Opposition members yesterday registered strong objections to the Hire Purchase Bill citing the absence of crucial safeguards for the protection of consumers but this did not stop its passage.
Government members in rebuttal, brushed aside their objections and told the National Assembly that the bill once enacted will be a win for both seller and purchaser.
After hours of heated debate from members of both sides of the House mainly in support, as well as calls for amendments, the bill was passed. The opposition abstained from voting on the bill.
Minister of Tourism, Industry and Commerce, Oneidge Walrond, who presented the bill for second reading, said the legislation which is long overdue will provide a statutory framework to govern contracts between buyers and sellers under conditional sale arrangements.
The Hire Purchase Bill, once enacted, makes provision for the regulation of hire purchases, credit sales, and conditional sale agreements.
The four-part Bill, now makes it illegal for sellers or their agents to forcibly enter any premises to seize goods.
It also compels the sellers to allow the buyer the right to determine the hire-purchase agreement or conditional sale agreement and prevents sellers from absolving themselves of liability in cases where any person acting on their behalf in connection with the formation or conclusion of the agreement is found in default.
Walrond told the National Assembly that 27 of the 30 clauses were amended in the bill at the Select Committee stage to ensure both vendors and consumer benefit. A new section containing six clauses was also added to the bill.
“It is of some importance Mr Speaker that I say that the Bill seeks to level the playing field and not to distort it. We [the government] were mindful of and determined to avoid replacing a regime that substantially disadvantaged the buyer with one that disadvantaged the seller,” Walrond said.
She told the House that despite the numerous benefits of hire purchase, there are many potential pitfalls in these types of arrangements.
“The doctrine of con-tract can be notoriously harsh where there are asymmetries in terms of power relations between contractual parties. This is precisely the situation that faces consumers when they are in the market for the types of goods that are typically sold ‘on terms’,” she said.
However, Shadow Minister of Tourism, Industry and Commerce, Haimraj Rajkumar, said the bill lacks a critical component, which is capping the interest rate charged for items bought on Hire Purchase.
Rajkumar in his arguments said Guyanese consumers are subjected to high-interest rates and charges based on com-pounded interest. Noting that many Guyanese have at one point or the other “Bind they belly” to ensure they can pay their instalments, the bill should have included a section to address such hardships.
“The Bill should have included a clause pro-posing to limit the amount of interest the seller can charge. We in the opposition had recommended that there should be a limitation on the interest charge on the hire purchase transaction. We also recommended the bill include the method of reducing the balance in calculating the installments as opposed to the com-pounded interest method, which is currently being used,” Rajkumar argued.
This suggestion, he informed the National Assembly, was proposed to the select committee which held consultations and made amendments to the draft bill. He stated that the committee acknowledged the suggestion but the opposition was surprised to see it omitted from the final draft of the bill.
“It was recognised that these two issues were relevant and must be regulated. Mr Speaker, consumers across Guyana would have welcomed and appreciated the decision to limit the interest charged on hire purchases, credit sales and condition sales agreement,” the former Minister of Business said to the House as he ignored heckling from government members.
In his arguments, Rajkumar questioned the rationale behind the omission of the suggestion without any discussion. He pointed out that consumers face challenges every day as they battle the rising costs of living.
“Why were these two recommendations not considered? Is it because it came from the opposition?” he questioned further before urging the subject minister to have the bill returned to the select committee for further deliberations.
AFC member, Khemraj Ramjattan, in his contributions registered similar concerns about the recommendations. He said the government always claims to be a working-class administration but the bill tells a different story.
“They want to talk plenty about the working class but when they have the opportunity at the suggestion of the opposition, ‘please do something for the working class’. They gone and say no, that is price control…,” Ramjattan stressed. In the same breath, he pleaded with the House for the record to reflect that the opposition made a proposal to enhance the bill for the benefit of the working class but it was denied.
Walrond however, passionately rebutted saying that the people of Guyana will not be fooled by the faint concern of the opposition member. She accused the opposition of using this opportunity to pretend that they care for the working class and working people of Guyana and it is a shame.
Walrond said opposition members failed to take care of their business as they never took up the issue with the omission of the recommendation made. She indicated they cannot be blamed for the opposition’s lack of concern.
“When the committee concluded its work they made no objections and when we resolved to put the work of the committee back to this honourable house no objections were made. They came here today Mr Speaker believing that as opposition they must find something to oppose and they picked their own omission…” Walrond stated.
