DIFFERENCE BETWEEN SALE AND HIRE PURCHASE 

SALE : 

(1) Sale of Goods, Act, 1930 apply on sale. 

(2) The possession(custody) of goods transferred to the buyer immediately 

(2) Ownership of goods transferred immediately on sale of goods 

(3) Buyer become the owner of goods after sale and has all rights of owner ie. resale, mortgage. 

(4) Price can be paid in one time or in installments 

(5) It may be oral or written


HIRE PURCHASE : 

(1) It must be in writing.

(2) Hire Purchase Act, 1972 apply . 

(3) Ownership of goods is transferred from seller to buyer only after payment of last installment 

(4) The hire has option to terminate contract at any stage. If hire want to terminate contract he/she will not liable for remaining balance installments. 

(5) If HIRE TERMINATE CONTRACT BEFORE LAST INSTALLMENT : 

• Then all installments already paid will be counted as hire charges for the usage of goods by hire.

• Now seller continue to be the owner of goods 

• Hire will not liable for remaining balance installments. 

(6) If HIRE PAID ALL INSTALLMENTS : 

• Then all installments paid will be counted as part/parcel of payment of goods.

• Buyer will become the owner of goods. Ownership is now transferred from seller to buyer. 

• Now he has all rights which are available to owner of goods ie. resale, pledge. 

(7) Hire is not liable to pay sale tax on hire purchase. It becomes payable only when it becomes sale. 

(8) Agreement should be in writing and signed by all the parties. 

(9) If hirer defaults payments, then the owner has right to take possession of goods back.