CONSUMER CREDIT ACT

Arrangement of Sections

1. Short title.

2. Applies of this Act.

FORMATION AND CONTENTS OF HIRE-PURCHASE AGREEMENTS

3. Requirements relating to hire-purchase agreements.

PROTECTION OF HIRERS

4. Warranties and conditions.

5. Limitation on hire-purchase charges.

6. Passing of property.

RIGHTS AND OBLIGATIONS OF THE HIRER

7. Right of hirer to purchase at any time with rebate.

8. Right of hirer to terminate agreement at any time.

9. Right of hirer to appropriate payments in respect of two or more, agreements.

10. Assignment and transmission of hirer's right or interest under hire-purchase agreement.

11. Assignment and transmission of owner's right or interest under hire-purchase agreement.

12. Obligation of hirer to comply with agreement.

13. Obligation of hirer in respect of care taken of goods.

14. Obligation of hirer in respect of use of goods.

15. Obligation of hirer to give information as to whereabouts of goods.

16. Rights of hirer in case of repossession of goods by owner.

17. Fraudulent sale or disposal of goods by hirer.

RIGHTS AND OBLIGATIONS OF THE OWNER

18. Rights of owner to terminate hire-purchase agreement for defaults in payment of hire or unauthorised act or breach of express condition.

19. Rights of owner on terminal deposit.

20. Restriction on owner a right to recover possession of goods otherwise than through court.

21. Powers of court in actions to recover goods.

22. Application of sections 20 and 21 to successive hire-purchase agreements between same parties.

23. Effect of suspension of order for delivery of goods.

24. Obligation of owner to supply copies and information.

25. Discharge of price otherwise than by payment of money.

26. Insolvency of hirer.

27. Evidence of adverse detention in suit or application to recover possession of goods.

28. Service of notices.

29. Avoidance of certain provisions in hire- purchase agreements.

29A. Offences by bodies of persons.

30. Regulation.

31. Interpretation.

SCHEDULE

29 of 1982,

7 of 1990.

AN ACT to define and regulate the duties of parties to hire-purchase agreements and to provide for matters connected therewith or incidental thereto.

[Date of Commencement: 18th August, 1982]

1. Short title.

This Act may be cited as the Consumer Credit Act.

2. Applies of this Act.

The provisions of this Act shall apply in relation to all hire-purchase agreements entered into in Sri Lanka after the coming into operation of this Act.

FORMATION AND CONTENTS OF HIRE-PURCHASE AGREEMENTS

3. Requirements relating to hire-purchase agreements.

(1) 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 agreement, a price at which the goods may be purchased by him for cash (in this section referred to as the "cash price”):

Provided that the requirements imposed by this subsection shall be deemed to have been sufficiently complied with—

(a) if the hirer has inspected the goods or like goods and at the time of his inspection, tickets or labels were attached to, or displayed with, the goods clearly stating the cash price, either of the goods as a whole or of all the different articles or sets of articles comprised in the goods; or

(b) if the hirer has selected the goods by reference to a catalogue, price list or advertisement which clearly stated the cash price, either of the goods as a whole or of all the different articles or sets of articles comprised in the goods.

(2) 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) has been complied with, and—

(a) the agreement is made and signed by the hirer and by, or on behalf of, all other parties to the agreement;

(b) the agreement contains—

(i) a statement of the hire-purchase price and of the cash price of the goods to which the agreement relates, and of the amount of each of the installments by which the hire-purchase price is to be paid, and of the date, or the mode of determining the date, upon which each installment is payable;

(ii) a statement of the deposit paid; and

(iii) a list of the goods to which the agreement relates sufficient to identify them;

(c) the agreement contains a notice, which is at least as prominent as the rest of the contents of the agreement, in the terms set out in the Schedule to this Act; and

(d) a copy of the agreement is delivered or sent to the hirer within fourteen days of the making of the agreement.

(3) Where any part of the hire-purchase price is, or is to be, paid-otherwise than in cash or by cheque the hire- purchase agreement shall contain a description of that part of the hire-purchase price.

(4) A hire-purchase agreement may be enforced not withstanding that there has been a failure to comply with the requirements specified in subsection (1) or in paragraph (b) or paragraph (c) or paragraph (d) of subsection (2) or in subsection (3) if the court in which an action is instituted to enforce such agreement is satisfied that such failure has not prejudiced the hirer and that it would be just and equitable in all the circumstances of the case to enforce such agreement.

PROTECTION OF HIRERS

4. Warranties and conditions.

(1) In every hire-purchase agreement there shall be—

(a) an implied warranty that, the hirer shall have and enjoy quiet possession of the goods;

(b) an implied condition on the part of the owner that he will have a right to sell the goods at the time when the property is to pass;

(c) an implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party at the time when the property is to pass.

