Hire Purchase Act Vis a Vis Restriction On The Recovery Of Goods By The Owner


By Carrington Osarodion Omokaro

All fingers are not equal they say. Which is the reason why every one cannot do things the same way. Some people may not have the money to pay for goods at the time they desire to purchase it while others can pay 10 times the value of those same goods at the time he/she desires to purchase it.


Halsbury’s Law of England, Vol, 1st edition defines Hire Purchase as

“A contract of hire with an option to purchase under which the owner of the chattel undertakes to sell it to, or that it shall become the property of, the hirer conditionally on his making a certain number of payments. Until the making of the last payment, however, no property in the chattel passes”. 

Simpliciter, it is an arrangement where an owner contracts to sell goods and the hirer agrees to buy on the condition that he makes installmental payment for the goods which he has in his custody. But he (hirer) does not become the owner until he pays the last installment.

 It is worthy of note that one of the distinguishing factors of Hire purchase from other legal transactions is that in Hire Purchase the Hirer is not under an obligation to purchase the goods, he may exercise the option to return the goods. Where he exercises this option however, he must give notice of his termination in writing to the owner or any person entitled or authorized to receive the sums payable under the agreement. He must also in addition to the earlier obligation pay at least half of the Hire purchase Price or such amount as may the specified in the agreement and hand over the goods back to the owner. See Section 8 of the H.P.A. It is apposite to note that if he failed to take reasonable care of the goods, he shall (must) pay damages for the failure.

In Nigeria, one of the most common form of H.P agreement is the type involving motor vehicles where Mr A may be in desperate need of a Toyota corolla 2003 model which may cost about 1.8million naira only (one million and eight hundred thousand only) but may not have the money at the time he desires to purchase the car or he may have the cash but cannot conveniently dispense such amount due to other necessities. So he approaches Mr B whom he knows can conveniently purchase the car for him to do so based on an agreement between both parties that Mr A will pay the Cost price which is 1.8 million plus 600,000  naira( Six hundred thousand naira) interest. Making the total sum 2.4 million( Two million and four hundred thousand). It may then be agreed that Mr A will pay the sum of 100,000 naira monthly for 24 months.

The essence of this article is to analyze the position of the law particularly on the restrictions on recovery of goods by the owner. However, some basic requirements will be made mention of.

Stating the purchase Price

Section 2(1) of the H.P.A states “Before any hire‐purchase agreement is entered into in respect of any goods, the owner shall state in writing to the prospective hirer, otherwise than in the note or memorandum of the agreement, a price at which the goods may be purchased by him for cash (in this section referred to as the “cash price”). Simpliciter, the owner must state to the prospective hirer, a price at which the goods may be purchased. If the owner fails to state the price thus not complying with the provisions of the act, the owner cannot enforce any right against the hirer to recover the goods or security given by the hirer. See Section 2(2) of the H.P.A and the case of Yusuf & anor  Vs  Oyetunde & anor (1975) NNLR 116. There are still some requirements stipulated in Paragraph a & b of S.2(1) where if either occurred will be deemed sufficient compliance with the Act.

Signature of the Hirer

It is very essential for the Hirer to sign the Agreement personally and not by an agent.

Section2(2)of the H.P.A states “An owner shall not be entitled to enforce a hire‐purchase agreement or any contract of guarantee relating to the agreement or any right to recover the goods from the hirer, and no security given by the hirer in respect of money payable under the hire‐purchase agreement or given by a guarantor in respect of money payable under a contract of guarantee relating to the agreement shall be enforceable against the hirer or guarantor, unless the requirement specified in subsection (1) of this section has been complied with and‐

  • a note or memorandum of the agreement is made and signed by the hirer and by or on behalf of all other parties to the agreement”.

