Hire-Purchase Act

Section 1. Short title Section This Act may be cited as the Hire-Purchase Act.

Section 2. Interpretation Section 2(1) In this Act, except where the context otherwise requires— "the appointed day", means such day as the Cabinet Secretary may, by notice in the Gazette , appoint to be the appointed day for the purpose of section 18 of this Act; "contract of guarantee", in relation to a hire-purchase agreement, means a contract, made at the express or implied request of the hirer, to guarantee the performance of the hirer’s obligations under the hire-purchase agreement, and "guarantor" shall be construed accordingly; "delivery", "goods" and "warranty" have the same meanings as in the Sale of Goods Act ( Cap. 31 ); "hire-purchase agreement" means an agreement for the bailment of goods under which the bailee may buy the goods or under which the property in the goods will or may pass to the bailee; and, where by virtue of two or more agreements none of which by itself constitutes a hire-purchase agreement there is a bailment of goods and either the bailee may buy the goods or the property therein will or may pass to the bailee, the agreement shall be treated for the purposes of this Act as a single agreement made at the time when the last of those agreements was mad...

Section 3. Application Section 3(1) This Act applies to and in respect of all hire-purchase agreements entered into after the commencement of this Act under which the hire-purchase price does not exceed the sum of four million shillings or such other higher or lower sum as the Cabinet Secretary may, after taking into account market forces from time to time prevailing, prescribe other than a hire-purchase agreement in which the hirer is a body corporate, wherever incorporated: Provided that monetary limitation does not apply so as to affect the definition of "hire-purchase business" in section 2 (1). Section 3(2) Notwithstanding subsection (1), nothing in this Act shall apply to any Scheme controlled, managed or guaranteed by the Government for the purpose of providing loans to any persons for the purchase of motor vehicles. [Act No. 11 of 1970 , Sch., Act No. 11 of 1992 , Act No. 7 of 2007 , Sch.]

Section 4. Establishment of registry Section 4(1) Deleted by ActNo. 13 of 2017, Sch. Section 4(2) For conducting the business of the registry, the Cabinet Secretary may, by notice in the Gazette , appoint a public officer to be Registrar of Hire-Purchase Agreements, a public officer to be Deputy Registrar of Hire-Purchase Agreements and where necessary public officers to be assistant registrars of hire-purchase agreements. Section 4(3) Subject to the directions of the Registrar of Hire-Purchase Agreements, the Deputy Registrar of Hire-Purchase Agreements and an assistant registrar of hire- purchase agreements shall have all the powers, and perform all the duties, and be subject to all the obligations, of the Registrar of Hire-Purchase Agreements. [Act No. 13 of 2017 , Sch.]

Section 5. Agreements to be registered Section 5(1) Deleted by ActNo. 13 of 2017, Sch. Section 5(2) The registrar shall, on payment of the prescribed fee, register any hire- purchase agreement delivered to him under subsection(1), unless the agreement is liable to stamp duty and is not duly stamped, or is not in the English language. Section 5(3) On registration of a hire-purchase agreement, the registrar shall deliver to the owner a certificate of registration, and a certificate of registration purporting to be given under the hand of the registrar shall be prima facie proof of the facts therein certified in any proceedings. Section 5(4)(a) no person shall be entitled to enforce the agreement against the hirer or to enforce any contract of guarantee relating to the agreement, and the owner shall not be entitled to enforce any right to recover the goods form the hirer; and Section 5(4)(b) no security given by the hirer in respect of money payable under the agreement, or given by a guarantor in respect of money payable under a contract of guarantee relating to the agreement, shall be enforceable against the hirer or the guarantor by any holder thereof. Section 5(5) Any person may in...

Section 6. Requirements relating to agreements Section 6(1)(i) if the hirer has inspected the goods or like goods, and at the time of his inspection tickets or labels were attached to or displayed with the goods clearly stating the cash price, either of the goods as a whole or of all the different articles or sets of articles comprised therein; or Section 6(1)(ii) if the hirer has selected the goods by reference to a catalogue, price list or advertisement which clearly stated the cash price, either of the goods as a whole or of all the different articles or sets of articles comprised therein. Section 6(2)(a) the agreement is made and signed by the hirer and by or on behalf of all other parties to the agreement; and Section 6(2)(b) the hire-purchase price and the cash price of the goods to which the agreement relates; and Section 6(2)(b)(i) the hire-purchase price and the cash price of the goods to which the agreement relates; and Section 6(2)(b)(ii) the amount of each of the instalments by which the hire- purchase price is to be paid and the date (or the mode of determining the date) upon which each instalment is payable; and Section 6(2)(b)(iii) a description of the goods sufficie...

