Identify which of the following statements correctly describes a hire- purchase agreement?
A) This is simply another name for a chattel mortgage on an automobile.
B) The contract does not create a bailment and the hirer has no contractual obligation to pay the purchase price.
C) The contract gives the hirer a lien on the goods preventing the owner from selling the goods to another.
D) The contract creates a bailment and the hirer has an option to purchase the item at the end of the stipulated term.
E) The contract creates a bailment but the hirer has a contractual obligation to pay the purchase price.

Question

Quizplus · Accepted Answer

A hire-purchase agreement is a contract between a buyer (hirer) and a seller (owner) where the hirer pays for an item in installments while using the item. The contract creates a bailment where the item remains the property of the owner until the hirer completes payment. At the end of the stipulated term, the hirer has the option to purchase the item. Therefore, choice D correctly describes a hire-purchase agreement.

Identify Which of the Following Statements Correctly Describes a Hire-