In this article, Anubhav Pandey from Rajiv Gandhi National University of Law talks of a Hire-purchase agreement.

Understanding Hire-purchase agreement

Hire-purchase is a method of selling goods. Simply put, Mr. X buys a car from Mr. Y through hire purchase agreement. This means Mr. X first, gets the car on bailment then afterward Mr. X buys the same car from Mr. Y. As the name suggest, ‘Hire-purchase’ agreement has two aspects.

• The first aspect is bailment of goods subject to hire and purchase and
• The second element is of sale. Purchaser (here Mr. X) is called hirer.
• 

Features of a Hire-purchase agreement

• The buyer takes the possession of the goods immediately and agrees to pay the price of the goods in installment.
• Initially, the hirer ( the person who takes the goods under hire, Mr. X in the above example), only gets the rights to use the goods (in legal terminology, hirer gets the possession of goods only.) After the total price is paid in installments, the goods finally are transferred to the hirer. In legal terminology, transfer of ownership.
• It is only after paying off the full price of the goods, the hirer becomes the owner of the goods under a Hire-purchase agreement.
• Furthermore, the seller has the right to repossess the goods in case of default by the hirer.
• Most noteworthy, the seller has the option to return the goods. In this case, he need not pay installments falling due after that.

Things which can be bought under Hire-Purchase agreement

Among various goods, consumer durables such as T.V, Fridge, AC, other electronics, Car, Bike, purchase of machinery in an industrial sector.

Difference between Hire-purchase agreement and Installment Sale

In a Hire-purchase agreement, the buyer has the option of returning the goods at any time before the purchase takes place. In sale through installment, there is no such option of return. Once the goods are delivered, the ownership and possession, both are transferred.

Difference between Hire-purchase agreement and lease

• Ownership is never transferred in a lease. In a Hire-purchase agreement, the ownership is transferred after the last installment.
• Tax benefits, in a Hire-purchase agreement, lies with the hirer. On the other hand, in a lease agreement, tax benefit goes to the lessor.

Hire purchase financing companies in India

A non-banking finance company that principally deals in the business of hire-purchase transactions and funding for such activities. Such companies facilitate the Hire-purchase agreement and take interest on the principal product’s amount. The primary sources of funds of the hire purchase company are retailers and wholesalers, hire-purchase finance companies and banks and financial institutions.

An example of the company conducting Hire-purchase agreement in India is Bajaj Finance, Cholamandalam. To know more about companies facilitating Hire-purchase agreement in India click the following link.

Rights available to hirer (person who obtains the goods) in a Hire-purchase agreement in India

• Though there are no such statutory rights given to the hirer, these are few rights which every Hirer must have in a Hire-purchase agreement.
• The hirer should have the right to complete the pur­chase of the goods by paying or tendering to the owner the hire-purchase price or the balance left after paying off the installments.
• The hirer should have the right to terminate the agreement at whatever time the hirer thinks fit. After termination of the Hire-purchase agreement, it is the duty of the hirer to re-deliver the goods to the owner.

Rights available to owner in a Hire-purchase agreement in India

• The rights of the owner depend upon the nature of the contract and also differ from contract to contract as well.
• The owner should have the right to terminate the hire-purchase agreement in cases of default in payment by the hirer or unauthorized use of the goods under the Hire-purchase agreement.
• On termination of a Hire-purchase agreement, the owner should have the right to retain the hire which has already been paid and to recover the arrears of hire due.

Things to watch out before entering into Hire-purchase agreement

• Hire purchase will almost always cost more than the price on the price tag. You will also pay interest and administrative costs. Even an interest-free deal usually has extra charges like booking fees or insurance.
• Don’t sign any contract if you are not sure. Ask for a copy, take it home to read, sleep on it, get advice, compare costs with those of other sellers.
• If any of the information is missing from your contract, you may not have to pay all of the cost of credit. The contract cannot be enforced until you have been given the required information.
• Furthermore, until you have paid off the goods, you cannot sell them or use them as security to borrow money. If you do, the finance company can take action against you and seize the goods.