Section 7. Avoidance of certain provisions in agreements Section an owner or any person acting on his behalf is authorized to enter upon any premises for the purpose of taking possession of goods which have been let under a hire-purchase agreement, or is relieved from liability for such an entry; or

Section 8. Conditions and warranties implied in agreements Section 8(1)(a) a condition that the owner will have a right to sell the goods at the time when the property is to pass; Section 8(1)(b) a warranty that the hirer shall have and enjoy quiet possession of goods; Section 8(1)(c) a warranty that the goods will be free from any charge or encumbrance in favour of a third party at the time when the property is to pass; Section 8(1)(d) except where the goods are second-hand goods and the agreement contains a statement to that effect, a condition that the goods will be of merchantable quality; and Section 8(1)(e) a condition that the legal ownership of, and title to, the goods shall automatically be vested on the hirer upon payment by him of the hire- purchase price in full: Section 8(2) Where the hirer expressly or by implication makes known the particular purpose for which the goods are required, there shall be implied a condition that the goods will be reasonably fit for that purpose. Section 8(3) The conditions and warranties set out in subsection (1) of this section shall be implied notwithstanding any agreement to the contrary; and the owner shall not be entitled to rely on a...

Section 9. Change of address and removal of goods from premises Section 9(1)(a) that the hirer shall record his postal, residential and business addresses in the agreement; and Section 9(1)(b) his new postal, residential or business address, as the case may be; Section 9(1)(b)(i) his new postal, residential or business address, as the case may be; Section 9(1)(b)(ii) the premises to which the goods are to be removed; Section 9(1)(b)(iii) the name and postal, residential and business addresses of the landlord, if any, of the new premises, but no such stipulation shall require the hirer to notify the owner more than ninety-six hours before the time of the change or removal. Section 9(2) If a hirer fails to comply with any stipulation made in pursuance of subsection (1) he shall be guilty of an offence and liable to a fine not exceeding two thousand shillings. Section 9(3) In a prosecution for an offence under this section it shall be a defence if the hirer satisfies the Court that his failure to comply with the stipulation in question was due to circumstances over which he had no control. Section 9(4) If the owner of goods under a hire-purchase agreement has given written notice of h...

Section 10. Removal of goods from Kenya Section 10(1) The owner of goods under a hire-purchase agreement may stipulate in the agreement that the hirer shall not remove or permit the removal of the goods from Kenya without the written consent of the owner. Section 10(2) If the hirer, in breach of a stipulation made in pursuance of subsection (1) and with intent to deprive the owner of his ownership of the goods or to defeat the rights of the owner to obtain any payment due to him under the agreement, removes or permits the removal of the goods from Kenya, he shall be guilty of an offence and liable to a fine not exceeding ten thousand shillings or to imprisonment for a term not exceeding one year, or to both such fine and imprisonment. Section 10(3) If a hire-purchase agreement contains a stipulation such as is referred to in subsection (1) of this section and the owner believes that the goods have been removed or are being removed or are about to be removed from Kenya without his written consent, he may institute a suit for the return of the goods. Section 10(4) Before instituting a suit in pursuance of subsection (3) of this section, or while the suit is pending, the owner may mak...

Section 11. Court may allow goods to be removed Section Where the terms of a hire-purchase agreement require the hirer to keep the goods comprised in the agreement in his possession or control at a particular place or not to remove the goods from a particular place, the Court may, on the application of the hirer and after hearing any representations made by or on behalf of the owner, make an order approving the removal of the goods to some other place within Kenya, which place shall thereafter, for the purposes of the agreement, be substituted for the first-mentioned place.

Section 12. Hirer may terminate agreement Section 12(1) At any time before the final payment under a hire-purchase agreement falls due, the hirer may terminate the agreement by returning the goods to the owner and giving him written notice of termination of the agreement, and if he does so he shall be liable (without prejudice to any liability which accrued before the termination) to pay the amount, if any, by which one-half of the hire-purchase price exceeds the total of the sums paid and the sums which were due in respect of the hire-purchase price immediately before the termination or such lesser amount as may be specified in the agreement. Section 12(2) Where a hire-purchase agreement has been terminated under this section, the hire shall, if he has failed to take reasonable care of the goods, be liable to pay damages for the failure. Section 12(3) A hirer returning goods under subsection (1) shall return them at his own expense to the premises from which they were originally supplied to him or to such other place as the owner may direct: Provided that the owner shall reimburse the hirer for any additional expense incurred in returning the goods to premises other than those fro...

