ICANBusiness LawSale of Goods and Hire Purchase2023

Kemi entered into a Hire Purchase agreement for industrial processing machinery with a Hire Purchase Price of ₦12,000,000. To date, she has paid total installments of ₦4,500,000 and currently owes ₦500,000 in accrued unpaid installments. Kemi decides to terminate the agreement under Section 8 of the Hire Purchase Act Cap H4 LFN 2004. Assuming no lesser amount is specified in the contract, what total sum must Kemi pay to the owner to fully discharge her statutory financial liability upon termination?

A₦500,000
B₦1,000,000
C₦1,500,000CORRECT
D₦7,500,000
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Why the answer is C, and why the others tempt you.
Under Section 8(2) of the Hire Purchase Act Cap H4 LFN 2004, upon statutory termination by the hirer, the hirer is liable to pay any accrued arrears plus the amount by which one-half (50%) of the Hire Purchase Price exceeds the total sums paid and due. Here, 50% of ₦12,000,000 = ₦6,000,000. Sums paid + due = ₦4,500,000 + ₦500,000 = ₦5,000,000. The deficit to reach 50% is ₦1,000,000. Adding the accrued arrears of ₦500,000 gives a total statutory liability of ₦1,500,000.
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