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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.
Introduction
This legal opinion addresses the assertion that a car dealer in Kenya can only repossess a vehicle purchased under a hire-purchase agreement after three months of non-payment and must provide a six-week grace period before selling the repossessed vehicle. This statement requires careful examination under Kenyan law, specifically the Hire Purchase Act (Cap. 507). The assertion is partially accurate but needs significant clarification and qualification. The timeframe and procedures for repossession are not as rigidly defined as stated.
The Hire Purchase Act (Cap. 507) and Repossession
The Hire Purchase Act, Cap 507, governs hire-purchase agreements in Kenya. This Act does not specify a mandatory three-month waiting period before repossession. Instead, the Act outlines conditions under which repossession is permissible, primarily focusing on default by the hirer. The Act allows for repossession upon default, but the definition of "default" and the process for repossession are crucial. The Act does not prescribe a specific timeframe for default before repossession can occur. The agreement itself will usually define what constitutes a default (e.g., missing a certain number of payments, or a certain amount of arrears).
Default and the Hire Purchase Agreement
The specific terms of the hire-purchase agreement are paramount. The agreement itself will define what constitutes a "default" and what actions the owner (dealer) can take. This could include, but is not limited to, missed payments, late payments, or breach of other contractual obligations. The agreement may stipulate a grace period before repossession, but this is not mandated by the Hire Purchase Act. A dealer cannot unilaterally decide on a grace period; it must be explicitly stated in the contract. If the agreement doesn't specify a grace period, the dealer can initiate repossession procedures upon default as defined in the contract.
The Six-Week Period Before Sale
The assertion that a dealer must give six weeks' notice before selling a repossessed vehicle is also not explicitly mandated by the Hire Purchase Act. While fairness and due process are important legal principles, the Act doesn't prescribe a specific timeframe for notice before sale. The dealer is generally required to follow the procedures outlined in the hire-purchase agreement and, if necessary, seek court orders for repossession and sale. The absence of a specific legal requirement for a six-week notice period doesn't mean it's not a good practice. A longer notice period could be beneficial to both parties, potentially avoiding legal disputes. However, it's not legally obligatory under the current legislation.
Repossession Procedures
The Hire Purchase Act does not detail specific repossession procedures. However, the general principles of contract law and due process apply. The dealer must generally act within the terms of the agreement and avoid actions that could be considered unlawful or oppressive. If the hirer disputes the repossession, they can seek legal redress. The courts will consider the fairness and legality of the repossession process.
Section 15 of the Hire Purchase Act
Section 15 of the Hire Purchase Act is particularly relevant. It restricts repossession when two-thirds of the hire-purchase price has been paid. In such cases, the owner must obtain a court order before repossessing the goods. This section highlights the importance of court intervention in certain situations to protect the hirer's rights. This section does not, however, set a minimum time period before repossession can occur.
Relevant Case Law
While specific Kenyan case law directly addressing the three-month and six-week periods is not readily available, several cases illustrate the principles involved in hire-purchase disputes and repossession:
David Karobia Kiiru v Laverage Company Ltd [2017] KEHC 5757 (KLR): This case highlights the application of Section 15 of the Hire Purchase Act, emphasizing the need for a court order for repossession when a significant portion of the purchase price has been paid. The case underscores the court's role in balancing the rights of the owner and the hirer. (Source: https://new.kenyalaw.org/akn/ke/judgment/kehc/2017/5757/eng@2017-04-06 ↗)
Other relevant cases: Further research into Kenyan case law concerning hire-purchase disputes would be necessary to find cases that specifically address the timing of repossession. However, the principles established in cases like Kiiru v Laverage are applicable to all hire-purchase disputes. The courts consistently emphasize the need for fairness and adherence to the terms of the contract.
Conclusion
TLDR: The statement that a dealer can only repossess a car after three months of non-payment and must provide six weeks' notice before selling is inaccurate. Kenyan law (Hire Purchase Act, Cap. 507) doesn't mandate these specific timeframes. Repossession is permissible upon default as defined in the hire-purchase agreement, but the process must be fair and comply with the law. Section 15 of the Act restricts repossession without a court order if two-thirds of the price has been paid. The specific terms of the agreement and relevant case law will determine the legality of any repossession.
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Answered by mwakili.com