Hire Purchase - do finance companies actually know the law?

The writer has noticed this several times and was recently challenged on a finance companies’ interpretation of a consumer’s rights when receiving a car on hire purchase (and this article should be restricted only to hire purchase).

The Finance Company (FC) were advancing the argument that,  for the first 6 months , it was our client  (a car dealer) who was responsible for proving that the alleged defect was not present at the point of handing the vehicle over.  It was submitted by the FC that their customer could call upon the so called “reversed burden of proof” concept found in the Sale of Goods Act.  We totally disagreed and challenged this on two grounds:

a)    Being a contract of hire-purchase, the FC were, until in receipt of their customer’s final payment, only hiring the vehicle on an ongoing basis.  They had not sold the car to their customer because they had legal ownership (title).  As there was no sale to their customer that contract between them and their customer was not a “sale” as required by the Sale of Goods Act and therefore the burden of proving defect or otherwise could not move away from their customer and onto our client.

b)    Whilst there was a contract of sale under the Sale of Goods Act between our client and the FC, the FC themselves could not benefit from this 6 month reversed burden of proof rule either.  Simply because such an additional right is available only to private consumers who buy and not to those buyers, such as FC’s, who buy cars from garages in the course of their trade or business.  

Something tells me that this is the start and not the end of this particular legal argument however!

Published: 14 Oct 2013


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