On 7 September 2009, Melody entered into a hire purchase agreement with Mudah Finance for a

used Toyota Camry at the price of RM 65,000. Explain the legal position of the following
situations, treating each part separately:
a) The pre-contractual information was not given until 13 October 2009.
Pre-contractual information is an obligation growing out of a contract or contractual
relation, of such a nature that it debars the party from legally entering into a similar contract at a
later time with any other person. Hire Purchase is a system of acquiring goods on credit whereby
the seller of the goods is regarded as the dealer; the purchaser is regarded as the hirer and the
finance company as the owner. The ownership of the goods bought on hire purchase does not
pass to the hirer at the time of the hire purchase agreement or upon delivery of the goods. The
ownership of the goods remains in the finance company until the hirer has fully settled the price
agreed upon in the hire purchase agreement.
Section 2 of Act 212 of Hire-Purchase Agreement states dealer is a person by whom or on
whose behalf negotiations leading to the making of a hire-purchase agreement with the owner.
This person is carried out the transaction leading to a hire-purchase agreement with the owner
was arranged1. Hirer means the person who takes or has taken goods from an owner under a
hire-purchase agreement and includes a person to whom the hirers rights or liabilities under the
agreement have passed by assignment or by operation of law 2. Owner means a person who lets
or has let goods to a hirer under a hire-purchase agreement and includes a person to whom the
owners rights or liabilities under the agreement have passed by assignment or by operation of
law3.
The main legislation governing the hire purchase transactions in Malaysia is the Hire
Purchase Act 1967, which came into force on 11 April 1968 after hire purchase, became an
increasingly popular method of acquisition. In any hire purchase agreement, there is always the
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Laws of Malaysia, Act 212, Hire-Purchase Act 1967, as at 1 March 2013.

dealer, generally the seller, by whom or on whose behalf negotiations leading to the making of a
hire-purchase agreement with the finance company were carried out.
A hire purchase agreement is commonly known as H.P. agreement. Any oral agreement is
not a valid hire purchase agreement. Section 4 A (1) states a hire-purchase agreement in respect
of any goods specified in the First Schedule shall be in writing and (1A) states a hire-purchase
agreement shall be in the national language or English language4. This is describing that a H.P.
agreement is should be in written form and shall be in English language. The H.P. agreement is
not valid if the stated requirement is not followed. This is stated in Section 4A (2) of Hire
Purchase Agreement, Act 2125.
Where the negotiation is successful, the prospective hirer will submit his or her financial
statements and supporting documents to the finance company for the approval of a hire purchase
facility or loan. The finance company may require the prospective hirer to furnish a guarantor to
guarantee the performance of the prospective hirer under the hire purchase agreement. A finance
company will not finance a loan for more than 90% of the "cash price" of the goods. Thus a hirer
must pay a deposit of at least 10% of the "cash price" of the goods.
Nevertheless the hirer can agree to pay more than 10% and the balance to be paid in
installments under a hire purchase facility. Once the hire purchase facility is approved, the
finance company will send a letter of undertaking to the dealer to inform them of the approved
hire purchase facility. Section 4B (1) states every hire-purchase agreement shall be signed by or
on behalf of all parties to the agreement 6. All parties will then be required to sign and enter into a
hire purchase agreement. The hire purchase agreement must be duly completed before being
signed by the parties involved.
Section 5 (1) of Hire-Purchase Agreement states within twenty-one days after the making of
a hire-purchase agreement, the owner shall serve or cause to be served on the hirer and the
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Laws of Malaysia, Act 212, Hire-Purchase Act 1967, as at 1 March 2013.

guarantors a copy of the agreement each 7. Within 21 days after the making of the hire purchase
agreement, the finance company must serve on the hirer and the guarantors a copy of the
agreement each. If the finance company is fail to serve the agreement within 21 days they might
render the hire purchase agreement is unenforceable. The document required to be served on
hirer or guarantors may be served by delivering it to him personally or by posting. Posting is
should be a registered post, addressed to the last known place of abode or business. The
documents pertaining to hire purchase agreement are should always keep in a proper place.
In short, buying a car under hire purchase is one of the most common ways to own a car.
HP is the hiring of goods with the option to buy the goods at the end of the hire purchase term. If
you take on HP financing, you are the hirer and financier is the owner. As a hirer, you will have
to repay the financier based on the agreed duration while you have possession of the vehicle.
When all the installments are paid up, ownership is then transferred to you. HP transactions are
governed by the Hire Purchase Act 1967 (HP Act). The HP Act sets out the forms and contents of
HP agreements, the legal rights, duties, obligations of hirers and financiers. The HP Act is
administered by the Ministry of Domestic Trade and Consumer Affairs legal position. The
agreement expressly negated Mudah Finance's liability for fitness and merchantable quality of
the car even the vehicle is second-hand good.