In an auction sale, the auctioneer invites bids from prospective

purchasers and sells the goods to the highest bidder. Section 64

lays down the following rules relating to an auction sale-

1. Where goods are put up for sale in lots, each lot is prima facie

deemed to be a subject of a separate contract of sale;

2. The sale is complete when the auctioneer announces its

completion by the fall of the hammer or in any other customary

manner, and, until such announcement is made, any bidder may

retract his bid. On the other hand, the auctioneer is also not

bound to accept the highest bid if he feels that it is much below

his expectation.

3. A right to bid may be reserved expressly by or on behalf of

the seller, and where such right is expressly so reserved, but not

otherwise, the seller or any person on his behalf may, subject to

the provisions hereinafter contained, bid at the auction;

4. Where the sale is not notified to be the subject to a right to bid

on behalf of the seller, it shall not be lawful for the seller to bid

himself or to employ any person to bid at such sale, or for the

auctioneer knowingly to take any bid from the seller or any such

person; and any sale contravening this rule may be treated as

fraudulent by the buyer.

5. The sale may be notified to be the subject to a reserved or

upset price. It is a price below which the auctioneer will not sell,

and if he by mistake knocks down the lot for less than the reserved

price, no valid contract comes into existence and he can refuse to

deliver the goods to the highest bidder. Where the sale is ‘without

reserve’ the goods must be sold to the highest bidder, irrespective

of the bid amount. But it is only a usage or custom of the trade

because otherwise the auctioneer is free to accept or reject any

offer or bid made to him.

6. The seller makes use of pretended bidding to raise the price,

the sale is voidable at the option of the buyer.

7. The auctioneer cannot sell goods on credit or accept

payment by means of a bill of exchange. Also, he cannot be

compelled to accept a cheque for the purchase price.

An Act to define and regulate the rights and duties of parties to

hire purchase agreements for matters connected therewith or

incidental thereto.

• CONTRACT OF GUARANTEE- Contract whereby a person

guarantees the performance of all or any of the hirer’s

obligations under the hire-purchase agreement.

• HIRE- The sum payable periodically by the hirer under a hire-

purchase agreement.

• HIRER- the person who obtains or has obtained possession of

goods from an owner under a hire-purchase agreement, and

includes a person to whom the hirer’s rights or liabilities

under the agreement have passed by assignment or by

operation of law.

• OWNER- the person who lets or has let, delivers or has

delivered possession of goods, to a hirer under a hire-

purchase agreement and incises a person to whom the

owner’s property in the goods or any of the owner’s rights or

liabilities under the agreement has passed by assignment or

by operation of law.

• The Dealer contracts with finance co. for financing his hire-

purchase deals

• The customer selects the goods for HP, and dealer arranges

for the complete set of documents.

• The Dealer sends documents to finance co. with respect to

purchase the goods, accept the HP transaction.

• The finance co. signs the agreement and sends copy along

with EMI details to dealer

• Down payment by customer on completion of proposal form.

• Dealer delivers the goods to the customer, property passes

on to the finance co.

• Hirer pays EMIs, and on last payment, the ownership passes

on to him, with loan completion certificate by the finance

co.

Procedure of Hire-Purchase

A company had agreed to offer a bus on a hire purchase

agreement on condition that Rs. 1140 were to be paid by the

hirer on delivery and 11 monthly installments were to be paid

thereafter, each of Rs. 226 and the owners were to be entitled

to terminate the contract on default occurring if hirer for any

month was in arrears. A suit was brought by the owners for

possession of the bus on the happening of the said condition.

Lord coutts-trotter,c.j. held that though there was no such

explicit condition, the amount Rs. 1140/- being construed

either as the installment of the hire money or as the premium

taken by the owner for granting lease and in either case money

received was not to be refunded. The money was not to be

regarded as advance of rent.

In Auto Supply Company vs. Raghunatha

Chetty

Hire purchase agreement means an agreement under which goods

are let on hire and under which the hirer has an option to

purchase them in accordance with the terms of the agreement and

incudes an agreement under which-

• Possession of goods is delivered by the owner thereof to a

person on condition that such person pays the agreed amount

in periodical installments, and

• The property in the goods is to pass to such person on the

payment of the last of such installments, and

• Such person has a right to terminate the agreement at

anytime before the property so passes.

Every hire-purchase agreement shall be-

(a) In writing, and

(b) Signed by all the parties thereto.

A hire-purchase agreement shall be void if in respect thereof

any of the requirements specified in sub-section (1) has not

been compiled.

Where there is a contract of guarantee, the hire-purchase shall

be signed by the surety also, and if the hire-purchase

agreement is not so signed, the hire-purchase agreement shall

be voidable at the option of the owner.

A sells a refrigerator to B with a stipulation that B shall pay A

fixed sum every month by way of installments till the full price

of the refrigerator is paid.

Now B pays the full amount to A by way of installments, he

doesn’t become the owner of the refrigerator. He can

discontinue payment of further installments.

In such case, A takes back the refrigerator has no right to

recover installments already paid by him to A because the

amount paid by him is adjusted towards the hire charges of

refrigerator. This is called a hire-purchase agreement.

Illustration

• .

Every hire purchase agreement shall state-

• The hire-purchase price of the goods to which the agreement

relates;

• The cash price of the goods, that is to say, the price at which

the goods may be purchased by the hirer for cash;

• The date on which the agreement shall be deemed to have

commenced;

• The number of installments by which the hire-purchase price

is to be paid, the amount of each of those installments, and

the date, upon which it is payable, and the person to whom

and the place where it is payable; and

• The goods to which the agreement relates, in a manner

sufficient to identify them.

Thank You!!