CORAM

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ADEMOLA CHIEF JUSTICE, NIGERIA

COKER JUSTICE, SUPREME COURT

IDIGBE JUSTICE, SUPREME COURT

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PARTIES

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AMUSAN & ANOR

APPELLANTS 

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BENTWORTH FINANCE (NIG.) LTD

RESPONDENTS 

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AREA(S) OF LAW

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HIRE PURCHASE AGREEMENT – LAW OF CONTRACT

 

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SUMMARY OF FACTS

The respondents claimed for arrears of hire rentals, re-possession expenses and agreed depreciation amount” and costs under a hire purchase agreement after terminating the contract due to breaches by the appellant. The appellant contended that the vehicles could not be repaired contrary to representations from the dealer. 

 

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HELD

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The court held that depreciation amount claimed by the respondent was a penalty but upheld the decision of the lower court granting the respondent’s claim in other respect. 

 

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ISSUES

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Whether or not the provisions of clause 4(ii) (usually referred to as a “minimum payment” clause) are a penalty or an agreed assessment of the depreciation naturally occurring to the hired goods

Whether a dealer is the agent of the owners in all circumstances in a hirer purchase agreement.

Whether the appellant was entitled to repudiate the contract

 

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RATIONES DECIDENDI

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WHERE THE OWNER TERMINATE A HIRE PURCHASE AGREEMENT, PROVISION FOR MINIMUM PAYMENT IS A PENALTY WHICH IS NOT RECOVERABLE

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‘Where a hirer exercises his right of option to which he is entitled by the hire-purchase agreement, he cannot complain that the “minimum payment” clause is a penalty it being agreed that he purchased the option on the terms of the contract, i.e., at the price for which he bargained: where, however, it is the owners who terminate the contract and wish to enforce their rights under the hire-purchase contract, different considerations will apply’-Coker J.S.C

 

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THE DEALER IN A HIRE PURCHASE AGREEMENT IS NOT THE AGENT OF THE OWNER IN ALL CIRCUMSTANCES

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‘It is true that in a normal hire-purchase transaction the hirer deals with the dealers for the purpose of executing the necessary documents, paying the initial deposit, taking delivery of the goods and, in some cases, paying the periodical rentals. This however does not warrant the conclusion that the dealers thereby become general agents of the owners’- Coker J.S.C.

 

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WHEN A HIRER CAN REPUDIATE A HIRE PURCHASE AGREEMENT

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‘To entitle the hirer to repudiation the breach must be of such a nature as to make it obvious that goods delivered are not such as envisaged by the contract.  … Where the defect cannot be described as fundamentally altering the nature of the article delivered pursuant to the contract, the remedy of the hirer lies in damages and is not a rescission of the contract’-Coker J.S.C

 

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CASES CITED

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Financings Ltd. v. Baldock (1963)1 All E.R. 443
Bridge v. Campbell Discount Co. Ltd. [1962] 1All E.R. 385
Karsales (Harrow) Ltd. v. Wallis [1956] 2 All E.R. 866
Industrial Trust Ltd. v, Grimley [1963 ] 2 All E.R. 33,
Yeoman Credit Ltd. v. Apps [1961] 2 All E.R. 281, at p. 292

 

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STATUTES REFERRED TO

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