Difference between sale and hire purchase

A showroom in Vashi offers you a two-wheeler with “zero down payment, easy monthly instalments for three years”. You ride it home the same day. Is it yours? If you miss the fourth instalment, can the financier take it back? If you sell it in month six, does the buyer get a good title? All of these turn on one question: did you buy the vehicle, or did you only hire it with a promise that it may become yours later?

In two minutes

In a sale, property passes to the buyer on the contract (or on the agreed event) and the price is owed; in hire purchase the hirer is a bailee paying hire, and ownership passes only if and when he exercises an option after the last instalment.

The rest of this chapter

The full explanation, the cheat sheet, every previous-year question at every mark weight, the quiz and the answer skeletons are part of Contract – II on LexBlox Semester. Sign in to unlock the subject, or read Module 1 of Legal Language and Writing free.