OLABISI ONABANJO UNIVERSITY, AGO-IWOYE

FACULTY OF LAW
DEPARTMENT OF BUSINESS & INDUSTRIAL LAW
COMMERCIAL LAW BIL 302 TUTORIALS ON AGENCY& HIRE PURCHASE

1. Write comprehensive notes on any two of the following:

i) Agency of necessity.
ii) Agent’s duty of care.
iii) Agent’s duty to account.
iv) Agent’s duty of obedience.

2. The law may presume usual authority from certain relationships between two persons enabling one
to bind the other where ordinarily nothing short of actual authority will do. Discuss with aid of
decided cases.

3. In an agency relationship, the consideration is the remuneration, which flows from the principal to
the agent in the executory form and of legal value. State the instances when an agent is entitled to
remuneration or reward irrespective of an implied term and even if he has not completed the contract
beneficial to his principal. What are the situations when a principal would not be under liability to
pay remuneration to his agent even if there is an agreement to that effect and even if the agent has
obtained what the principal wanted?

4. An agent is a person employed to do an act for another or to represent another in dealings with the
third parties. Explain the important rules and essential characteristics of agency in a commercial
transaction.

5. Chief Owonikoko a business tycoon with interest in landed properties and shares in public quoted
companies decided to divest himself of some of the property. He contacted Abulesowo (an Estate
Agent) and Akapo (a stockbroker). Abulesowo is to sell Chief Owonikoko’s twin duplex at Victoria
Island for N30 Million at a commission of N1 Million. Akapo is to sell Chief Owonikoko’s ordinary
shares at Agbonmagbe Bank at the rate of N10 per share. Chief Owonikoko decided to withdraw his
instructions to Abulesowo after several unsuccessful attempts and expenses by Abulesowo. A day
after the withdrawal of instructions, Abulesowo brought a bank draft in the sum of N35 Million from
Madam Geleodun in favour of Chief Owonikoko which Chief Owonikoko rejected. Akapo on the
other hand successfully sold the shares at the rate of N11 per share but forwarded a cheque to cover
N10 per share to Chief Owonikoko while also making a claim for reimbursement of the money spent
by using the central clearing system (common in stock exchange business) for the disposal of the
shares. Advise Abulesowo and Akapo as to their rights and liabilities.

6. The doctrine of undisclosed principal constitutes an exception to the rule of privity of contract,
discuss.

7. Agency relationship may be created in several ways, enumerate them with the aid of decided case.

8. The agency relationship gives rise to certain obligations on the part of the agent. Enumerate these
obligations with the aid of decided cases.

9. Write short notes on the following:

i) Authority coupled with interest.
ii) Agent’s right of lien.

10. “An act done without any precedent authority becomes the act of the principal when adopted by
him.” Discuss with aid of decided cases.

11. Oriolowo authorised Akapo to negotiate for the sale of certain landed properties in Abeokuta and
promised to pay 10% of the purchase price as commission on completion of the sale. Akapo placed
an advertisement in the Homes Magazine consequent upon which he obtained an offer of N5 million
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 from Paul and the offer was accepted by Oriolowo. However before the payment of the purchase
price, Oriolowo decided not to proceed further with the transaction and in fact wrote a letter to
Akapo informing him that he was no longer interested in selling the properties.
Advise Akapo. Would your advice be different if the properties were compulsorily acquired by the
Ogun State Government with a payment of N7 million as compensation for the acquisition?

12. a) Examine the conditions that must be satisfied before agency by estoppel can arise.

b) Sola has been Joseph’s caretaker for many years and has been collecting rent on Joseph’s house at
Fibigbade Street, Ago-Iwoye on Joseph’s behalf from the tenants. Joseph terminated the contract
between him and Sola. Bankole and Richard being unaware of this development paid a year’s rent
each to Sola who purportedly collected same on Joseph’s behalf. Examine the rights of the parties.

