CONTRACT LAW — Hire Purchase Agreement — Invalid Agreement — Effect on Nature of Transaction
Ratio Decidendi
Per Mukhtar, JSC, in Ajagbe v. Idowu (2011) NLC-123-271-2003(SC) at pp. 9—10; Paras E—A:
"A careful consideration of the above principle, the provisions of the Hire purchase act, together with the requirements expected to be complied with, vis-a-vis the contents of exhibit 'A', one will find that it negates a valid hire purchase agreement. The learned trial judge found exhibit 'A' not to contain an option to purchase, and that the plaintiff was not given cash price for which the vehicle may be purchased. In the end he found exhibit 'A' not to be a valid hire purchase agreement"
Explanation / Scope
This principle establishes that an agreement that does not contain an option to purchase and does not state the cash price negates a valid hire purchase agreement under the Hire Purchase Act. The principle applies where the validity of a hire purchase agreement is challenged. It ensures that the statutory requirements are met. The principle reflects the formalities for hire purchase agreements. It prevents invalid agreements from being enforced as hire purchase. The court must examine the contents of the agreement. The principle provides guidance on the validity of hire purchase agreements.