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By law a dealer can only repossess a car purchased on hire purchase after 3 months of non payment or default and not before. The dealer is required to give you a minimum of 6 weeks to settle the outstanding balance before they can sell the repossessed vehicle.

Table of Contents

1. Introduction

2. Sources of Law

3. Analysis of Hire-Purchase Agreements in Kenya 3.1 The Hire-Purchase Act 3.2 Repossession Rights of the Hire-Vendor 3.3 Notice Period Before Repossession 3.4 Notice Period Before Sale of Repossessed Goods

4. Conclusion

1. Introduction

This legal opinion addresses the assertion that a dealer can only repossess a vehicle purchased under a hire-purchase agreement in Kenya after three months of non-payment and must provide a minimum six-week notice period before selling the repossessed vehicle. We will analyze the relevant Kenyan legislation to determine the accuracy of this statement.

2. Sources of Law

This legal opinion relies primarily on the Hire-Purchase Act (Cap 507) of the Laws of Kenya.

3. Analysis of Hire-Purchase Agreements in Kenya

3.1 The Hire-Purchase Act

The Hire-Purchase Act (Cap 507) governs hire-purchase agreements in Kenya. This Act outlines the rights and obligations of both the hire-vendor (the dealer) and the hire-purchaser (the buyer). The Act aims to protect the rights of the hire-purchaser while ensuring that the hire-vendor can recover their goods in case of default. Crucially, the Act does not stipulate a mandatory three-month waiting period before repossession.

3.2 Repossession Rights of the Hire-Vendor

The Hire-Purchase Act grants the hire-vendor the right to repossess goods if the hire-purchaser defaults on their payments. However, the Act emphasizes the importance of due process. Section 12 of the Act states that the hire-vendor may take possession of the goods if the hire-purchaser is in breach of the agreement. This breach could include failure to make payments, but it is not limited to this. The Act does not specify a timeframe before repossession can occur. The timing of repossession is often determined by the specific terms and conditions outlined in the individual hire-purchase agreement.

3.3 Notice Period Before Repossession

The Hire-Purchase Act does not mandate a specific notice period before repossession. While the Act emphasizes fairness and due process, it does not prescribe a minimum number of weeks or months before a hire-vendor can repossess goods. The absence of a prescribed notice period does not, however, imply that a hire-vendor can repossess goods without any notice whatsoever. The courts have consistently held that the hire-vendor must act reasonably and fairly. A lack of reasonable notice could be considered a breach of the implied term of good faith and fair dealing in the contract. The reasonableness of the notice period will depend on the circumstances of each case, including the nature of the breach, the history of the hire-purchase agreement, and the relationship between the parties.

3.4 Notice Period Before Sale of Repossessed Goods

Once goods have been repossessed, the Hire-Purchase Act outlines the procedure for their sale. Section 13 of the Act provides that the hire-vendor must give the hire-purchaser reasonable notice of their intention to sell the repossessed goods. Again, the Act does not specify a minimum notice period. The reasonableness of the notice period will be determined by the courts based on the specific circumstances of the case. The notice must afford the hire-purchaser a reasonable opportunity to redeem the goods by paying the outstanding balance. The courts have interpreted "reasonable notice" to mean sufficient time for the hire-purchaser to take action to prevent the sale. This could involve paying the outstanding balance, negotiating a repayment plan, or seeking legal advice. A six-week notice period, while potentially reasonable in many cases, is not legally mandated by the Hire-Purchase Act.

4. Conclusion

The assertion that a dealer can only repossess a vehicle after three months of non-payment and must provide six weeks' notice before selling it is not entirely accurate under Kenyan law. While the Hire-Purchase Act does not specify a minimum timeframe for repossession, it emphasizes the principles of fairness and reasonableness. The hire-vendor must act reasonably in giving notice before repossession and before selling the repossessed goods. The reasonableness of the notice period will depend on the specific circumstances of each case and will be determined by the courts if challenged. The specific terms and conditions of the individual hire-purchase agreement will also play a significant role in determining the rights and obligations of the parties. It is advisable for both hire-vendors and hire-purchasers to seek legal advice to understand their rights and obligations under the Hire-Purchase Act and their specific agreements.