Section 13. Hirer may complete agreement Section 13(1) The hirer under a hire-purchase agreement may give notice in writing to the owner of his intention to complete the purchase of the goods by paying or tendering to the owner on a specified day the net balance due to the owner under the agreement, and having given such notice may complete the purchase accordingly on the day specified. Section 13(2) For the purposes of subsection (1) of this section, the net balance due is the balance originally payable under the agreement less any amounts (other than the deposit) paid or provided, whether by cash or by other consideration, by or on behalf of the hirer under the agreement. Section 13(3)(a) at any time during the continuance of the agreement; or Section 13(3)(b) the reasonable costs incurred by the owner in and incidental to taking possession of the goods; and Section 13(3)(b)(i) the reasonable costs incurred by the owner in and incidental to taking possession of the goods; and Section 13(3)(b)(ii) any amount properly expended by the owner on the storage, repair or maintenance of the goods; and Section 13(3)(b)(iii) any additional interest which is due under the agreement.

Section 14. Adverse possession Section 14(1) Where an owner institutes a suit to enforce a right to recover possession of goods from a hirer and proves that, before the institution of the suit and after the right to recover possession of the goods accrued, he made a request in writing to the hirer to surrender the goods, the hirer’s possession of the goods shall, for the purpose of the owner’s claim to recover possession thereof, be deemed to be adverse to the owner. Section 14(2) Nothing in this section affects a claim for damages for conversion.

Section 15. Recovery of possession where two-thirds of price paid Section 15(1) Where goods have been let under a hire-purchase agreement and two- thirds of the hire-purchase price has been paid, whether in pursuance of the agreement or of a judgment or otherwise, or has been tendered by or on behalf of the hirer or a guarantor, the owner shall not enforce any right to recover possession of the goods from the hirer otherwise than by suit. Section 15(2)(a) the hirer shall be released from all liability under the agreement and shall be entitled to recover from the owner by suit all sums paid by the hirer under the agreement or under any security given by him in respect thereof; and Section 15(2)(b) guarantor shall be entitled to recover from the owner by suit all sums paid by him under the contract of guarantee or under any security given by him in respect thereof. Section 15(3) This section does not apply where the hirer has terminated the agreement or the bailment by virtue of any right vested in him, or to the removal of goods under section 16 (3)(b).

Section 16. Provisions where suit instituted Section 16(1) Where a suit is instituted in the circumstances described in section 15 of this Act, the owner shall not take any step to enforce payment of any sum due under the hire-purchase agreement or under any contract of guarantee relating thereto, except by claiming the sum in the suit. Section 16(2) Subject to rules of court, all the parties to the agreement and any guarantor shall be made parties to the suit. Section 16(3)(a) the court shall have power, in addition to any other powers, to make upon the application of the owner such orders as the court thinks just for the purpose of protecting the goods from damage or depreciation, including orders restricting or prohibiting the use of the goods or giving directions as to their custody; and Section 16(3)(b) without prejudice to the powers of the court under paragraph (a) of this subsection, where two instalments of the hire-purchase price are due and unpaid the owner may remove the whole or any part of the goods to any premises under his control for the purpose of protecting them from damage or depreciation and retain them there pending the hearing of the suit, and the owner shall...

Section 17. Where order for delivery of goods postponed Section 17(1)(i) no further sum shall be or become payable by the hirer or a guarantor on account of the unpaid balance of the hire-purchase price, except in accordance with the terms of the order; and Provided that— Section 17(1)(ii) the Court may make such further modifications of the terms of the hire-purchase agreement, and of any contract of guarantee relating to it, as to payment as the Court considers necessary having regard to the variation of the terms of payment. Section 17(2) If, while the operation of an order for the delivery of the goods to the owner is postponed under section 16 (4), the hirer or a guarantor fails to comply with any conditions of the postponement, or with any term of the hire-purchase agreement as modified by the Court, or wrongfully disposes of the goods, the owner shall not take any civil proceedings against the hirer or guarantor otherwise than by making an application to the Court by which the order was made: Provided that, in the case of a breach of any condition relating to the payment of the unpaid balance of the hire-purchase price, it is not necessary for the owner to apply to the court...

