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Report No. 20

Clause 9

Section 4 of the English Act deals with the right of a hirer to terminate the agreement. Under the law he is entitled to do so at any time, and return the goods, and in that event he should properly be liable only for the hire upto that date. But the agreements generally provide that when the hirer terminates them, he should pay an amount specified therein and that, as already stated,1 was often penal and exorbitant. This was one of the evils sought to be redressed by the Act.

Dealing with this matter, section 4 provides that on termination of the agreement the hirer shall "be liable, without prejudice to any liability which has accrued before termination, to pay the amount, if any, by which one-half of the hire-purchase price exceeds the total of the sums paid and the sums due in respect of hire-purchase price immediately before the termination, or such less amount as may be specified in the agreement". The result of this section is, that if the minimum amount specified in the agreement exceeds one-half, the hirer is liable to pay only one-half and not more.

In adopting the principle of this section, the clause under discussion tries to express it in a language which deals with each situation separately-namely (i) where the amount paid exceeds 1/2 and (ii) other cases. Where there is, under the agreement, no minimum payment to be made, nothing need be paid as penalty. This is also clear from the language of the draft.

It is also provided that the hirer should give notice to the owner (before termination) and deliver the goods and pay up the amounts due.

Section 4(2) of the English Act deals with the hirer's liability to pay damages for not taking reasonable care. This subject has been dealt with in a separate clause2, and does not, therefore, find a place in the clause under discussion.

According to section 5(b) of the English Act, any agreement which bars the right conferred by the Act on the hirer is void, and that has been adopted in this clause also.

1. See the body of the Report, para. 2.

2. See clause 13.

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