Part II of the Bill deals with the requirements set out for Hire Purchase, Credit and Conditional Sale Agreements. Part II creates a regime – a framework if you will – for these agreements. This part makes provision for certain requirements to be in place in every Hire Purchase, Credit Sale and Conditional Sale Agreement.
These requirements are designed to protect the parties, especially the buyer and they constitute a minimum set of protections that must be expressly included in any contract.
The Minister added that if a seller omits to include these protections in their contracts, the default result will be to bar the seller from enforcing any rights under the agreement unless they can satisfy a court that the buyer has not been prejudiced by such omission.
Clause 3(1) imposes, she said, the obligation on the seller to disclose the cash price prior to the sale that is to say, by some means other than through the actual agreement which evidences it.
Clause 3(2) specifies certain circumstances under which the requirement at 3(1) to disclose the cash price would be deemed to have been satisfied. Those conditions briefly stated are where the cash price is prominently displayed physically with each item of goods, or where it is prominently featured with the items in a catalogue.
“This requirement to prominently display the cash price is a significant one because the failure to do so was one of the main devices by which unsuspecting consumers were enticed into purchases that they could not afford,” she said before stating “The common practice of displaying a seemingly low weekly installment, could entice a customer into signing an agreement which would in fact require say monthly payments which would subsequently prove to be unaffordable.”
Clause 3(3) requires a written Agreement for the purchase while Clause 3(4) specifies certain provisions that must be expressly included the agreement. These provisions include some of the most important protections for the buyer that are enshrined in the Bill and they are required to be included in a prominent manner in every contract. That is to say they cannot be in “fine print”.
Clause 3(4) is one of the most consequential provisions in the Bill as it relates to consumer protection, the minister said. The clause states that among the provisions that every contract must include, are: the right of the buyer to terminate the Agreement early, A prohibition on the Seller repossessing the goods in the absence of a Court Order, where seventy percent or more of the hire purchase price has been paid, an obligation of the seller to provide notice to the buyer of an intention to repossess goods where less than seventy percent of the purchase price has been paid and, the right of a buyer to make good on a breach having had notice of intention to re-possess.
“…These are some of the substantive rights and obligations that are enshrined in various clauses of the Bill… And if they are not included – in a prominent manner – in the contracts, the seller is prohibited from repossessing goods, seizing security deposits, or suing guarantors among other things – unless they can satisfy a court that the omission did not prejudice the buyer,” she explained, noting that this is not a one-sided deal.
Clause (4), she went on to state, makes similar provisions for Credit and Conditional Sale Agreements as Clause 3 does for Hire Purchase Arrangements. That is to say that Clause (4) mandates prominent disclosure of Cash Prices prior to sale, and that Credit and Conditional Sale contracts must expressly include certain provisions that protect the buyer.
Clause (5) gives the right to the buyer to terminate Agreements and makes provision for certain rights for the buyer and indeed the seller where such a course of action is pursued.
“Mr Speaker, I turn to Clause 6, which again is one of the most consequential clauses in the Bill. Mr Speaker, this clause provides that certain provisions shall be void and shall have no effect if included in any hire purchase agreement…this clause prevents sellers from contracting out of certain obligations imposed by this Act, and it also prevents sellers from attempting to remove rights of buyers through contract,” she highlighted.
Clause (8), the minister said, provides some protection to sellers from potential undesirable practices on the part of buyers. This clause obliges a buyer to disclose the location of the goods if so requested by the owner or the owner’s agent.
Clause (9) provides that there shall be a number of implied conditions and warranties in every Hire Purchase, Credit and Conditional Sale Agreement. This include implied warranties that the hirer shall have and enjoy quiet possession of the goods and that the goods shall be free from any encumbrance in favour of third parties, the Minister said.
Clause 10 provides for a notice of cancellation of an agreement at any time within days of its signing and where the hirer or buyer serves a notice of cancellation, the notice must operate so as to rescind the agreement.
Clause 11 states that a notice of cancellation shall be deemed to be served on the owner or seller at the time when it is posted by registered post addressed to the owner or seller. This is without prejudice to the service of a notice of cancellation by any other lawful method upon owner or seller.
Clause 12 deals with re-delivery and interim care of goods comprised in the notice of cancellation. If the hirer or buyer delivers the goods to an authorised person he shall be taken have done so with the consent of that authorised person and his obligation to take care of the goods shall immediately cease.
Clause 13 states that where a notice of cancellation operates to rescind a hire-purchase agreement, a credit sale agreement or a conditional sale agreement, that agreement should deemed never to have had effect. Upon the service of a notice of cancellation, any sum has been paid by the hirer or buyer and is comprised in the hire-purchase price or total price be recoverable by him from the person to whom it was paid.
