Consumer Hire Regulation
Conformity with the Hire Purchase Agreement
Were a hire-purchase agreement is concluded between an owner and a hirer, the owner is required to deliver goods to the hirer that are in conformity with the agreement at the relevant time and comply with the requirements following Where they are not in conformity, the hirer will have the right to remedies specified. “Relevant time” is defined.
Owner to have right to sell goods etc.
The following conditions apply to a hire-purchase agreement.
- The owner must have the right to sell the goods when ownership of them is to be transferred;
- the goods must be free from any charge not disclosed to the hirer before entering into the agreement and must remain so until ownership is transferred; and
- the hirer may only be affected by a benefit of the owner/ another person already disclosed on the goods.
- where only limited title to the goods transfer, an owner or third person may have, all charges must be disclosed before the agreement is entered into and the hirer may only be affected by a claim under a charge already disclosed.
If the owner does not have the right to sell the goods, the hirer can terminate the agreement.
Where the hirer has the right to terminate the agreement, he must do so under the below provisions and the owner must comply with its obligations
The hirer will have the right to remedies below where the goods are not in compliance, where all known charges are not disclosed by the owner and where a restriction prevents or limits the use of the goods. Where a dispute arises, the burden of proof rests on the owner to show that he had a right to sell the goods, that they complied with the above provisions and all known charges were disclosed.
Requirements for Conformity
To conform with the agreement, the goods must meet certain subjective requirements such as description, quantity, possess functionality and compatibility, be fit for purpose, be delivered with all accessories and instructions, and updated as stipulated. Also, spare parts and adequate after sales service must be made available by the owner in such circumstances as stated in the offer and for a reasonable time period, if not stated. “Interoperability” is defined.
There are the following objective requirements for conformity with hire- purchase agreement. The goods delivered under a hire- purchase agreement must
- comply with applicable laws, standards, or codes of conduct;
- correspond to the description of a sample or model made available to the hirer;
- delivered with instructions, where applicable;
- possess the features of durability, compatibility and security expected of the goods, particularly features referred to in any public statement.
The durability of the goods means the ability of the goods to maintain their functions and performance through normal use and which the hirer could reasonably expect. The owner will not be bound by any public statement on the durability of the goods where he shows that he was not aware of it, or it had been corrected or the hirer could not have been influenced by it.
Digital Element
Where a hire-purchase agreement for the letting of goods with digital elements provides for a single act of supply of digital content or digital services, the owner must ensure that the hirer is informed of and supplied with the updates necessary to keep the goods in conformity with the agreement for a reasonable time period.
Where such an agreement provides for a continuous supply of digital content or digital service for a period exceeding two years, the owner must ensure that the hirer is informed of and supplied with the updates necessary to keep the goods in conformity with the agreement during that period. If the time period of supply does not exceed two years, the owner must ensure that the hirer is informed of and supplied with the updates necessary to keep the goods in conformity for two years beginning with the delivery of the goods with digital elements.
The owner is not liable for any lack of conformity where the hirer fails to install updates supplied within a reasonable time and had been informed of the updates. There will be no lack of conformity with a hire-purchase agreement where the hirer was informed of and accepted a deviation from particular requirements when concluding the agreement. In this instance, the burden of proof rests on the owner to show the hirer was informed of and accepted the deviation.
Incorrect Installation of Goods
Any lack of conformity with the hire-purchase agreement due to incorrect installation of the goods will be regarded as a lack of conformity of the goods if the installation is part of the agreement and was carried out by the owner or under his responsibility or if the installation was carried out by the hirer and the incorrect installation was due to the defective installation instructions provided to the hirer.
Implied Terms Title
Implied terms of hire-purchase agreement provides that the following provisions are implied into every hire-purchase agreement and will have effect as if they were the terms of such agreement.
The owner shall ensure that—
- at the time when the ownership of the goods is to be transferred under the hire-purchase agreement, the owner has the right to sell the goods,
- at the time when the ownership of goods is to be transferred under the hire-purchase agreement, the goods are free from any charge or other encumbrance (other than a charge or other encumbrance which was disclosed to the hirer before the hirer entered into the hire-purchase agreement), and
- the hirer shall enjoy quiet possession of the goods except so far as it may be disturbed by the owner or any other person entitled to the benefit of any charge or encumbrance so disclosed.
Where the hire-purchase agreement shows, or the circumstances at the time the agreement was concluded imply, that the owner and the hirer intend that the owner transfer only the limited title to the goods that the owner or a third person may have—
- all charges and encumbrances known to the owner shall be disclosed to the hirer before the hirer enters into the agreement, and
- the hirer’s quiet possession of the goods shall not be disturbed by—(i) the owner,(ii) the third person, ori) a person claiming through or under the owner or the third person unless that person is claiming under a charge or encumbrance that was disclosed to the hirer before the agreement was concluded.
