months with a monthly instalment of RM520. After paying for a
period of 24 months, Ani’s husband suddenly died. Can Ani
proceed with the hire purchase agreement?

Issue 1:

Whether Ani can proceed with the hire purchase agreement after her husband,
Osman died?

Law

The Hire Purchase Act 1967, provides several provisions concerning the rights
and the duties of hirers under hire-purchase agreements .

STATUTORY RIGHTS OF HIRER

Under Section 13. Rights by Operation of Law. If the hirer is dead, the hirer’s
right, title and interest under the hire-purchase agreement will pass to his
personal representative by operation of law. Upon the transfer, the personal
representative shall comply with the provisions of the hire-purchase agreement.

“by operation of law" indicates that a right or liability has been created for a
party, irrespective of the intent of that party, because it is dictated by existing
legal principles. For example, if a person dies without a will, his heirs are
determined by operation of law. Similarly, if a person marries or has a child after
his or her will has been executed, the law writes this pretermitted spouse or
pretermitted heir into the will if no provision for this situation was specifically
included. Adverse possession, in which title to land passes because non-
owners have occupied it for a certain period of time, is another important right
that vests by operation of law.

Apply
From the cases, Ani is the personal representative of Osman by operation of
law.

Conclusion
Since Osman died, her wife, Ani can proceed with the hire purchase
agreement.
b) What happen if Osman does not wish to continue with the hire
purchase agreement? What should he do?

Issues 2
Whether can Osman terminate the hire purchase agreement or not?

Law
Section 15. Right to terminate the agreement.

- Under Section 15 (1),the hirer has right to terminate the hire purchase
agreement at any time by returning the goods to the owner during
ordinary business hours at the owner’s ordinary business place
specified in the agreement for that purpose.

- Under Section 15(5)(a), upon the termination , the hirer may require the
owner to sell the goods to any person introduced by the hirer who is
prepared to buy the goods for cash at a price agreeable to the owner.

- Under Section 15(5)(b), if at the time of returning the goods to the owner,
the value of the goods is more than the balance outstanding, the hirer is
entitled to the difference.

If at the time of returning, the value of the goods is less than the balance
outstanding, the owner is entitled to the difference.

Apply
From this case
Conclusion

c) Can Hamidon, Osman’s friend, take over the hire purchase

agreement when Osman is no longer interested in continuing with
the hire-purchase agreement?

Case 3
Whether can Osman’s friend, Hamidon continue the hire purchase agreement
or not?

Law
Section 12. Right to assign hirer’s Rights under Hire Purchase Agreement

- Initially, the hirer is not the owner of the goods. Therefore, he has no
right to assign, any right over the goods to another person.
- Under Section 12 (1) , however, the hirer may assign the right, title and
interest under a hire-purchase agreement to another person (assignee)
with the consent of the owner.
- Under Section 12(1)If the owner is unreasonably withhold the consent,
then the hirer may assign his right, title and interest without the consent
of the owner.
- Under Section 12(3), however, the hirer must first apply to the High Court
for an order declaring that the consent of the owner has unreasonably
been withheld.

“consent is unreasonably withheld means:

a) That the owner fails or refuses to give his consent without sufficient
cause/reason.
 b) Under Section 12(2), if the owner requires any payment or
consideration for his consent to such an assignment
c) Under Section 12(3), when the High Court is satisfied to declare
that the owner has unreasonably withhold his consent, upon the
application by the hirer.
d) Refer to Section 12 (5), when the owner requires other
or additional guarantors to guarantee the assignee’s obligation,
whereas:
i) The same guarantors who have guaranteed the hirer’s
obligation have agreed to guarantee the assignee’s obligation
under the assignment; or
ii) The assignee has furnished the same number of guarantors
to guarantee his obligation under the assignment as was furnished
by the hirer to guarantee his obligation under the hire-purchase
agreement. Refer to Section 12(5).

- On the other hand, in granting the consent to the assignment, the owner
may stipulate that all defaults incurred by the hirer under the hire-
purchase agreement shall be made good .Refer to Section 12(4)

- Owner may also require the hirer and the assignee (under Section 12(4))
a) To execute and deliver to the owner an assignment in a form
approved by the owner, whereby the assignee agrees:
i) To be personally liable to pay the installments remaining
unpaid, and
ii) To perform and observer all other stipulations &conditions
of the hire-purchase agreement during the residue of the
term, and
iii) To indemnify the hirer in respect of those liabilities.

b) To pay the reasonable costs incurred by the owner in stamping or

registering the assignment agreement
Apply

Conclusion

REFERENCES