Section 18. Licence required to carry on hire-purchase business Section 18(1) No person after the appointed day shall carry on hire-purchase business, except under and in accordance with the terms of a current licence authorizing him to do so. Section 18(2) Any person who contravenes subsection (1) shall be guilty of an offence and liable to a fine not exceeding two hundred thousand shillings or to imprisonment for a term not exceeding one year, or to both such fine and imprisonment. [Act No. 7 of 2007 , Sch.]

Section 19. Licensing officer Section The Cabinet Secretary shall appoint a public officer to be the licensing officer for the purposes of this Act.

Section 20. Granting of licences Section 20(1) A person may make application for a licence in the prescribed manner, and the licensing officer shall either grant a licence accordingly, either without conditions or subject to such conditions as he may think fit, or refuse to grant a licence. Section 20(2) Where a licensing officer refuses to grant a licence, or imposes conditions in a licence, he shall give to the applicant the reasons in writing for his action, if the applicant so requests. Section 20(3) A fee of one thousand shillings, is payable in respect of the issue of a licence. Section 20(4) A licence shall be issued so as to expire two years after the date of issue. Section 20(5) In considering an application for a licence, the licensing officer shall take into account the financial condition of the applicant and the manner in which he has conducted any hire-purchase business then or formerly carried on by him, and may require the applicant to provide such information as he requires to enable him to make a decision. [Act No. 8 of 1985 . s. 25, Act No. 5 of 2007 , s. 76.]

Section 21. Where renewal of licence refused Section Where the holder of a licence applies for and is refused a new licence, or where a person who immediately before the commencement of this Act was carrying on hire-purchase business applies before the appointed day for and is refused a licence, he may, notwithstanding section 18 of this Act, continue to carry on hire- purchase business so long and so far only as is necessary to complete existing hire-purchase agreements and wind up the business, and may not enter into any new hire-purchase agreements.

Section 22. Appeals Section 22(1) Any person who is refused a licence may appeal to the Cabinet Secretary in writing within one month after the date of the refusal, and the Cabinet Secretary’s decision shall be final. Section 22(2) Where a person appeals under subsection (1) of this section, he may continue to carry on hire-purchase business until the appeal is decided, notwithstanding section 18 .

Section 23. Licence to be displayed Section The holder of a licence shall ensure that the licence or a copy thereof is at all times conspicuously displayed in or on every premises in which he carries on hire- purchase business, and if he fails to do so he shall be guilty of an offence and liable to a fine not exceeding one thousand shillings.

Section 24. Successive agreements between same parties Section Where goods have been let under a hire-purchase agreement and at any time after two-thirds of the hire-purchase price has been paid or tendered the owner makes a further hire-purchase agreement with the hirer comprising those goods, sections 15 and 16 shall have effect in relation to that further agreement as from its commencement.

Section 25. Owner to account for proceeds of sale Section Where the owner under a hire-purchase agreement enforces a right to recover possession of the goods from the best price reasonably obtainable as soon as is reasonably practicable and he shall be liable to account for and pay hirer otherwise than by suit, he shall sell the goods at the to the hirer that part of the proceeds of sale which exceeds the sum of the unpaid balance of the hire-purchase price and the expenses necessarily incurred by the owner in recovering possession of and selling the goods.

Section 26. Hirer’s refusal to surrender goods not conversion Section If, while the enforcement by an owner of a right to recover possession of goods from a hirer is restricted by this Act, the hirer refuses to give up possession of goods to the owner, the hirer shall not, by reason only of such refusal, be liable to the owner for conversion of the goods.

Section 27. Hirer may require information Section 27(1)(a) the total of the payments made under the agreement by or on behalf of the hirer, and the date of each payment; Section 27(1)(b) the total amount due under the agreement and unpaid, and the amount of each unpaid instalment and the date on which it became due; and Section 27(1)(c) the total amount which is to become due under the agreement, the amount of each instalment which is to become due and the date (or the mode of determining the date) upon which it is to become due. Section 27(2)(a) no person shall be entitled to enforce the agreement against the hirer or to enforce any contract of guarantee relating to the agreement, and the owner shall not be entitled to enforce any right to recover possession of the goods from the hirer; and Section 27(2)(b) no security given by the hirer in respect of money payable under the agreement or given by a guarantor in respect of money payable under a contract of guarantee shall be enforceable by any holder thereof against the hirer or guarantor, as the case may be, and if the default continues for a period exceeding thirty days the owner shall be guilty of an offence and liable to a fine...