Where the owner does not have the right to sell goods hirer shall have the right to terminate the hire‑purchase agreement.
In case of dispute, it shall be for the owner to show that—
- the owner had the right to sell the goods
- the goods complied with the above requirements
- the owner disclosed all known charges and encumbrances
- the hirer’s possession of the goods complied with the above requirements
Subjective requirements for conformity with hire-purchase agreement
The goods delivered under a hire-purchase agreement shall—
- be of the description, type, quantity and quality, and possess the functionality, compatibility, interoperability and other features, specified in the hire-purchase agreement,
- be fit for any particular purpose for which the hirer requires them—) that the hirer made known to the owner at the time of, or before, the conclusion of the hire-purchase agreement, and) that the owner has accepted,
- be delivered with all accessories and instructions, including on installation of the goods, specified in the hire-purchase agreement, and
- be updated as specified in the hire-purchase agreement.
Parts and After Sale
Spare parts and an adequate after-sales service shall be made available by the owner—
- in such circumstances as are stated in an offer, description or advertisement by the owner on behalf of the producer or on his or her own behalf, and
- for such period as is so stated or, if no period is so stated, for a reasonable period.
“Interoperability’ means the ability of goods to function with hardware or software different from those with which goods of the same type are normally used.
Objective Requirements for Conformity
The goods delivered under a hire-purchase agreement shall—
- be fit for all of the purposes for which goods of the same type would normally be used, taking into account so far as relevant any enactment or rule of law, European Union law, technical standards or, in the absence of technical standards, applicable sector-specific industry codes of conduct,
- be of the quality and correspond to the description of any sample or model that the owner made available to the hirer before the conclusion of the hire-purchase agreement,
- be delivered along with any accessories, including packaging, installation instructions or other instructions, that the hirer may reasonably expect to receive, and
- be of the quantity and possess the qualities and other features (including in relation to durability, functionality, compatibility, safety and security) normal for goods of the same type that the hirer may reasonably expect given the nature of the goods and taking into account any public statement in relation to the goods made by, or on behalf of, the owner or any other person constituting a previous link in the chain of transactions relating to the hire-purchase agreement, including the producer, particularly in advertising or on labelling.
Reference to the durability of the goods is a reference to the ability of the goods to maintain their functions and performance through normal use and to possess the ability to do so which is normal for goods of the same type and which the hirer can reasonably expect having regard to—
- the specific nature of the goods,
- the possible need for reasonable maintenance of the goods,
- any public statement on the durability of the goods made by or on behalf of any person constituting a link in the chain of transactions, and
- all other relevant circumstances, including the price of the goods and the intensity or frequency of the use made of the goods by the hirer.
The owner shall not be bound by any public statement referred to if the owner shows that—
- the owner was not, and could not reasonably have been, aware of the public statement in question,
- at the time of the conclusion of the hire-purchase agreement, the public statement had been corrected in the same way as it had been made (or in a comparable way), or
- the decision of the hirer to take the goods could not have been influenced by the public statement.
Digital Elements
Where a hire-purchase agreement for the letting of goods with digital elements provides for a single act of supply of the digital content or digital service, the owner shall ensure that the hirer is informed of and supplied with updates, including security updates, that are necessary to maintain the goods in conformity with the agreement for the period of time that the hirer may reasonably expect given the type and purpose of the goods and the digital elements, and taking into account the circumstances and nature of the hire-purchase agreement.
Where a hire-purchase agreement for the letting of goods with digital elements provides for a continuous supply of the digital content or digital service for a period exceeding two years, the owner shall ensure that the hirer is informed of the availability, and supplied with, any update (including a security update) that is necessary to maintain the goods in conformity with the agreement during that period.
Where a hire-purchase agreement for the letting of goods with digital elements provides for a continuous supply of the digital content or digital service for a period not exceeding two years, the owner shall ensure that the hirer is informed of the availability, and supplied with, any update (including a security update) that is necessary to maintain the goods in conformity with the contract for the period of two years beginning with the delivery of the goods with digital elements.
Updates
Where the hirer fails to install within a reasonable time an update supplied the owner shall not be liable for any lack of conformity with the hire-purchase agreement resulting solely from the failure to install the update—
- if the owner informed the hirer of the need for the hirer to install the update (including the consequences of failing to do so), and
- the failure of the hirer to install the update, or the incorrect installation by the hirer of the update, was not due to shortcomings in the installation instructions provided to the hirer.
