Difference Between Hire Purchase Agreement And Sale Of Goods Agreement

Sales contracts are very similar to tempe purchase agreements and, in fact, the very object of a lease agreement is ultimately the sale of the goods.-Nevertheless, a sale must be distinguished from a rental purchase, as their legal incidents are very different. The distinction between a sales contract and an employment contract is mainly due to the tax objective. Turnover tax is only levied in the case of a sales contract. If one wants to transfer ownership of the goods and the goods are ultimately to be delivered to the buyer, this is a contract of sale, although some work may be required on the seller`s part of the goods. However, if the core of the contract lies in the provision of services and the exercise of powers and no product is delivered as such, it is a contract of enterprise and not a contract of sale. In fact, the difference between the two is very tiny. 5. In the event of a sale, the buyer may transfer a good title to a bonafide buyer on his part, but in the case of a lease purchase, the lessee cannot transfer a title to a bonafide buyer. Companies that need expensive machinery — like construction, manufacturing, facility rental, printing, road freight, transportation, and engineering — can use leases, as well as startups that have few collateral to set up lines of credit.

4. In the event of a sale, the seller bears the risk of any damage resulting from the buyer`s insolvency. In case of purchase of rental, the owner does not take such a risk, because if the tenant does not pay a measurement, the owner has the right to take back the goods. 2. In case of delay of the tenant in the payment of a measurement, the owner has the right to immediately resume possession of the goods without refunding the amount received until then, since the property still belongs to him. The essence of the lease agreement is therefore that there is no purchase agreement, but only a guarantee of the goods, in combination with a call option that may or may not be exercised. A lease purchase agreement can also be distinguished from a “sale agreement” (or a purchase agreement” from the buyer`s point of view). As has already been said, a rental agreement is only an irrevocable offer to purchase, that is, after that, the owner is obliged to sell the goods later if the tenant pays all the instalments as agreed, but cannot be forced to purchase by the lease.