Essential clauses under Hire-Purchase agreement

#1 Nature of the agreement

• This clause will contain the purpose of the agreement. Say, you want to buy a television. The nature of the agreement will be for personal use. If you are buying machinery for your business, then nature of the agreement will be for a commercial purpose.
• This clause also defines the commencement of the agreement and its termination.
• This clause will also contain payment details, how often to pay, the amount to pay, when to pay, the name and address of the owner.

#2 Delivery of goods

Date, time, and place of delivery of goods. This clause also defines the hirer’s responsibility to pay for the delivery charges.

#3 Risk clause

In the case of any damage to the goods, the hirer owes full responsibility for such damage. The hirer should get it repaired at his own cost.

#4 An explanation of the rights of hirer and the owner

• With regards to rights of the hirer, rights such as the right of termination.
• Explanation of owner’s right such as, right to repossess, termination, etc.

#5 The charges, or how much it costs you to borrow

By adding, finance (or interest charge) for the number of months, booking fee, maintenance and repairs, insurance required by the finance company, other charges such as credit check fee.

What to do when you are cheated under a Hire-purchase agreement

The appropriate remedy can be sought by approaching consumer forum.

Step1: Approaching the right court.

Approaching the appropriate court with territorial and pecuniary jurisdiction. Most of the time in Hire-purchase agreement, there is an arbitration clause with the seat of arbitration. Or the court to approach in the case of a dispute. 

Step 2 Drafting of Consumer complaint.

For this purpose, one should consult a lawyer as it would be more productive rather than drafting on your own. Here are few key points which must be in your draft complaint

• Introduction Introducing yourself in 2-3 lines.
• Transaction Detail of goods purchased, date of purchase, memo number, other such details.
• Defect In this complaint about the defect in the goods.
• Rectification. Rectifying steps taken by the complainant to redress the matter before approaching the court. An example could be, approaching the finance company multiple time, informing him about the defects over phone and letters, etc.
• Evidence. Proof, mentioning of memo receipt of the Hire-purchase agreement, eye witnesses, which supports such purchase and defects.
• Jurisdiction. This is where a lawyer comes handy. Complaint made to the court having no jurisdiction will result in dismissal of the case.
• Relief claimed. All the relief which one claims as compensation should be mentioned under this part. An example can be, a TV bought under the Hire-purchase agreement was not working from the time of unpacking. The relief claimed should be a price of the TV. Along with this, one should always claim for litigation expenses incurred while fighting the matter in the court as a relief.

Step3: Payment of court fee.

If one is approaching district forum, the court fee is INR 100 (up to 1 lakh rupees), 1-5 lakh INR 200, 5-10 lakh INR 400, 10-20 lakh INR 500. When matter concerned with is above 20 lakh then will be with the state commission, for matters between 20-50 lakh INR 2000, 50 lakh- 1 crore INR 4000 and matters above 1 crore is dealt by National consumer forum and the court fee in such cases is INR 5000.

Step4: One can argue the case on their own or may hire a lawyer. If one is arguing on their own, here are few points to be kept in mind-

• Dress code → Person arguing must not necessarily be in lawyer’s attire. The Decent formal dressing will suffice the situation.
• Copies of complaint → three set of copies if the matter is in District Forum or State forum and four set of copies if the matter is at the National Forum.
• What will be the complainant called in the court →  A complainant will be referred to as Consumer Complaint (C.C.) and
• After result → In conclusion, free certified copy will be given to the litigants.

Within how many days should a complaint be filed in the consumer forum

The complaint must be filed within two years from the date of receipt of purchase. If the limitation time has exceeded, then an additional time might be granted on providing with sufficient reason which will be subject to the understanding of the court.

References

[http://businessjargons.com/hire-purchase-company.html]

Avatar Singh, Sale of Goods Act

 

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In this article, Anubhav Kumar Pandey from Rajiv Gandhi National University of law talks about the legality of Prenuptial agreement in India.

What is prenuptial agreement

An agreement on the distribution of assets, liabilities, and issues relating to the custody of children if the marriage falls apart in the future, entered into by the wedding couples before the marriage is called prenuptial agreement. Prenuptial agreements in India are sometimes referred to as, pre-marital agreements.