13. a) To what extent is an agent who disobeys his principal, protected in Law.

b) “The Law leans against general lien in agency relationship” Discuss

14. Deola engages Foluso to carry out the sale of his property at Oru-Ijebu for the sum N2.3 Million.
Foluso is to receive N230,000 as commission. Foluso secured a buyer (Alex) who paid N2.3 Million.
Alex further gave Foluso the sum of N200,00 as gift, but this was unknown to Deola. Foluso wants
to sue for his commission, but Deola is refusing to pay because she (Deola) considers the N200,000
received by Foluso as a “greek” gift. Advise Foluso

15. Discuss the legal implications of the following

a) Johnson a 16 year old undergraduate of OOU appoints Sola an estate agent to purchase a house for
him in Victoria Island.
b) In June 2019Deolu applied for shares in OOU Microfinance Bank for Gbenga who was then 17
years old without prior authority. Gbenga turned 18 on 26th October 2019 and wants to ratify the
application.
c) Mrs.Ninalowo went to Shoprite at Ibadan and bought the following items on her husband’s credit
i) A Rolex wristwatch valued at N200,000.00
ii) Two pairs of ladies shoes for N50,000.00 each
iii) A Givenchy ladies bag for N70,000.00

16. “It is unjust to force a relationship of agency on parties who do not wish for such a relationship to
arise. Accordingly, in order for a relationship of agency to arise, the consent of both parties should
always be present.” Discuss this assertion with the aid of decided cases.

17. ‘The legal rules relating to a third party’s liability to an undisclosed principal lacks a sufficiently
clear justification and, as a result, the law in this area is confused and lacks fairness.’ Discuss the
validity of this statement.

18. Jerry who owns a business centre at the Prof Saburi Adesanya Model Market, OOU informed his
friend Toye that he wished to sell his photocopier as he was having problems with the machine. He
asked Toye to help him sell the photocopier and requested Toye to find the best possible offer. Jerry
also asked Adeolu to help him buy a new computer and printer. Toye gave Jerry the sum of
N25,000.00 saying that that was the highest he could get for it. Meanwhile, Toye actually sold the
photocopier to himself. Toye later sold the photocopier to Bimpe for the sum N35,000.00. Adeolu
went to Computer village and bought a computer and printer. It was later discovered that the
computer and printer were refurbished which could have been detected on proper inspection. Discuss
the legal issues involved.

19. a) Port, while in Starboard’s employment, had collected stationery supplies from Compass once a
week. He is sacked by Starboard, but the following week collects the supplies from Compass who
has not been informed that Port had been sacked. Port makes off with the stationery. Advise
Starboard.

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 b) What are the necessary conditions that must be present before a person can claim to be an agent of
necessity?

18. Chief Olowolayemo gave his wife Orekelewa authority to deal with Ajenipa, a general merchant,
and had held her out as his agent and as entitled to pledge his credit. He also instructed Bankole an
estate agent to get tenants for his newly completed office complex at Ajah. Chief Olowolayemo
suffered a mental breakdown and became insane shortly afterwards upon hearing that his goods
that perished at sea. While his insanity lasted, Orekelewa ordered goods from Ajenipa, who
accordingly supplied them without knowledge of Chief Olowolayemo’s insanity. Meanwhile
Bankole without knowledge of the insanity entered into a contract for the lease of the office
complex with Lekki Gardens Limited. Chief Olowolayemo has recovered and refused to pay for
the goods supplied to Orekelewa by Ajenifuja. He has also asked Bankole return the cheque of
Lekki Gardens Limited.

19. Abiola who owns a beauty shop at Lekki, Lagos state was planning to relocate to Canada. She
informed Joseph of her intention to sell some of the equipment in her beauty shop and requested
for his assistance in finding buyers for the items. Abiola instructed Joseph not to conclude any sale
without informing her and that all payments must be paid into Abiola’s bank account. Joseph
contacted Audu a second hand goods dealer. Audu visited the beauty shop and indicated his
interest in the Plasma TV in the shop. Audu negotiated with Joseph and agreed to buy the Plasma
TV for the sum of N50,000.00. Audu paid the purchase price directly to Abiola’s bank account on
Joseph’s direction. Two months later, Joseph sold the 2 horse power split air conditioner at the
beauty shop to Audu for the sum of N80,000.00 without informing Abiola and received cash for it
from Audu. Upon learning about the sale Abiola asked Audu to return the air conditioner with
immediate effect as she has no intention of selling the air conditioner. Meanwhile Audu has
refurbished the air conditioner and sold it to Tolulope.
Discuss the rights and liabilities of all the parties.