Clause 14 deals with appropriation of payments where there are two or more agreements.
A hirer under two or more agreements to the same seller is entitled on making any payment which is not sufficient to discharge the total amount to appropriate the sum paid by him –
(a) in satisfaction of the sum due under any one of the agreements; or
(b) in satisfaction of the sums under any two or more agreements in such proportion as he thinks fit.
Clause 15 states that where a vehicle being registered is subject to a hire-purchase agreement, the Revenue Authority shall annotate on the registration that the vehicle is subject to a hire-purchase agreement.
In Part III of the Bill (clauses 16 to 28) deals with recovery of possession and other remedies.
Clause 16 states that where goods are let under a hire-purchase agreement or sold under a conditional sale agreement and the owner or seller brings an action to recover possession of the goods from the hirer or buyer, the possession of the goods shall be deemed to be adverse to the owner or seller. This clause does not affect a claim for damages for conversion.
Clause 17 states that where the hirer or buyer has paid 50 per cent or more of the hire-purchase price or total purchase price, the owner or seller shall not enforce any right to recover possession of the goods otherwise than by action in a court of law.
Clause 18 sets out the powers of the magistrate’s court in certain actions by owners or sellers to recover possession of the goods. The owner shall claim the sum due under the contract whatever the sum of money involved.
Clause 19 states that while an order for specific delivery of goods is postponed, the hirer or buyer shall be deemed to be a bailee of the goods under the agreement and no further sum shall become payable by the hirer, buyer or a guarantor on account of the unpaid balance except in accordance with the terms of the order of the court. The court may at any time during the postponement of the operation of an order, vary or revoke the postponement.
Clause 20 deals with successive hire-purchase agreements between the same parties. Section 17 (owner may recover goods) and Section 18 (powers of the court to recover possession) shall have effect in relation to a further agreement.
Clause 21 deals with the provisions as to insolvency of the hirer or buyer.
Clause 22 deals with rebate on early payments. A rebate in the price of goods shall be allowed to the hirer or buyer at the rate of five per cent per annum in respect of early payments; where a balance remains unpaid for more than one month it attracts an interest of five per cent per annum.
Clause 23 deals with notice of default. Where goods have been let under a hire-purchase agreement or sold under a conditional sale agreement and less than fifty percent of the hire-purchase price or total purchase price has been paid, the owner or seller shall not enforce any right to recover possession of the goods unless he has given the hirer or buyer a notice of his intention to do so. The owner or seller may, on the expiration of twenty-one days after the notice has been given to the hirer or buyer, enforce his right to recover possession of the goods.
The notice, it added shall be deemed to have been given if it is directed to the hirer or buyer and delivered at or sent by registered letter to his address.
Clause 24 deals with hirer’s or buyer’s refusal to surrender goods. Where the hirer or buyer refuses to give up possession of goods, he shall not by reason only of the refusal be liable for conversion of the goods.
Clause 25 deals with obstruction by the hirer or buyer of the owner or seller in the exercise of his lawful right to recover possession of goods. The obstruction may amount to an offence liable to a fine of fifty thousand dollars.
Clause 26 deals with installation charges under any hire-purchase agreement or conditional sale agreement. The amount to be paid for installation charges shall not be treated as part of the hire-purchase price.
Clause 27 provides for the magistrate’s court in its civil jurisdiction to hear and determine any matter pertaining to any agreement, notwithstanding the sum claimed exceeds the monetary limit of the jurisdiction of the magistrate’s court.
Clause 28 places an obligation on the owner or seller to ensure that the hirer or buyer insure goods required to be insured.
Part IV (clauses 29 and 30) deals with miscellaneous matters. It sets out the sections of the Act that apply to hire-purchase agreements or conditional sale agreements whether made before or after the commencement of the Act. It also gives the Minister the power to make regulations.
In recommending the Bill to the House, the minister said the Bill has benefited from consultation with probably all of the main stakeholders who would have an interest in it.
“We have the consumer bodies representing one set of potential parties to Hire Purchase Agreements and the sellers as the other set of potential parties. We have the Bar who would be called upon by parties in the case of disputes, as well as the Competition and Consumer Affairs Commission which prior to enactment of this Bill had the hapless job of addressing consumer complaints in the absence of an enabling statutory framework. As an aside I would note that following the enactment of this Bill, the Commission would be relieved of this burden as dispute resolution would fall principally to the magistrates’ courts. Mr Speaker, the consultation process was a full and fruitful one,” she said.
