Hire Purchase Agreement

Hire purchase agreement is an agreement by which goods are let on hire and the hirer has an option to purchase the goods in accordance with terms of the agreement. Hire Purchase Agreements are often used in the case of airline industry and auto industry while leasing aircrafts and automobiles.

Elements of Hire Purchase Agreement

To be termed as a Hire Purchase Agreement, the terms of agreement must include the following elements:

Possession of goods is delivered by the owner to a person on condition that such person pays the agreed amount in periodical instalments;
The property in the goods is to pass to such person on payment of the last of instalments;
The person has a right to terminate the agreement at any time before the property passes.
The agreement is supported by consideration in the form of payment of rentals by the hirer to the owner at regular intervals, and the right to use the goods by the hirer.

Parties to a Hire Purchase Agreement

In a hire purchase agreement, the two parties to the agreement are the hirer and owner. The owner lets the goods on hire for a specified period of time with a provision for payment of rentals at regular intervals including an option to buy the goods at the end of the period. The parties entering into a Hire Purchase Agreement must be capable of entering into a contract and there should be an intent to create a legal relationship between the parties.

Stamp Duty on Hire Purchase Agreement

Hire purchase agreement requires a stamp duty to be paid like any other ordinary agreement as per the Indian Stamp Act. However, registration of Hire Purchase Agreement is not required, as it mostly does not pertain to any immovable assets.

To draft a Hire Purchase Agreement, talk to an IndiaFilings Business Advisor.

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Frequently Asked Questions

Common questions about Hire Purchase Agreement Services India.

A hire purchase agreement is a contract where the owner of goods (such as an automobile or aircraft) allows another party (the hirer) to take possession of the goods and use them, with an option for the hirer to purchase the goods eventually by paying the agreed amount in periodic installments.

The essential elements of a hire purchase agreement are: 1) The owner delivers possession of the goods to the hirer on the condition that the hirer pays the agreed amount in periodic installments; 2) The ownership of the goods passes to the hirer upon payment of the last installment; and 3) The hirer has the right to terminate the agreement at any time before the ownership is transferred.

The two parties involved in a hire purchase agreement are the owner (the party who owns the goods and lets them on hire) and the hirer (the party who takes possession of the goods and has the option to purchase them eventually).

Yes, stamp duty is required to be paid on a hire purchase agreement, just like any other ordinary agreement, as per the Indian Stamp Act.

No, registration of a hire purchase agreement is not necessary, as it typically does not pertain to any immovable assets.

The consideration in a hire purchase agreement is the payment of rentals by the hirer to the owner at regular intervals, and the right to use the goods by the hirer.

Hire purchase agreements are commonly used in the airline industry and the automobile industry for leasing aircraft and automobiles, respectively.

The parties entering into a hire purchase agreement must be legally capable of entering into a contract, and there should be an intent to create a legal relationship between them.

Yes, the hirer has the right to terminate the hire purchase agreement at any time before the ownership of the goods is transferred to them upon payment of the last installment.

To draft a hire purchase agreement, it is recommended to consult with a professional business advisor or legal expert who can assist in preparing the agreement according to the specific requirements and ensure compliance with relevant laws and regulations.