Enforceability of prenuptial agreements in India

There is no particular law, which talks of legality or enforceability of prenuptial agreements in India. Prenuptial agreements in India are not binding. But this does not devaluate the importance of prenuptial agreements overall. The court might take the prenuptial agreement into consideration for understanding the intention of the couple. Prenuptial agreement has helped the court in reaching a proper settlement in cases for divorce.

A list of judgments where prenuptial agreements have been used by the court to arrive at a proper conclusion.

• Sunita Devendra Deshprabhu v. Sita Devendra Deshprabu. In the following case, the Bombay High Court took the prenuptial agreement into consideration for deciding the separation of the asset.
• Anjali Sharma, a middle-aged business woman, forbade her husband to remarry post divorce and also claimed custody of all the pets bought during marriage with the help of a document called a prenuptial agreement.
• A couple in Coimbatore before getting into the union of marriage signed a prenuptial agreement. One of the clauses of the agreement said, “No party in the marriage will force the other party to change his/her religion after the solemnization of the marriage.” The clause was not maintained by the wife. The court took the help of the prenuptial agreement to come to a conclusion and took the non-maintainability of the court as a proper ground for divorce.
• Several Courts have taken, prenuptial agreement as a guiding factor to come closer to the fact of, what was the intention of the couples before entering into the marriage. This does not make a prenuptial agreement as binding. Prenuptial agreement in India is not binding. They might carry a persuasive value for strengthening the case.

List of judgments where Court has strictly declared such agreements invalid

• Indian judiciary has declared such agreements as invalid in Tekait Mon Mohini Jemadai v. Basanta Kumar Singh and Krishna Aiyar v. Balammal.
• Pre-nuptials are not tenable or executable in a court of law. However, they can at best be an indication of the intent of the parties.

Should I go for a prenuptial agreement?

By now you know that prenuptial agreement in India is a supporting document. Prenuptial agreements in India can be used to decrease the uncertainty relating to property division and other problems which occur during a divorce. Without going further into the morality issues and as to why prenuptial agreements should be made legally binding, let us look for clauses which every prenuptial agreement in India must contain.

Separate property clause

The clause says, after the solemnisation of the marriage, the parties to the holds have a separate right to their property. The separate property will be free from any claim that may be made by the other party. The property will remain separate in case of death or divorce.

Shared property clause

Any couple entering into the union of marriage will eventually think of buying property together. In a marriage, various gifts are gifted to the couples which are in nature of shared property. Example, a house gifted by the in-laws from both side. This clause will cover, what is to be done with the property which is shared by both the parties to the marriage.

Earning during the marriage

This clause says that All earnings of each party during the marriage shall be considered the separate property of the individual. The clause might read as follows, “Nothing in this Agreement shall be construed as relieving either party of an obligation to support their minor children. All earnings of each party during the marriage shall be considered the separate property of the individual. Nothing in this Agreement shall be construed as relieving either party of an obligation to support their minor children.”

Alimony, support, and maintenance

The most important clause. Sets out the payment that will be made after divorce. This is an empowering clause. Clause contain issues relating to the following,

• Whether both the couples are earning or not. If both the couples are not earning, what is the maintenance, support or Alimony, to be given to the party needing such support?
• What will be the situation when the party to the marriage who is not earning now starts to earn in future.

Wills/Codicils or other Transfer of Property

The clause might read as follows, “Nothing in this document shall be considered a waiver of any bequest of devise that one party may choose to make the other party by way of a will or codicil or by way of any gift, grant, or conveyance from one party to the other.”

Child Clause

This clause settles the disputes as to, to whom the custody of the child will go after the divorce. The clause might read as follows, “The parties agree that if the parties become biological or adoptive parents or guardians of a minor, this Agreement shall remain in full force and effect without any change or modification of any nature with the exception of requirements to support such children.”

A question arises, “If a document does not possess any binding value in the court of law, then what is the purpose of entering into a prenuptial agreement in India? Is there any alternative to a prenuptial agreement in India? Does Indian law provide any other remedy for such situations?

Alternative to prenuptial agreements in India

Yes. There are alternatives to a prenuptial agreement in India. There exist loopholes to every law but when there is no law at all things becomes much easier. The same goes with prenuptial agreements in India. Here are few alternatives to a prenuptial agreement in India.