What we can deduce from the above, particularly the last two lines is that while other parties which I may reason to include the owner & guarantor if need be can have the agreement signed on their behalf, the hirer by virtue of the act cannot sign through an agent. If the agreement is signed by another person, the owner cannot enforce the Hire purchase agreement against the hirer or recover/seize the goods from the hirer. In Ayoke v. Bello 3PLR/1991/55 (C.A), the agreement marked exhibit F was signed by the Hirers husband because she was not in the country when the original document was prepared. The Hire purchase price for the Peugeot 504 was N 9600. N 4000 was paid to the defendant on the day of the purchase, the balance was to be paid in ten installments of N560. After some default, the defendant seized the Car. The court held that the agreement was worthless and unenforceable, the seizure was wrong.  It is apposite to know that the husband signed the agreement without stating that he was signing on behalf of someone. Although that would still not have sufficed. The essence of this particular law is to protect the buyer or hirer who must know and understand what he is agreeing to. See Also Distributors v. Goldring (1957) 2 ALL ER 525.


Prior to the inception of the Act, the common law position was the applicable law.

Recovery under Common Law

During this Era, the owner’s right of repossession is absolute for the hirer’s right under an agreement is entirely and exclusively dependent upon the terms of the agreement thus putting the hirer in a weak and precarious position. Where there was no agreement on such issue, the owner may repossess the goods upon the breach of the hirer to pay an installment or to do so punctually. Even if the default was in respect of the last installment, the owner could recover the goods. In Atere v. Dada Amao(1957) WRNLR 1 76, the hirer had paid a total sum of £995 out of a total hire purchase price of £1000 but defaulted in paying the last installment of £5. The owner nevertheless, was held entitled to repossess the goods. This was obviously draconian and arbitrary. See also, Bentworth Finance Nig Ltd vs. De Bank Transport Ltd(1968) 3 ALR.

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Recovery under the Act (The Crux of this Article)

The Hire Purchase Act was enacted in the Year 1965 but only applied to Federal Capital territory of Lagos it was subsequently given national application by virtue of the Hire purchase (Application Act) 1966. However, application of the law didn’t start until October 1 1968 by virtue of the Hire Purchase (Appointed day) Order 1968.

A lot of people who are not conversant with the act are still of the notion that upon default by the hirer, the owner can recover the Car and that when this happens all sums paid are gone without any form of recovery.

Section 9(1) of the H.P.A states as follows – Where goods have been let under a hire‐purchase agreement and the relevant proportion of the hire‐purchase price has been paid (whether in pursuance of a judgment or otherwise) or tendered by or on behalf of the hirer or any guarantor, the owner shall not enforce any right to recover possession of the goods from the hirer otherwise than by action and except as provided by subsection (5) of this section”. The words in bold are for emphasis.

What we can deduce from the above is that once the relevant portion of the Hire purchase price has been paid, or not yet paid but offered/presented, the owner cannot seize/recover the goods without first instituting an action in court. Relevant portion by virtue of Section 9(4)(b) which relates to motor vehicles means three-fifths. In percentage, 3/5 is 60%. If you doubt it, here is a simple mathematical illustration, if the Hire purchase price is 1,000,000(one million), you will have 1,000,000/ 1 x 3/5 which would give us 3,000,000/5 when you divide it, it gives you 600,000(Six hundred thousand) which is 60% of 1,000,000.

The question we may ask ourselves here is what would happen if the owner goes ahead to seize/recover possession without instituting an action in court. The consequence is stipulated in Section 9(2) which states “If an owner recovers possession of goods in contravention of subsection (1) of this section, the hire‐purchase agreement, if not previously determined, shall determine and‐

  • the hirer shall be released from all liability under the agreement and shall be entitled to recover from the owner in an action for money had and received all sums paid by the hirer under the agreement or under any security given by him in respect of the agreement;

So therefore, a contravention of sub-section 1 of section 9 puts an end to the Hire purchase agreement however, i.e if it has not previously ended. Such contravention entitles the hirer to recover from the owner all installments paid or any collateral he has given under the agreement. It is safe to say that the act seems to place fairness and protection on the Hirer upon payment of the relevant portion. NB that where the hirer terminates the agreement or wishes not to continue for any reason whatsoever, the provision of subsection 1 and 2 of section 9 shall not apply which means that where the hirer has exercised his right to terminate the agreement, the owner need not institute a court action before he can recover his goods nor will the hirer be entitled to recover all sum paid or collateral given.


