Types Of Hire Purchase Agreement

5. During the period during which the contract is in progress, the lessee of the company shall pay the company, in equal monthly instalments, an amount of Rs. . as a rental fee in advance, the first of these payments to be made during the performance of this contract and any subsequent monthly payment on or before . The day of each following month is the next. Payment is made at the company`s registered office only in cash or by cheque in the name of the company. On the other hand, some companies might want to use the asset, but excuse their balance sheet. In this case, the fact that the property is not transferred immediately becomes an advantage. Companies that wish to finance their fixed assets through off-balance-sheet financing are those that are more interested in the rental purchase system. If the seller has the resources and legal right to sell the goods on credit (which normally depends on a licensing system in most countries), the seller and the owner are the same person. However, most sellers prefer to receive a cash payment immediately. To do this, the seller transfers ownership of the goods to a financial company, usually at a discounted price, and it is this company that rents and sells the goods to the buyer.

This introduction of a third party complicates the transaction. Suppose the seller makes false claims about the quality and reliability of the goods that induce the buyer to “buy.” In a traditional sales contract, the seller is liable to the buyer if these presentations prove to be false. The lessee may not remove the license plates attached to the machine for the purpose of identifying the ownership of the company during the term of this contract. . . .

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