(2) In every hire-purchase agreement there shall be an implied condition that the goods will be of merchantable quality but such a condition shall not be implied—

(a) as regards defects of which the owner could not reasonably have been aware at the time the agreement was made;

(b) where the hirer has examined the goods or a sample thereof, as regards defects which the examination ought to have revealed;

(c) as regards defects specified in the agreement whether referred to therein as defects or by any other description to the like effect;

(d) if the goods are second-hand goods and the agreement contains a statement to that effect.

(3) Where the hirer whether expressly in writing or by implication has made known to the owner the particular purpose for which the goods are required, there shall be an implied condition that the goods will be reasonably fit for such purpose.

(4) Where the goods are let or agreed to be sold under a hire-purchase agreement by reference to a sample there shall be—

(a) an implied condition on the part of the owner that the bulk will correspond with the sample in quality; and

(b) an implied condition on the part of the owner that the hirer will have a reasonable opportunity of comparing the bulk with the sample.

(5) Where the goods are let or agreed to be sold under a hire-purchase agreement by description there shall be an implied condition that the goods will correspond with the description; and if the goods are let or agreed to be sold under the agreement by reference to a sample as well as by description it shall not be sufficient that the bulk of the goods corresponds with the sample if the goods do not correspond with the description.

(6) An owner shall not be entitled to rely on any provision in a hire-purchase agreement excluding or modifying the condition set out in subsection (3) unless he proves that before the agreement was made the provision was brought to the notice of the hirer and its effect made clear to him.

5. Limitation on hire-purchase charges.

(1) In this section—

(a) "cash price installment”, in relation to a hire-purchase installment, means an amount which bears to the net cash price the same proportion as the amount of the hire-purchase installment bears to the total amount of hire-purchase price less any deposit as defined in
paragraph (b);

(b) "deposit” means any sum payable by the hirer under the hire-purchase agreement by way of deposit or other initial payment 6r credited or to be credited to him under the agreement on account of any such deposit or payment, whether that sum is to be or has been discharged by payment of money or by transfer or delivery of goods or by any other means;

(c) "net cash price”, in relation to goods comprised in a hire-purchase agreement, means the cash price of such goods as is required to be specified in the hire-purchase agreement under sub-paragraph (i) of paragraph (b) of subsection (2) of section 3 less any deposit as defined in paragraph (b) of this -subsection;

(d) "net hire-purchase charges”, in relation to a hire- purchase agreement for any goods, means the difference between the net hire-purchase price and the net cash price of such goods;

(e) "net hire-purchase price”, in relation to goods comprised in a hire-purchase agreement, means the total amount of hire purchase price of such goods as is required to be specified in the hire-purchase agreement under sub-paragraph (i) of paragraph (b) of subsection (2) of section 3 less—

(i) any amount which is payable to cover the expenses of delivering the goods or any of them to or to the order of the hirer and which is specified in the agreement as included in the hire-purchase price;

(ii) any amount which is payable to cover registration or other fees under any law in respect of the goods or the agreement or both and which is specified in the agreement as included in the hire-purchase price;

(iii) any amount which is payable for insurance in respect of the goods and which is specified in the agreement as included' in the hire-purchase price;

(iv) the amount, if any, payable as installation charges and which is specified in the agreement and included in the hire-purchase price;

(v) any deposit as defined in paragraph (b); and

(vi) any amount payable as business turnover tax or such other tax as is specified in the hire-purchase agreement, being a tax on the hire or sale of the goods;

(f) "statutory charges” in relation to a hire purchase agreement, means the amount calculated in accordance with the provisions of subsection (2).

(2) The statutory charge shall be an amount calculated at such rate percentage per annum as may be prescribed” by the Minister in consultation With the Minister in charge of the subject of Finance, having regard to the rates at which the Central Bank lends monies to commercial banks and, to the interests of the national economy, in accordance with following formula:

SCNC X R X T/100

Where SC represents the statutory charges; NC represents the Net cash price; Represents the rate; and Represents the time expressed in years and fractions of years that elapses between the date of agreement and the date on which the last hire-purchase installment is payable under the agreement. In this subsection, "Central Bank” means the Central Bank of Ceylon established under the Monetary Law Act.

(3) Where the net hire-purchase charges in relation to a hire-purchase agreement exceed the statutory charges in relation to such agreement calculated in accordance with the provisions of subsection (2), the hirer shall be entitled to have his liability reduced by the amount by which the net hire-purchase charges exceed the statutory charges aforesaid.

(4) Where the hirer is entitled to have his liability reduced by the amount referred to in subsection (3), his liability shall be reduced by that amount and that amount may be set off by the hirer against the amount that would otherwise be due under the agreement and, to the extent to which it is not so set off, may be recovered by the hirer as a debt due to him by the owner.

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