20. Johnson engaged his friend Thomas to help him purchase two tickets for the premiere of the newly
released “Avengers: End Game” at the OOPL Cinemas. The previous week he had been in a fight
with one of the patrons at the cinema as a result of which the management banned both of them
from coming to the cinema. When Johnson presented the ticket at the gate he was denied entry into
the cinema. Meanwhile his girlfriend Doris for whom he purchased the second ticket was allowed
entry. He had intended to propose to Doris thereafter and his plans had been disrupted. Johnson
intends to sue the management of OOPL Cinemas. Advice Johnson.

21. (a) Harry hired Carol to be his financial broker. He asked Carol to invest N200,000 on UTC
shares. Carol was to get a commission in accordance with stock broking practice. Carol believing
that GTB share would yield better income invested the money on GTB shares. Harry later found
out that Carol invested his money in a different stock. Advise Harry
b) Discuss the scope of an agent’s fiduciary duties to the principal

22. Gavin works for JB Farms Limited as a procurement manager. The company requested him to
source for and purchase a second-hand truck for deliveries of palm oil to its customers. In a meeting
with the company’s director, Gavin was instructed that the second-hand van should be in good
condition. He was hesitant about this task that was assigned to him as he knew very little about
vehicles. He bicycled to work daily and the only experience he had with vehicles was watching car
commercials. However, Gavin did not share his concerns with the company’s director as he wanted
the company to have a good impression of his capabilities.After a few weeks of visiting car dealers,
Gavin managed to find a second-hand truck. He noticed that the bonnet and bumper were dented.
However, he was in a rush and hence, did not make any enquiries about the dents. He simply passed
his name card (which states his name, job title and office contact details as well as the company’s
name) to the car dealer. After completing the details in the contract for the purchase of the van, the
car dealer signed the contract and then passed it to Gavin for signature. Gavin signed it, writing
above his signature “for and on behalf of JB Farms Limited”. The van was then delivered to the
company.A week later, the van failed to start. A mechanic confirmed that the van suffered from a

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 number of serious mechanical defects because it was previously involved in an accident and was
repaired poorly. JB Farms is now claiming that the contract (which Gavin signed on its behalf) is
invalid because he did not follow its instructions to purchase a van that was in “good condition”.
Analyse the issues involved and advise the parties

HIRE PURCHASE

1. Aneke informed his friend, Cletus, that he was in need of some cars for transport business from
Aba to Lagos. Cletus, the Sales Manager of Dele Motors, took him to Dele Motor’s stand where
Aneke chose five Peugeot 505 salon cars. Aneke took the five cars on hire purchase. At delivery,
Aneke arranged for the towing of three of the cars to his Mechanic’s workshop for repairs. The
three cars are still in disrepair after much spending to get them on the road. Dele motors is asking
for the accrued instalments but Aneke has refused to pay. Advise Dele Motors.

2. (a) Mention the three distinguishing clauses in a hire purchase agreement.

(b) Discuss the various ways of termination of hire purchase agreement.

3. Amisha bought a car under a hire purchase agreement from Senang Finance. Amisha failed to pay
her monthly installments from April 2017 to July 2017. Senang Finance wants to repossess the car.
Advice Amisha on the procedure of repossession under the Hire Purchase Act 1965.

4. a) Discuss briefly the nature of a hire purchase agreement.

b) Wole receives possession of a trailer lorry from Jide& Sons under anAgreement headed:
“Hire Purchase Agreement”. He is to pay a total N500,000.00 spread over a 12 months
period. It is provided that “upon Payment of the final instalment the vehicle shall become
the property of the hirer”. There is no provision which allows Wole to determine the
contract. Wole sells the vehicle to Sola, a transporter and subsequently falls into arrears for
two months. On learning of the sale to Sola, Jide& Sons terminates the contract and sues to
recover the vehicle from Sola.Advise the parties.

5. Ken hired a crane from Penthouse. The crane must normally be in use at least thrice a week. Ken’s
work suffered a setback and the crane became idle for six months. But ken did not default in
paying the monthly instalments. When it became obvious that Ken’s business could no longer
recover, Ken started to default in payment of instalments. Having paid more that three-quarter of
the instalments, Ken decided to sell the crane and pay the final instalments. He sold the crane to
Lucky. Before Lucky could take delivery, Penthouse forcefully retook possession of the crane only
to discover that the crane has expired not being in use for the past six months. Advise the parties.