The Section states as follows; “In the application of the provisions of this section to motor‐vehicles, where three or more installments of the hire‐purchase price of a motor‐vehicle under the agreement are due and unpaid, the owner may remove the motor vehicle to any premises under his control for the purpose of protecting it from damage or depreciation and retain it there pending the determination of any action, and the owner shall be liable to the hirer for any damage or loss which may be caused by the removal.”

The question scholars seems to disagree on is whether going by the above section, an action need be instituted before the owner can exercise his right herein.

Late Hon. Justice (Prof) Okay Achike in his Law journal 13, No1(1987) “Limits  to the rights to retake possession of Goods Under  hire-purchase Agreement in Nigeria” is of the view that going by the aforementioned section, pendency of an action in court is mandatory to ground a valid exercise of the hirer’s right under S. 9(5).

Igweike holds a contrary view where he stated that the crucial words in the subsection are “Any action” and not “The action”.

 Ofo, Nat, distinguishing Hire-Purchase Transactions from other commercial transactions chose to maintain a middle course. He aligned with Achike but went further to contend that the subsection may be interpreted to include situations where the owner may recover possession but must bring an action within a reasonable time.

Adebisi I. Raimi, Lecturer faculty of law Obafemi awolowo University, Ile-Ife Nigeria in his work The Right of the owner to recover possession of the hired goods from the hirer under the Hire purchase act 1965: A right in existence or in Extinction,  cited initially the Supreme court case of Omoijunafor v. Nigerian technical company ltd (1978) 1 ALL NLR which held that the intention of the decree is to give the owner of such vehicle the necessary power to repossess and keep the vehicle in a state of repair pending the intervention of the court and thus held that the defendants were entitled to repossess the hired vehicle. He later went on to cite the case of Civil Design construction Nig. Limited v. SCOA Nigeria Limited (2007) 2 S.C.N.J P.252. As over ruling the earlier case and stated that it is now settled law for the owner to mandatorily institute an action against the hirer before he can exercise his right of possession. I will respond to this shortly because I seem to with utmost humility disagree with the latter case law cited as over-ruling the earlier.

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MY HUMBLE VIEW (Carrington Osarodion Omokaro)

Firstly, I opine that Section 9(5) does not demand First, instituting an action before removal.  My reason is because having a crucial look at Section 9(1), it states that the owner shall not enforce any right to recover possession of the goods from the hirer otherwise than by action and except as provided by subsection (5) of this section”. I do not think we need a soothsayer to interpret the meaning of except as provided by subsection 5. However, if need be, I opine that the Section means that it is either you recover possession of the goods by an action since relevant portion has been paid, although you can still remove the goods from the hirer as provided by subsection 5 without an action yet where the hirer though haven paid the relevant portion, defaults in payment of three or more installments basically for the purpose of securing and ensuring that the Res is not misused. This is very rationale. Now let’s look at this, we all know that the essence of subsection 1 was to give the hirer some protection and safety after paying a certain amount. Now, Knowing fully well that he will not have the car taken away from him may make him to be at large or default in paying the installment religiously because he knows there is a clog imposed by the law on the owner to recover the goods which I believe was the reason for the inclusion of Subsection 5. Equity they say is Equality and I believe that the draftsman intention was to Level the field and make things fair for both parties. Also, the wordings of the subsection 5 says the owner MAY remove the motor vehicle to any premises under his control for the purpose of protecting it from damage or depreciation. What I can deduce from this is that, the section has given a discretion to the owner with the inclusion of the word may to either exercise the option of removing the motor vehicle from the hirer and keep in a safe place after which he would subsequently institute an action in court or not decide to remove the car and simply bring an action still. What is certain is that an action must be instituted and we can infer just like Nat ofo stated that such action ought to be brought within a reasonable time. Lastly, the section used the word “remove” not “dispose”… so the owner is only keeping it in his custody. It is not like he is selling it. And if you are thinking that such will be prejudicial to the hirer only, I want you to know that it is also prejudicial to the owner as well. You may ask how, what I will say however is imagine yourself wearing the shoes of both parties.



