Legal analysis of the challenges of unfair terms and consumer protection in hire purchase transactions in Nigeria

Abstract

Hire-purchase agreement is a contract of hire plus the option to purchase. However, certain terms which are imputed in the hire purchase agreements, especially by the owner, and some of which are imposed by law can be onerous on the hirer. There is equally the question of what protections are available to the hirer as a consumer of goods in hire purchase transactions. This paper analysed the concept of hire purchase, its various challenges in Nigeria and assess the various laws through which the rights of consumers of hire purchase goods are protected. Doctrinal method of legal research was adopted in executing this work. Primary and secondary sources of legal research writings were deployed. Statutory provisions and case laws served as primary sources while secondary sources of legal research like law textbooks, dictionaries, articles in learned journals and online materials were equally utilised. It was the finding in this paper that unfair terms in a hire purchase agreement violates the doctrine and principle of good faith, a principle which is based on the idea of honesty and true sincerity in dealings with others, such that there is neither maliciousness nor fraudulent act which makes things harder for the other party upon agreeing to contract with another. The paper recommended that Nigeria should adopt the practice in some other countries where unfair terms in a hire purchase agreement is subjected to “gross consumer violation test.” These tests are to ensure that the consumers are not taken for granted and that their rights are not violated because of the vulnerable position they occupy. This should be made applicable by law in Nigeria.