6. (a) Richie is considering buying a Cherokee Jeep from R.S Motors on Equipmentleasing basis.
Richie is bothered why hire purchase, which He considers a better option, is no longer
fashionable. Advise Richie on fate of hire purchase agreement, in the context of other
forms of credit sales arrangements, especially equipment leasing.

(b) T.J. gives his car which he acquires on hire purchase to Dare, a driver, with express
instruction that Dare should never allow any other person to drive it. Dare gives the car to
Yomi in whose custody the car is stolen.

Examine the legal issues germane to hire purchase in the facts of this case
7. Lolly approached Tommy Motors Limited for the purchase of a Toyota Jeep worth N2.4 Million to
be financed by OOU Limited who bought the car from Tommy Motors Limited and gave on hire
purchase terms to Lolly with an initial payment of N200,000.00, the balance to be paid in 11
monthly instalments. The agreement signed between OOU Limited and Lolly contained the
following clauses that Lolly must insure the vehicle with Tobay Insurers and in the event of Lolly
exercising the right to return the goods, she is to pay inclusive of all sums previously paid a sum
that would amount to the total purchase price. After three months, Lolly found that she could not

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 cope with the repayment and decided to return vehicle. OOU Limited is claiming the sum of
N1.8Million being the balance payable under the agreement. Discuss the rights of the parties.

b) Would your answer be different if Lolly was in arrears for three months and still retained
possession of the jeep?

8. a) The Hire Purchase Act is unduly protective of the Hirer. Discuss.

b) Adeola approached AlhajiIsiaka Motors for the purchase of a second hand luxurious bus for his
transport business to be financed by OOU Limited on hire purchase terms. AlhajiIsiaka told
him that the vehicle was in good order and condition and in fact he could stake his last kobo on
it. After taking delivery, Adeola discovered that the engine of the bus was defective, the shaft
was in bad shape and the gear box needed to be replaced. He wants to repudiate the contract
and also sue AlhajiIsiaka for breach of warranty of fitness for purpose. Advise him.

9. (a) Discuss the distinctive features of Hire Purchase as a form of contract.

(b) Distinguish between Hire Purchase and the following Transactions.
i) Contract of Sale
ii) Credit Sale Agreement
iii) Conditional Sale
iv) Loan on Security of Goods
v) Finance Leasing

10. With the aid of decided cases, discuss the tripartite relationship that exists between the Dealer, Hirer
and a finance company.

11. On February 20th, 2016, Mr. Wilberforce, a dealer in used cars entered into a contract for the
hire purchase of 10 new Mercedes 406 to Falcon Cabs, a transport service company for the
sum of N4,800,000.00 payable in 24 monthly instalments of N200,000 each. At the time of the
contract, Mr. Wilberforce portrayed himself as a car dealer without specifying that his area of
expertise was the sale of used cars. Upon delivery, four of the cars appeared to be new, while
the remaining 6 cars were used. Falcon Cabs took delivery and discovered further that two of
cars supplied could not move on their own and Falcon Cabs had to tow the two cars to their
mechanic’s workshop. After, the payment of the first instalment, Falcon Cabs has refused to
pay further instalments on the six used cars. A clause in the agreement allows Mr. Wilberforce
to enter upon the premises of Falcon cabs for the purpose of taking possession of the hired
goods upon default by the hirer. Mr. Wilberforce intends to enforce this clause. Advice the
parties with the aid of judicial and statutory authorities.
12. a) Imagine that you have a client who earns N40,000 monthly and seeks to buy a Nissan Almera
2004 Model car which costs N800,000 and he is in an urgent need of a means of transportation,
what will be your advice to such client and why.

b)Highlight the liabilities of the hirer at the termination of the hire purchase agreement.

13. a) The decision of the court in the case of Tabansi (Agencies) Ltd v. Incar Nigeria Ltd
(CCHJ/7/74) shows that the introduction of the new section under the Amendment Act has not
done away with the right of action and repossession but that the owner has to fulfill certain
conditions before he can invoke section 9(5) of the act. Discuss.

b) Mention the contents of the note or memorandum of a hire purchase agreement as required under
section 2(a) of the HPA. 1965.