The appellants by virtue of an H.P agreement, undertook to purchase from the respondents a steyr tipper for the total purchase of £5643 (N11, 286). The appellants by virtue of the agreement was required to make an initial deposit of £1502 (N3004) before collecting the steyr tipper (vehicle) and thereafter to make fifteen regular & consecutive monthly installment payment of £276 (N552) on or before the end of each successive month, commencing from the 4th day of August, 1972 in order to complete payment of the total purchase price. Appellants took delivery of the goods after making the deposit of N3004 & subsequently made regular installments as provided in the Hire Purchase Agreement until August 1972. He made irregular payments, the last of which being N78 was on the 4th day of May 1973. No payments were made for the months of June, July & August until the 25th September, 1973. When the appellants again paid the sum of N80. Leaving outstanding balance of N4510 being arrears of installments due and unpaid. The respondents wrote letters dated 13th June, 1973 and 15th June 1973 which drew the attention of the appellants to the unpaid arrears of installments and gave notice of their intention to repossess the vehicle. On the 4th October, 1973, the respondents reposed the vehicle from the appellant who subsequently filled an action in the high court of Bendel state. The learned trial judge (Ogbobine J.) stated thus “In the principal act the power of the owner of a vehicle…bought on hire purchase to seize the vehicle was completely removed after the hirer had paid three-fifths of the hire purchase price. This  was no doubt working great hardship on the owners of the hired vehicles and it is my opinion that section 9(5) of the (Sic) Amended act was introduced to remove the hardship which the owners of hired vehicles were…experiencing . it is therefore clear to me that notwithstanding the fact that three-fifths of the hire-purchase price has been paid, the owner of a vehicle has the authority to repossess the vehicle under the new law if there is a default in the payment of three installments. It is to be realized that such repossession does not immediately give the owner the power to deal with it in anyway which is prejudicial to the interests of the hirer. It is only a means of ensuring that the vehicle is safe… so that if in the end the owner is to sell the vehicle with leave of court in order to recover the unpaid balance of the hire purchase price the owner will not be at a loss. I think this is the spirit and intention of the amendment…”. The learned trial judge dismissed the appellants claim with costs. The apex court reaffirmed this position by stating that by promulgating the decree no. 23 of 1970 was to give the owner of the hired vehicle the necessary power to repossess and keep the same in a state of repair pending the intervention of the court.


Three(3) Transactions ensued in this case. In the first transaction the appellant bought an Ingersoll cyclone water well rig with registration number LA 2632 WD from the respondents via a hire purchase agreement of N431, 842. In the second transaction the appellant bought a second rig with registration no LA 8509 WD which purchase price was N514,482, though at the time of the dispute, the appellants had an outstanding payment of two installments of N50,000 each making it N100,000 remaining unpaid. In the third transaction, there were different contentions by both parties. It is apposite to note however that amongst many other claims, the 1st paragraph of the claimant’s statement of claim stated thus “DECLARATION that the seizure of the plaintiffs rigs No LA 2632 WD and LA 8509 WD was wrongful”. The major issue for determination in that case was in respect of rig LA 8509 WD, in which the appellants had paid N414, 482 out of N514, 482 which is over three-fifth the respondent argued that the agreement between both parties was not governed by the hire purchase act but by common law because EXHIBIT D2 did not stipulate that the respondent would not repossess as provided under section 9(1) of the Hire purchase agreement upon payment of three-fifth of the purchase price. They also argued that since the appellant did not prove that rig LA 8509 WD is a motor vehicle as defined under the H.P.A, the Act does not apply.  The trial court gave judgment in favor of the appellant stating that the rig was a motor vehicle and thus the H.P.A applied hence making the seizure unlawful. The court of appeal held otherwise and stated thus that the plaintiff did not call any evidence to show that the rig is a motor vehicle other than by the testimony of PW1 where he stated that the rigs are duly registered with a Motor Licensing Authority and therefore concluded that the rig was not a Motor vehicle and thus held that the transaction was governed by the common law instead of the Hire purchase Act. At the Supreme Court, reference was made to page 921 of the record of the court of appeal whereby DW1 gave evidence under cross examination suggesting that the rig No LA 8509 WD was generally treated as if it was a motor vehicle. The apex court stated thus “It is settled law that a plaintiff must succeed on the strength of his case and not on the weakness of the defence and that where the evidence of the defence supports the case of the plaintiff, the plaintiff is entitled to rely on same in proof of his case, the position of the law being what it is, the appellant is entitled to take advantage of the evidence of DW1 extracted under cross examination…I hold the view that if the rig is generally treated as if it is a motor vehicle and having regard to the facts and circumstances of this case it being registered by the motor licensing authority, being insured, given certificate of road worthiness and driven by a driver – it is in fact a motor vehicle within the contemplation of Section 20(1) of the Hire Purchase Act.”

