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Report No. 20

Clause 3

Section 2 of the English Act contains elaborate prescriptions as to requirements of a hire-purchase agreement.

In order to simplify it, the provision has been split up into two clauses in the draft. The requirements relating to form have been incorporated in the clause under discussion, while the requirements relating to contents have been set out in a separate clause.1

The clause provides that the agreement must be in writing and signed by the parties. It is felt that these safeguards are necessary for preventing fraud etc.

It has been made clear that a breach of the requirements relating to form will make the agreement void. In this respect, the clause goes further than section 2(2)(a) of the English Act, which makes it unenforceable, but not totally void.

Where the agreement is not signed by the surety, it is considered that the agreement need not be made void or voidable in relation to the hirer. It need not also be made void or voidable at the instance of the surety; in such cases, it is considered, it should be sufficient to provide that the agreement is voidable at the owner's instance. The only person who is likely to be prejudiced by the surety's not signing the hire-purchase agreement is the owner.

1. See clause 4.

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