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Comparison between Sale and Hire Purchase Agreement

S. No.
Hire Purchase Agreement
Under a contract of sale, if the property in the goods is immediately transferred from the seller to the buyer; the contract is called a sale.
It is an agreement under which the owner delivers his goods on hire basis to a person called ‘hirer’, for his use. The hirer has an option to purchase the goods by paying the agreed amount in specified installments.
Mode of creation
It may be made either orally or in writing.
It must be in writing.
Transfer of ownership
The ownership of the goods is transferred from the seller to the buyer as soon as the contract is made.
The ownership of the goods is transferred from the seller to the hirer only when all installments are paid as agreed.
Passing of risk
Risk passes to the buyer as the buyer become the owner when the sale takes place.
The risk is with the seller as he remains the owner.
Termination of the contract
The buyer cannot terminate the contract and refuse to pay the price of the goods.
The hirer can discharg the contract at any time and he is not required to pay further.
Position of buyer
The buyer becomes the owner and gets all the rights of an owner. Example, right to pledge, resale etc.
The hirer does not become the owner and his position is that of a bailee only. He becomes owner only when all the installments are paid.
In case of resale by the buyer, the third party will get a better title of the goods against the original seller.
A third party would not get good title against the original seller since the hirer had no title to goods.
In case of default by the buyer, the seller can sue for price.
Seller can take repossession of goods as he is the real owner.
Governing Act
It is governed by Sales of Goods Act, 1930.
It is governed by Hire Purchase Act, 1972.

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