W.S.N. ONNOGHEN, J.S.C as he then was (Delivering the leading Judgement) stated thus “… I therefore hold that the Hire purchase act applies to the transaction between the parties and that as it is admitted that the appellant has paid 3/5th of the purchase price of the rig in issue the respondent cannot in law repossess the rig otherwise than in accordance with the law. In this circumstance, I resolve issue No 1. In favour of the appellant.” The Learned justice has also stated that even if the common law had applied, the seizure would still be unlawful because the appellant had paid up to 60% of the purchase price of the rig.

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It is definitely evident that the Facts and ratio in the latter case is different from the Facts and ratio in the earlier case. In the latter case, a default in three months installments after the relevant pursued was paid never ensued neither was it made an issue, what ensued was seizure of goods after the relevant portion has been paid simpliciter as contemplated by Section 9(1). Also, none of the learned justices made reference to Section 9(5) which obviously is because the issue and facts never warranted for such. On the other, in the earlier case, the facts bothered not just on default upon payment of the relevant portion ALONE as contemplated by Section 9(1) but also bothered on default when three installments are due and unpaid. So the latter case cannot be said to overrule the earlier case. For a case to overrule another, the facts in both ought to be so peculiar and the judgment vis a vis the ratio decidendi must seem conflicting as it is trite law that where that there are conflicting decisions of courts of Co-ordinate (Equal) jurisdiction, the decision that is Later in time prevails as stated in the case of ALAO v. UNILORIN (2008) 1 NWLR (Pt. 1069) 421  . Also, if the earlier decision was reached per incuriam, the latter case cannot be said to overrule it still even if it merely made mention of the supposed overruling principle as an Obiter Dictum because it is a trite principle of law that an obiter dictum of a latter case cannot overrule the ratio decidendi in an earlier one even where reached in manifest ignorance or per incuriam. I humbly submit that as far as the Civil Designs case is not similar with the omoijunafos case and did not base its ratio on the Provisions of Section 9(5) like that of omoijunafos case, the civil designs case has not overruled the omoijunafos case and I conclude by saying that the Principle of law in OMOIJUNAFO v NIGERIAN TECHNICAL COMPANY LTD(1976) vis a vis Section 9(5) of the Hire Purchase Act is still the current position of the Law.

Carrington Osarodion Omokaro, Benin City, Edo State, Nigeria. Omokarocarrington@yahoo.com


  1. Adebisi I. Raimi – The Right of the owner to recover possession of the hired goods from the hirer under the Hire purchase act 1965: A right in existence or in Extinction
  2. Ofo, Nat, distinguishing Hire-Purchase Transactions from other commercial transactions
  4. ACHIKE – Limits to the rights to retake possession of Goods Under  hire-purchase Agreement in Nigeria
  6. ACHIKE – Limits to the rights to retake possession of Goods Under  hire-purchase Agreement in Nigeria
  7. Hire Purchase Act(CAP H4)
  8. OKANY – Nigerian Commercial Law
  9. Ebuka Obidigwe – Lawcarenigeria.com Service of Originating processes at the Federal High Court of Nigeria : Did Akeredolu v. Abraham (2018) LPELP-44067 (SC) settle The controversy
  10. Judy.legal



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