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Q1. What is Hire purchase system? What are its, features?, , Ans:, , Hire Purchase System: Hire Purchase System is a, system of retail business under which the seller, agrees to sell the article on the condition that the, buyer shall pay the purchase price by a fixed number, of installments. Here the article is not legally sold out, to the buyer and hence the ownership in the goods, does not pass on to the buyer. The purchaser, becomes the owner only on payment of the last, installment., , Features of Hire Purchase System, , 1. Agreement: There is an agreement between the, seller and the purchaser., , 2. Possession: The possession of goods immediately, passes from the seller to the buyer on signing the, agreement., , 3. Installments: The buyer will make payment in, installments over a period of time., , 4. Ownership: The ownership of the goods will remain, with the seller and passes to the buyer on the, payment of last installment., , 5. Constituents of Hire Purchase: Each installment is, treated as hire charge till the last installment is paid.
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6. Option to returning goods: The buyer has an option, to return the goods to the seller has a right to, repossess the goods sold on hire purchase and forfeit, the amount already received either as down payment, or in installments., , 7. Repossession: If there is any default in payment of, any installment, the seller has a right to repossess the, goods sold on hire purchase and forfeit the amount, already received either as down payment or in, installments., , Q2. What is Installment purchase system? What, are its features?, , Ans:, , Installment Purchase System: In_ Installment, Purchase System, the possession as well as, ownership passes from the seller to the buyer, immediately on entering the agreement but the buyer, agrees to pay the total price in installments. If the, buyer makes any default in the payment of any, installment, the seller has no right to repossess the, goods. The seller can file a suit in the court of law for, recovery of the price., , Features of Installment Purchase System, , 1. There is an agreement between the seller and the, buyer., , 2. The buyer is required to pay the total price in *
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Features of Installment Purchase System, , 1. There is an agreement between the seller and the, buyer., , 2. The buyer is required to pay the total price in, installments., , 3. The buyer gets the possession and ownership of, goods immediately on signing the agreement., , 4. If there is any default in the payment of any, installment, the seller has no right to repossess the, goods. He can go to the court and sue the purchaser, for unpaid balance., , 5. As the purchaser is the owner of goods, he can, dispose of the goods in any manner he likes., , Q3. What are the distinction between Hire, Purchase System and Installment Purchase, System?, , Ans: Following are the main points of distinction, between the two systems:, , Basis of Hire Purchase System Installment Purchase, Distinction System, , a. Nature of It is an agreement of It is an agreement to, contract hiring. sell., , b.Ownership The buyerbecomesthe The buyer becomes, , owner of the goods the owner of the, , only after clearingthe goods immediately, , final installment. after the agreement to, , sell is complete.
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cannot sell, destroy,, transfer, damage or, , _ pledge the goods, , c, Return of Under hire purchase Under installment, goods system, goods can be purchase system, the, returned if the buyer goods cannot be, does not want to pay returned by the buyer, rest of the installments. to the seller unless, there is some default, on the part of the, seller,, d.Rightof = If the buyer fails to pay If the buyer fails to pay, repossession any installment, the any installment, the, sellerhastherightto seller can only take, take back the goods steps to recover the, from the buyer. balance amount but, has no- right to, | repossess the goods,, e.Effectof Thesellergainsifthere The seller does not, defaultin | is default in payment gain in case of default, payment bythehire purchaser. in payment by the, | | _ buyer. |, f. Nature of The payments made by The payment made by, payment the buyer are regarded the buyer is regarded, as hire chargesforthe as part payment of the, goods till the final goods., installment is paid., g. Right of Under hire purchase Under installment, disposal system, the buyer purchase system, the, , buyer can do all these, things.
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Q4. What are the distinction between Hire, Purchase System and Credit Sales?, , Ans: Following are the main points of distinction, between the two systems:, , , , , , , , BASIS OF, DISTINCTION HIRE PURCHASE SYSTEM | CREDIT SALES |, a.Ownership | In Hire Purchase System, In credit sale, the buyer, of goods the buyer does not becomes the owner of the, become the owner of the gocds as soon as the, goods untilhe clears the transaction for sale is, final payment. completed,, b. Positionof | The buyer's position in In case of credit sale, the, the buyer case of Hire Purchase buyer halds the position of, System is that of a bailee the owner of the goods., till he pays the last, installment. | |, c. Nature of Hire Purchase is in the Credit sale is a contract of, contract nature of agreement to sale., sell. |, d. Applicable Hire Purchase Act, 1972 Sale of Goods Act, 1930 is, Act. is applicable. _ applicable. |, e, Right to The buyer has norightto The buyer has the right to, dispose ofthe | dispose of the goods dispose of the goods, goods until he pays the final bought after the contract |, installment, because he | of sale is completed., is not the owner. | |, f. Discount Incase of hire purchase In case of credit sale a, system, generally no discount is — generally, discount or rebate is allowed on bulk purchase, allowed by the hire as well as on timely, vendor on the periodical | payment of the price., payment of the, instalments.