Section 28. Appropriation of payments where more than one agreement Section A hirer who is liable to make payments in respect of two or more hire-purchase agreements to the same owner shall be entitled, on making any payment in respect of the agreements which is not sufficient to discharge the total amount then due under all the agreements, to require the owner to appropriate the sum so paid by him in or towards the satisfaction of the sum due under any one of the agreements, or in or towards the satisfaction of the sums due under any two or more of the agreements in such proportions as he thinks fit, and, if he fails to make any such appropriation, the payment shall by virtue of this section be appropriated in or towards the satisfaction of the sums due under the respective hire-purchase agreements in the order in which the agreements were entered into.

Section 29. Limitation on enforcement of agreement Section any provision in the agreement for the acceleration of the payment of an instalment, unless an instalment, or some part of an instalment which is not less than one-tenth of the hire-purchase price, or two or more instalments or part of instalments which altogether are not less than one-twentieth of the hire-purchase price, are due and unpaid; or

Section 30. Agreement binding on trustee or liquidator of owner Section 30(1)(a) in the case of a natural person, the owner is adjudged bankrupt; or Section 30(1)(b) in the case of a company, the owner is placed in liquidation, a hire- purchase agreement entered into by the person or company as owner continues in effect after the commencement of the bankruptcy or liquidation and is binding on the bankruptcy trustee or liquidator, but without affecting the right of the bankruptcy trustee or liquidator to disclaim. Section 30(2) Subsection (1) does not affect the powers of the court to set aside any disposition of property that is an undue preference. [Act No. 19 of 2015 , s. 124.]

Section 31. Bankruptcy of hirer Section If a hirer is adjudged bankrupt, the rights and duties which are the subject of the hire-purchase agreement entered into by the hirer shall vest in his trustee, notwithstanding the terms of the agreement, but without prejudice to the trustee’s right to disclaim: Provided that if the goods are used by the trustee on behalf of the hirer’s estate, the trustee shall pay to the owner, as a cost in the administration of the estate, each instalment in respect of the purchase price which becomes due under the agreement during the period the goods are so used.

Section 32. Service of notices Section 32(1)(a) by delivering it to him personally; Section 32(1)(b) by leaving it at his place of abode or business with some other person apparently a resident thereof or employed thereat and apparently over the age of sixteen years; or Section 32(1)(c) by posting it addressed to him at his last known place of abode or business in Kenya. Section 32(2) The affidavit or oral evidence of an owner or his servant or agent as to the delivery or posting of any notice or document required or authorized to be served under this Act shall be admissible as prima facie evidence of the due service of the document or notice, if the deponent swears to the facts necessary to prove due service either from his own knowledge or to the best of his information and belief based on and verified by the records of the owner.

Section 33. Cabinet Secretary’s power to obtain information Section 33(1) Every person carrying on hire-purchase business shall furnish to the Cabinet Secretary, at the prescribed time and in the prescribed manner, all such information as the Cabinet Secretary may reasonably require for the proper implementation of this Act. Section 33(2) Any person who fails or refuses to comply with a written requirement made under subsection (1) shall be guilty of an offence and liable to a fine not exceeding one hundred thousand shillings. [Act No. 7 of 2007 , Sch.]

Section 34. False information Section Any person who knowingly gives false information in any proposal form or other document completed for the purpose of entering into a hire-purchase agreement shall be guilty of an offence and liable to a fine not exceeding five thousand shillings or to imprisonment for a term not exceeding six months, or to both such fine and imprisonment.

Section 35. Cabinet Secretary’s power to make rules Section 35(1) The Cabinet Secretary may make rules generally for the better carrying out of any of the provisions or purposes of this Act. Section 35(2)(a) anything which is to be or may be prescribed under this Act; Section 35(2)(b) the form of hire-purchase agreements; Section 35(2)(c) the form of notices relating to hire-purchase agreements; Section 35(2)(d) deleted by ActNo. 13 of 2017, Sch. Section 35(2)(e) the fees payable for anything which may be done under this Act.

Section 32A. Cabinet Secretary may determine interest rates etc. Section 32A(1)(a) the matters to be taken into account in the computation of the hire-purchase price and the amounts of the instalments by which the hire-purchase price is to be paid including such matters as the rate of interest or charges which may be imposed on a hirer in respect of any sum credited or to be credited to the hirer by the owner; and Section 32A(1)(b) the penalties or forfeitures which may be imposed on a hirer under a hire-purchase agreement. Section 32A(2) The Cabinet Secretary may determine different matters and different penalties and forfeitures for different types of hire-purchase businesses. [Act No. 12 of 1984 , Sch.]