NAME:

NAME: ABDUR
ABDUR RAHMAN
RAHMAN BIN
BIN
MOHAMMED
MOHAMMED (21BB04011)
(21BB04011)

SUBJECT:
SUBJECT: COMMERCIAL
COMMERCIAL LAW
LAW
(SBSU
(SBSU 2093)
2093)

TOPIC:
TOPIC: HIRE
HIRE PURCHASE
PURCHASE

PRESENTING
PRESENTING FOR:
FOR: DR.NORAZLA
DR.NORAZLA
BINTI
BINTI ABDUL
ABDUL WAHAB
WAHAB
 REPOSSESSION
Definition of repossession.
Repossession is a legal process through which a creditor
reclaims property or goods from a borrower who has failed to
meet their financial obligations, typically by failing to make
required payments according to the terms of a loan or
agreement. This can involve seizing assets such as vehicles,
real estate, or other valuable items pledged as collateral.

Repossession is when something you bought on credit, like a

car or a house, is taken back by the lender because you
haven't kept up with your payments. In simple words, it
means losing something you bought because you didn't pay
for it as agreed.

02
 REPOSSESSION
PROCESS

1. Default on the loan (s 17)

The repossession procedure begins when the

hirer misses loan installments. The Hire Purchase
Act's Section 17 deals with each party's
obligations and responsibilities with relation to
payments.
REPOSSESSION
PROCESS

2.Notice to default ( s 18(1) )

In accordance with Section 18(1), the hirer shall
receive a notice of default from the owner
subsequent to the default. This notification alerts
the hirer to the default and gives them a chance
to make things right.
REPOSSESSION
PROCESS

3.Repossession Order ( S 18(2) )

According to Section 18(2), the owner may ask the
court for a compensation order if the hirer
ignores to fix the default. Legal authorization for
repossession is granted by this order.
REPOSSESSION
PROCESS

4.Repossession ( S 18(3) )
The owner reclaims the goods from the hirer's
ownership using the repossession order,
according to the processes specified in Section
18(3) and accompanied by enforcement
authorities.
REPOSSESSION
PROCESS

5.Notification of Repossession ( S 16 (4) )

After repossession, the owner serves a document
acknowledging receipt of the goods to the hirer,
as mandated by Section 16(4). This document
includes details of the repossession.
REPOSSESSION
PROCESS

6.Disposal of Repossessed Goods ( S 19 )

Section 19 of the Hire Purchase Act outlines what
the owner should do with repossessed goods. It
states that the owner must sell these goods fairly
to recover the outstanding debt. The money
earned from selling the goods should be used to
settle what the hirer owes.
 REPOSSESSION REAL CASE

PANG BROTHERS MOTORS SDN BHD V LEE AIK

SENG
Pang Brothers Motors Sdn Bhd v Lee Aik Seng (1978) 1 MLJ 179 • A car was
taken by the respondent on hire-purchase from the appellant. The
respondent failed to pay the instalments due and the appellant issued a
notice under section 16(1). There was a dispute on whether the appellant
had served a notice to repossess on the respondent. •

The court held that section 16 clearly specifies that the period before
which the seizure can take place shall not be less than twenty-one days
after the service of the notice. However, the date specified in the notice
was two days short of the statutory minimum. The notice was therefore
bad in law even if served. Its effect was therefore null and void.
GUARANTOR

Who is guarantor?

A guarantor is someone who promises to

pay back a loan if the person borrowing the
money can't pay it back. It's like having a
backup plan for the lender in case the
borrower has trouble repaying the loan. So,
the guarantor steps in to cover the debt if
needed.
GUARANTOR

Under (section 20 A) owner may repuired

acceptable guarantor. which is guarantee
the performance of hirer during owes.

For example if hirer failed to pay the loan to

ower. the guarantor should take
responsibilty to pay hirer owes.
 PROVISIONS OF GUARANTOR
1. Section 21(1):
Guarantors can't escape their responsibility just because the borrower doesn't pay.
They're still on the hook.
2. Section 21(2):
Even if the owner takes back the stuff bought on hire purchase, the guarantor is still
responsible for paying if the borrower doesn't. However, if there's a new agreement
between the owner and the borrower, the guarantor might not be responsible anymore.
3. Section 21(3):
Guarantors only have to pay what the borrower should. They're not responsible for any
extra stuff unless they agree to it separately.
4. Section 21(4):
If the owner takes back the stuff and the guarantor pays anything, the guarantor can get
that money back like they were the borrower. But they can't claim more than they
actually paid.
GUARANTOR NOT TO BE BOUND IN CERTAIN CASES

under section 22
1. S 22 (a): If the guarantor agrees to pay more money than the original loan amount:
Any agreement where the guarantor commits to paying an amount larger than the
original loan balance becomes invalid.
2. S 22 (b): If the guarantor agrees to take on obligations for goods not included in the hire-
purchase agreement:
Any agreement where the guarantor agrees to fulfill responsibilities related to goods not
part of the original agreement is also considered invalid.
 RIGHTS OF GUARANTOR AGAINST OWNER

Under section 23
1. Guarantor's Right to Discharge:
The guarantor can clear their obligation by paying the amount owed by the borrower to
the lender at any time.
2. Rights Upon Payment:
After paying, the guarantor has two options:
(a) They can either sue the borrower in the lender's name for any breaches of the hire-
purchase agreement, but they need to cover the lender's legal costs. Alternatively,
they can sue the borrower in their own name if they legally take over the debt.
(b) The guarantor can demand that any collateral the lender holds from the borrower
to secure the debt be transferred to them.
3. Right to Setoff or Counter-claim:
If the lender makes a claim against the guarantor under the guarantee, the guarantor
can use any valid claims or counter-claims the borrower may have against the lender to
defend themselves.
 RIGHTS OF GUARANTOR AGAINST HIRER.

Under section 24
S 24 (1) Guarantor's Right to Indemnification:
The guarantor has the right to be reimbursed by the borrower for any claims made by
the lender under the guarantee. In simpler terms, if the lender demands payment from
the guarantor, the borrower must compensate the guarantor for this amount.

S 24 (2) Guarantor's Right to Compel Payment:

The guarantor can force the borrower to make timely payments on the hire-purchase
agreement. If the borrower fails to pay the installments as required, the guarantor can
seek a court order from a Magistrate to compel the borrower to fulfill their payment
obligations.
 GUARANTOR NOT TO SEIZE

Under section 25
Guarantors do not have the right to take possession of
property, like the owner does under the hire-purchase
agreement. However, if the agreement specifically allows
it, the guarantor can use this right
 GUARANTOR NOT TO SEIZE

Under section 25
Guarantors do not have the right to take possession of
property, like the owner does under the hire-purchase
agreement. However, if the agreement specifically allows
it, the guarantor can use this right
 UNION BANK V. GRADSKY
In the case of Union Bank v. Gradsky, Bess Gradsky borrowed money from
Union Bank, with Max Gradsky acting as her contractor. Max also signed a
guarantee promising to pay if Bess defaulted on the loan. When Bess couldn't
repay the loan and the bank sold the property used as collateral through a
nonjudicial sale, they sued Max to recover the remaining debt.

However, the court ruled in favor of Max Gradsky. They held that the bank
couldn't pursue Max for the debt because they chose to sell the property
instead of going to court first. The guarantee agreement also stated that Max
couldn't force the bank to take any other action, further shielding him from
liability. This decision established that a guarantor of a loan secured by real
estate is shielded from liability for the remaining debt after a nonjudicial sale of
the property.
THANK YOU