The main points of distinction between the ‘sale’ and ‘hire-purchase’ are as follows:
1. In a sale, property in the goods is transferred to the buyer immediately at the time of contract, whereas in hire-purchase the property in the goods passes to the hirer upon payment of the last instalment.
ADVERTISEMENTS:
2. In a sale the position of the buyer is that of the owner of the goods but in hire purchase the position of the hirer is that of a bailee till he pays the last instalment.
3. In the case of a sale, the buyer cannot terminate the contract and is bound to pay the price of the goods. On the other hand, in the case of hire- purchase the hirer may, if he so likes, terminate the contract by returning the goods to its owner without any liability to pay the remaining instalments.
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4. In the case of a sale, the seller takes the risk of any loss resulting from the insolvency of the buyer. In the case of hire purchase, the owner takes no such risk, for if the hirer fails to pay an instalment the owner has the right to take back the goods.
5. In the case of a sale, the buyer can pass a good title to a bona fide purchaser from him but in a hire-purchase, the hirer cannot pass any title even to a bona fide purchaser.
ADVERTISEMENTS:
6. In a sale, sales tax is levied at the time of the contract whereas in hire- purchase sales tax is not leviable until it eventually ripens into a sale (K. L. Johar & Co. vs Dy. Commercial Tax Officer).