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Very Short Question and Answers - Methods of Sale

Q 1.
What is a hire purchase basis of sale?

Ans:

It is a method where the buyer pays the purchase price in instalments but the ownership remains with the seller until all instalments are paid.

Q 2.
When does the ownership of the goods transfer to the buyer in a hire purchase sale?

Ans:

Ownership transfers only after the buyer pays all the instalments.

Q 3.
What rights does the seller have if the buyer fails to pay an instalment in a hire purchase sale?

Ans:

The seller can ask for the goods to be returned and also sue the buyer for damages.

Q 4.
Is the buyer allowed to purchase the goods before all instalments are paid in a hire purchase sale?

Ans:

Yes, by paying the total remaining amount at any stage during the instalment period.

Q 5.
For what type of goods is hire purchase commonly used?

Ans:

It is used for durable and expensive items such as cars, motorcycles, TVs, and machinery.

Q 6.
What is an instalment payment system?

Ans:

It is a system where goods are sold and payments are made in agreed instalments, known as the deferred instalment plan.

Q 7.
When does ownership transfer in an instalment payment system?

Ans:

Ownership passes to the buyer when the goods are sold and the initial payment is made.

Q 8.
If the buyer defaults on a payment in an instalment system, can the seller take back the goods?

Ans:

No, the seller cannot ask for the goods to be returned as ownership has already passed to the buyer.

Q 9.
What legal action can a seller take in an instalment payment system if the buyer defaults?

Ans:

The seller can sue the buyer in a court of law for the balance amount due.

Q 10.
How is payment made in both hire purchase and instalment systems?

Ans:

In both methods, payment is made in instalments.

Q 11.
State one key difference between hire purchase and instalment payment system regarding ownership of goods.

Ans:

In hire purchase, ownership transfers after the last instalment. In instalment payment, ownership transfers upon sale and initial payment.

Q 12.
In which method does the buyer immediately become the owner of the goods?

Ans:

In the instalment payment system.

Q 13.
Can the seller reclaim goods in a hire purchase system if the buyer defaults?

Ans:

Yes, the seller can reclaim the goods.

Q 14.
Can the seller reclaim goods in an instalment payment system if the buyer defaults?

Ans:

No, the seller cannot reclaim the goods.

Q 15.
Give an example of a product often sold using hire purchase.

Ans:

A car is often sold using hire purchase.

Q 16.
What is meant by deferred instalment plan?

Ans:

It is another term for the instalment payment system, where payments are deferred and made over time in instalments.

Q 17.
If a buyer wants to own the goods early in hire purchase, what should they do?

Ans:

They should pay off all the remaining instalments at once.

Q 18.
Who bears the risk of loss of goods in hire purchase before ownership transfers?

Ans:

The seller bears the risk until ownership transfers to the buyer.

Q 19.
Who bears the risk of loss of goods in instalment payment system after the initial payment?

Ans:

The buyer, since ownership has already been transferred.

Q 20.
What legal recourse does a seller have if the buyer stops paying instalments in hire purchase?

Ans:

The seller can take back the goods and sue the buyer for damages.

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