Hire-Purchase Act 1967 and Contracts Act 1950

QUESTION 1 Advise Karim on the above situation by applying the Contracts Act 1950 and relevant cases.(20 marks)

Karim owns a chain of pharmacies in Subang Jaya, Seremban and Kota Bharu. He manages the ones in Subang Jaya and Seremban while the one in Kota Bharu is handled by his assistant, Zali. Two days ago, Kota Bharu was hit by flood due to continuous heavy rain. Karim’s pharmacy was flooded and some of the medical supplies and other goods were damaged as a result of the flood. To minimize the losses, Zali sold all the damaged medical supplies at below market price. He also sold the medical supplies which were not damaged at a low price as it was easier to clean the premises when it is empty. He also sold the furniture in the pharmacy and the infrared digital thermometer with a stand even though it was still functioning. Karim was upset when he found out what Zali did, but Zali claims that he had to sell everything due to the flood. Karim suffered losses and wishes to take legal action against Zali.



Tan has a hire-purchase agreement with Bank Koh Yak (BKY) for a car over a duration of seven years. He has been paying the instalments diligently and has two more years to complete the payments. Since Tan did not apply for moratorium in 2020, he continued to pay the instalments every month. Tan is thinking of completing it earlier as he wants to reduce his debts in view of the pandemic, but he has not taken any steps on it. In December 2020, however, Tan’s wife was hospitalized because of miscarriage. Tan was so worried about his wife and was busy handling so many things that he forgot to pay the instalment for December. On 25th January 2021, Tan received a 4th schedule notice from BKY informing him that the car will be repossessed if he fails to pay in 14 days. Two weeks later, agents of BKY towed the car from the parking lot while Tan was at the market buying groceries. Tan is upset and wants to know what he can do as he wants the car back. He is also prepared to pay up all the debts since he does not want to be tied up with paying the instalments.


Advise Tan on the above situation by applying the Hire-Purchase Act 1967 and relevant cases.

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