Forming a trust and keeping aside the money for their future grandchild

A trust fund for your own child

Parents can form a trust fund for their child, which s/he can access once s/he turns a certain age. For instance, a woman who is 20 years old at the time of marriage, could access the fund at 40.

MoU (Memorandum of Understanding)

Such MoU can contain clauses similar to a prenuptial agreement. But again this MoU will not be binding. They might be helpful in drawing the court’s attention in a case.

Joint ownership or Co-ownership agreement

Simply put, when two or more person holds title to the same property. Apart from acting as an investment, a joint ownership of a house might provide you with tax deductions under the section 80 C of the Income Tax Act.

Prenuptial agreement in India, the GOA way!

Before marriage, partners can enter into a prenuptial or separation of assets agreement, drawing up a list of possessions that belong to each other. “This agreement is irrevocable but has no bearing on the children who have equal rights to both parents’ assets,” Shocked! But the Civil code in Goa provides for a prenuptial agreement.

Prenuptial agreement in India, Sample Agreement.

After reading this post, if you think that prenuptial agreement can smoothen your future married life, here is a sample for prenuptial agreement in India. This is just a sample, for detailed information you will have to consult a good lawyer.

________________________________________, hereinafter referred to as Prospective Husband, and _______________________________________, hereinafter referred to as Prospective Wife, hereby agree on this _____ day of ________________, in the year ______, as follows:

Prospective Husband and Prospective Wife contemplate marriage in the near future and wish to establish their respective rights and responsibilities regarding each other’s income and property and the income and property that may be acquired, either separately or together, during the marriage.

Prospective Husband and Prospective Wife have made a full and complete disclosure to each other of all of their financial assets and liabilities, as more fully outlined in the accompanying Financial Statements, attached hereto as Exhibits A and B.

Except as otherwise provided below, Prospective Husband and Prospective Wife waive the following rights:

1. To share in each other’s estates upon their death.
2. To spousal maintenance, both temporary and permanent.
3. To share in the increase in value during the marriage of the separate property of the parties.
4. To share in the pension, profit-sharing, or other retirement accounts of the other.
5. To the division of the separate property of the parties, whether currently held or hereafter acquired.
6. To any claims based on the period of cohabitation of the parties.
7. [SET FORTH RELEVANT EXCEPTIONS HERE.]
8. [ADDITIONAL PROVISIONS HERE. These can range from prescribing that the children will be raised in a particular religion to allocating household chores between the parties.]
9. Both Prospective Husband and Prospective Wife are represented by separate and independent legal counsel of their choosing.
10. Both Prospective Husband and Prospective Wife have separate income and assets to independently provide for their respective financial needs.
11. This agreement constitutes the entire agreement between the parties and may be modified only in writing executed by both Prospective Husband and Prospective Wife.
12. In the event it is determined that a provision of this agreement is invalid because it is contrary to applicable law of India, that provision is deemed separable from the rest of the agreement, such that the remainder of the agreement remains valid and enforceable.

This agreement will take effect immediately upon the solemnization of the parties’ marriage.

I HAVE READ THE ABOVE AGREEMENT, I HAVE TAKEN TIME TO CONSIDER ITS IMPLICATIONS, I FULLY UNDERSTAND ITS CONTENTS, I AGREE TO ITS TERMS, AND I VOLUNTARILY SUBMIT TO ITS EXECUTION.

_______________________________

Prospective Husband   ______________________________

Prospective Wife         _______________________________

Refferences

[2016 SCC OnLine Bom 9296].

[http://timesofindia.indiatimes.com/life-style/relationships/love-sex/Happily-married-but-conditions-apply/articleshow/12230194.cms?] [http://www.internationalfamilylawfirm.com/2012/04/prenuptial-agreements-in-india.html] [ILR (1911) 34 Mad 398.] [ILR (1901) 28 Cal 751.] [https://www.telegraphindia.com/1151104/jsp/opinion/story_51223.jsp#.WK2F9zt97IU]

Satisfied with the information given above. What are your views on prenuptial agreement in India? Comment below and don’t forget to share.

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