The Nature Of Hire-Purchase Law And Its Impact On Future Commercial Transactions In Uganda

Abstract

This study examines the legal framework for hire purchase in Uganda, the nature and benefits of

hire purchase and compares with mortgages, credit and conditional sales, leasing, sale of goods

and outright sales. In hire purchase. the hirer is given immediate possession of goods upon

payment of the deposit, but has an option to purchase them. Subsequent payment is made in

installments, which is a credit facility to the hirer. However, the hirer gets mere possession and

not property in the goods, which only passes when he or she exercises his or her option to

purchase the goods, and only upon payment of the hire purchase price. The study revealed that

the hire purchase Act over-protects the hirer at the expense of the owner of goods. This, coupled

with government interYention defeats the rationale behind the privatization of the economy in the

1990s and consequently the freedom of contract. The determination of interest rate being the

prese1Ye of the central Bank, restricting the owner from repossessing the goods and disposing

them olT, and a host of other claw-back provisions, all attest to this. The study among others

recommends for amendment of the sections to strike a balance between the rights of both the

hirer and the owner.

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