COMMERCIAL LAW REVISION QUESTIONS 2
Kinyago, a small-scale farmer agreed to take a television set and a radio from Malipo Rahisi
Ltd., a hire purchase firm last year. The hire purchase price for both items was Sh.90,000. He
paid a deposit of Sh.30,000 and the balance was payable by monthly installments of Sh.5,000.
After paying installments for six months, he defaulted. Malipo Rahisi Ltd., promptly repossessed
the goods.
1. Discuss the legal position
Legal Position in Kinyago’ s Case
This case involves a hire purchase agreement, where Kinyago agreed to acquire a television set
and a radio from Malipo Rahisi Ltd., paying in installments. Since he defaulted after six
months, the key legal issues involve repossession rights and legal protections under hire
purchase law.
Legal Analysis
1. Ownership in Hire Purchase
o In a hire purchase agreement, ownership remains with the seller (Malipo
Rahisi Ltd.) until the buyer (Kinyago) completes all payments.
o Since Kinyago had only paid six installments (Sh.30,000 deposit + Sh.30,000 in
installments = Sh.60,000), he had not yet completed payments, meaning Malipo
Rahisi Ltd. still legally owned the goods.
2. Repossession Rights of the Owner
o Under hire purchase law, the owner has the right to repossess the goods if the
hirer defaults on payment.
o However, if the hirer has paid more than two-thirds (⅔) of the total hire
purchase price, the owner cannot repossess the goods without a court order.
o In this case:
The hire purchase price was Sh.90,000.
Two-thirds (⅔) of Sh.90,000 = Sh.60,000.
Kinyago had paid exactly Sh.60,000, meaning he had reached the ⅔
threshold.
3. Legal Consequences of Wrongful Repossession
Kinyago, a small-scale farmer agreed to take a television set and a radio from Malipo Rahisi
Ltd., a hire purchase firm last year. The hire purchase price for both items was Sh.90,000. He
paid a deposit of Sh.30,000 and the balance was payable by monthly installments of Sh.5,000.
After paying installments for six months, he defaulted. Malipo Rahisi Ltd., promptly repossessed
the goods.
1. Discuss the legal position
Legal Position in Kinyago’ s Case
This case involves a hire purchase agreement, where Kinyago agreed to acquire a television set
and a radio from Malipo Rahisi Ltd., paying in installments. Since he defaulted after six
months, the key legal issues involve repossession rights and legal protections under hire
purchase law.
Legal Analysis
1. Ownership in Hire Purchase
o In a hire purchase agreement, ownership remains with the seller (Malipo
Rahisi Ltd.) until the buyer (Kinyago) completes all payments.
o Since Kinyago had only paid six installments (Sh.30,000 deposit + Sh.30,000 in
installments = Sh.60,000), he had not yet completed payments, meaning Malipo
Rahisi Ltd. still legally owned the goods.
2. Repossession Rights of the Owner
o Under hire purchase law, the owner has the right to repossess the goods if the
hirer defaults on payment.
o However, if the hirer has paid more than two-thirds (⅔) of the total hire
purchase price, the owner cannot repossess the goods without a court order.
o In this case:
The hire purchase price was Sh.90,000.
Two-thirds (⅔) of Sh.90,000 = Sh.60,000.
Kinyago had paid exactly Sh.60,000, meaning he had reached the ⅔
threshold.
3. Legal Consequences of Wrongful Repossession