Exceptions to Conformity
There shall be no lack of conformity with a hire-purchase if, at the time of the conclusion of the agreement—
- the hirer was specifically informed by the owner that a particular characteristic of the goods deviated from the requirements of the subsection concerned, including a lack of conformity with the hire-purchase agreement caused by a restriction resulting from a violation of an intellectual property right or any other right of a third person, and
- the hirer expressly and separately accepted that deviation.
In case of dispute, it shall be for the owner to show that the hirer—
- was specifically informed by the owner that a particular characteristic of the goods deviated from the requirements and
- expressly and separately accepted that deviation when concluding the hire-purchase agreement.
Incorrect installation of goods
Any lack of conformity with the hire-purchase agreement resulting from the incorrect installation of the goods shall be treated as a lack of conformity of the goods with the hire-purchase agreement if—
- the installation forms part of the agreement and was carried out by the owner or under the owner’s responsibility, or
- the installation, intended to be carried out by the hirer, was done by the hirer and the incorrect installation was due to shortcomings in the installation instructions provided to the hirer by the owner or, in the case of goods with digital elements, provided to the hirer by the owner or by the supplier of the digital content or digital service.
Implied terms – Liability of owner
Where the hire-purchase agreement for the letting of goods with digital elements provides for a continuous supply of digital content or digital service for a specified period, the owner will be liable for a lack of conformity within that period. Where the agreement provides for the delivery of goods on more than one occasion, the owner will be liable to the hirer during the period for a lack of conformity of the goods at the relevant time.
Where an update is supplied by the owner or a third party for the letting of goods with digital elements, the owner will be liable for any lack of conformity with the agreement caused by the update or caused by the failure of the owner to supply the update. The hirer’s right to a remedy for lack of conformity with the hire- purchase agreement where the owner is liable will apply for six years from
- the relevant time for goods other than goods with digital elements and
- the time the lack of conformity of the digital content or digital service occurs or becomes apparent within the period they are supplied under the hire-purchase agreement for goods with digital elements.
Burden of Proof
Any lack of conformity with the hire-purchase agreement during the 12 months beginning with the relevant time that the goods were supplied will be presumed to have existed at the relevant time unless proven otherwise or such presumption is incompatible with the nature of the goods or lack of conformity. Where the agreement for the letting of goods with digital elements provides for continuous supply of those elements for a specified period, the burden of proof is on the owner for a lack of conformity that becomes apparent during that period.
For the purposes of the presumption, the hirer will only need to prove lack of conformity of the goods with the agreement and that it became apparent during the 12 months beginning with the relevant time. A hirer will not be restricted from seeking a remedy after 12 months from delivery.
Liability for Commercial Guarantee
A commercial guarantee is binding on the guarantor according to the commercial guarantee statement and associated advertising, at or before the conclusion of the hire-purchase agreement. Where the producer offers a commercial guarantee of durability for the repair or replacement of the goods, the producer is liable during the period of the guarantee of durability for repair or replacement of the goods and may offer more favourable conditions. The commercial guarantee will be binding in relation to the most advantageous conditions, i.e., these may have been set out in the associated advertising.
Where the owner gives a hirer a commercial guarantee provided by another guarantor, the owner is liable for the observance of the guarantee to the hirer as if he was the guarantor, unless he expressly stated otherwise. Where the owner gives his own commercial guarantee to the hirer, it will be presumed that he has not made himself liable under any commercial guarantee from another guarantor which the owner has given to the hirer. The liability of the owner to the hirer is without prejudice to the rights of the hirer.
Where goods covered by a commercial guarantee provided to a hirer are acquired by another hirer during the guarantee period, the other hirer will be able to rely on the guarantee against the guarantor or the owner as if they were the hirer to whom the guarantee was provided.
The statement will be given to the hirer on a durable medium by the time of delivery of the goods and will contain specific details. The commercial guarantee will be binding for the guarantor irrespective of non-compliance with the statement. “Durable medium” and “free of charge” are defined for this section.
A commercial guarantee will not limit the rights of the hirer at common law or under statute or add extra obligations to those under the hire-purchase agreement or purport to give the guarantor the sole decision on conformity of the goods with the agreement. Otherwise, a commercial guarantee will not be binding on the hirer. A guarantor who gives a commercial guarantee which contravenes this provision commits an offence.
Consumer Hire and Consumer Hire Purchase
Where goods are let under a consumer-hire agreement the above provisions apply as if it were a hire-purchase agreement. In a consumer-hire agreement, where the hirer is entitled to be reimbursed for the price, it applies only to any price paid by the hirer for a period of hire where he no longer possesses the goods due to the termination of the agreement.
In a consumer-hire agreement the owner will ensure that the goods will be free from any charge or encumbrance not disclosed before the agreement and the hirer will be entitled to enjoy the goods without any charge or encumbrance except those disclosed.