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Repossessions of assets Rights of the hire vendor

Repossessions of assets occur when a buyer Rights of the hire vendor to terminate
defaults on payments under a hire purchase hire purchase agreement occurs when the
agreement, prompting the seller or financier purchaser makes more than one default in
to reclaim the asset. This results in reversing payment of instalment as provided in the
FOR ONLINE READING ONLY
the asset and liability on the buyer’s books agreement. In that case, the hire vendor
and potentially recognizing any loss or gain shall be entitled to terminate the agreement
on the repossession. A proper accounting by giving notice of termination in writing.
treatment ensures accurate financial records Where a hire purchase agreement is
reflecting the repossession event. terminated, the hire vendor has the right to:
LANGUAGE EDITING
The concept of repossession of (i) Enter the premises of the purchaser
assets and seize the assets;
Repossession of assets occurs when there (ii) Retain the hire charges already paid
is a default in payments contrary to the and to recover the arrears of hire
hire purchase agreement. ‘Default’ is charges due; and
defined as a failure to meet hire purchase (iii) Claim compensations for non-delivery
obligations especially repayment of hire of the assets.
purchase instalments. Under a hire purchase Restrictions on the owner
agreement, the hire purchaser has an Where the owner seizes the goods lent under
obligation to pay up to the last instalment a hire purchase agreement, the hirer may
so that the ownership of goods smoothly recover from the owner the amount, if any,
passes to the purchaser. A failure to meet by which the amounts paid in respect of the
this obligation, is treated as default on the hire purchase price up to the date of seizure
hire purchaser’s part. is higher than the value of the goods on the
Under hire purchase agreement, the vendor date of seizure. In situation, where goods
simply transfers the possession of assets have been sold on hire purchase agreement,
to the hire purchaser, not the ownership, and the legal amount of hire purchase price
until the final instalment is paid. Since has been paid in full, the vendor shall not
the ownership is not transferred, if the be allowed to repossess the goods from the
hire purchaser fails to pay even the last hirer, unless by the verdict of a court.
instalment, the vendor has the legal right Activity 8.2
to recover the possession of the goods/ Mr. Daudi, a small business owner, has
properties that were previously sold on hire entered into a hire purchase agreement
purchase. The amount paid by the purchaser with Ms. Mwajuma, a machinery
is treated as the rent for use of the asset. This supplier, to acquire equipment for
act of recovery of possession is termed as his manufacturing operations. Due to
‘repossession’. unexpected financial difficulties, the

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