14. Ogbeni, a primary school dropout took a motorcycle (locally called Okada) on hire purchase from
Mr. Olowolayemo a business mogul on the 31st of August 2015. The market price of the
motorcycle is N250,000 but the parties agreed orally that Ogbeni will pay N300,000 in 30 weekly
instalments of N10,000 each after which he can exercise his option to purchase at the payment of
the thirtieth instalment. Ogbeni paid his instalments punctually but defaulted upon the 26 th

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 instalment on the 22nd of February. Four days after the default, Mr. Olowolayemo sent his boys to
take possession of the motorcycle and Mr. Olowolayemo sold the motorcycle to Omoifa at
N280,000. Seriously aggrieved by the action of Mr. Olowolayemo, Ogbeni has planned to arrange
some boys to go to and beat Mr. Olowolayemo up and take the motorcycle back. Advise the
parties.

15. a) Mr. Olu took a Mazda 626 on hire purchase from Mr. Owoade at the total purchase price of
N960,000. The agreement was for Mr. Olu to pay a monthly instalment of N80,000 and he can
exercise his option to purchase after making not less than 10 instalments after which he is to pay
the remaining two instalments at once. The car was handed over to Mr. Olu in good condition.
After making use of the car for five months, Mr. Olu got a better deal with his friend who wanted
to sell his car of the same model for N600,000. Mr. Olu returned the car to the premises of Mr.
Owoade without telling him that he was no longer interested in the contract of hire purchase.
However, Mr. Owoade believes that Mr. Olu has failed to complete his contract to purchase the car
on hire purchase. Advice Mr. Owoade.

b) Briefly explain the minimum payment clause under the Hire Purchase Act. 1990.

16. a) Mr. Albert took a Toyota Corolla car, 2004 model on hire purchase from Mr. Adeola at the hire
purchase price of N1,000,000.00. Both parties agreed that Mr. Albert will pay a monthly
instalment of N100,000.00 with the right to exercise an option to purchase after paying eight(8)
instalments. Four months after, Mr. Albert got a better deal from his friend to sell a Toyota Corolla
car, 2006 model for the sum of N900,000.00. Mr. Albert quickly returned the Toyota Corolla car to
Mr, Adeola without informing him that he was no longer interested in the contract of hire
purchase. Mr. Adeola believes that the ACTION of Mr. Albert was a breach of the Hire purchase
agreement. Advise Mr.Adeola
(b) Outline the essential features of hire purchase agreement

17. a) With the aid of judicial decisions, discuss the implied terms under the Hire Purchase Act of 1965

b) Raphael took a vehicle from ABC Nig Ltd under a hire-purchase agreement. It was agreed that the
hire purchase price of N1,000,000.00 was to be paid in twelve instalments from January to
December each instalment to be payable on the last day of each month. Raphael paid the instalments
diligently from January to October. However, Raphael defaulted in paying the instalment in the
month of November. On the 10th of December, with the aid of some “Area Boys”, ABC Nig Ltd
removed the vehicle from a garage where the vehicle was undergoing repairs, at which time a total
of 10 instalments had been paid by Raphael. Raphael intends to bring an action against ABC Nig
Ltd. Advise Raphael.

18. (a) Outline the contents of the note or memorandum of a hire purchase agreement as required
under section 2(a) of the Hire Purchase Act. Cap H4 LFN 2004.
(b)Write the factors that distinguish the following:
(i) Hire Purchase and Hire
(ii) Hire Purchase and credit sale transactions
(iii) Hire Purchase contract of sale

19. (a) The Court of Appeal in Kolawole v L.A. Olorioko Nig Ltd (2016) 13 NWLR 1529 @ 274
stated that by virtue of section 9(1) of the Hire purchase Act, the owner is forbidden from
recovering possession of goods let under Hire purchase agreement after the relevant proportion
of the Hire purchase price has been paid otherwise than by action and except as provided by
section 9(5) of the Act. To what extent do you agree with this statement?

(b) Briefly explain the minimum payment clause under the Hire Purchase Act Cap H4 LFN 2004.

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20. With the aid of statutory provisions and judicial authorities discuss the obligations imposed on
the parties to a hire purchase under the Hire Purchase Act.