Knowing Your Right Under a Work and Pay Scheme

Feature Article Knowing Your Right Under a Work and Pay Scheme
AUG 26, 2021 LISTEN

Work and pay is a scheme introduced in Ghana some few years ago. The scheme was introduced by banks and financial institutions and made popular by the Ghana Private Road Transport Union (GPRTU). It was designed to help the union acquire fleet of vehicles for its members on a hire purchase facility that was agreed on by both parties.

The work and pay scheme ensures that drivers or transport unions are provided with vehicles and made to pay the cost plus interest within a reasonable period of time. The system involves the parties agreeing on the hire purchase price of the vehicle and then signing agreements for the process to begin. Most businessmen and organisations have all resorted to this kind of facility due to its lucrative nature. In recent times, most of these businesses or individuals prepare the agreement in a manner that makes the benefactors poorer due to unfavorable terms and conditions in the agreement.

The laws that govern such a scheme is the Hire Purchase Act. At common law, a contract of Hire Purchase involves two parties, a hirer and an owner. The owner delivers goods to a hirer who in return makes periodic payments to the owner and further agrees to return the goods and terminate the hiring or choose to purchase the goods at the end of the hiring period. Most work and pay agreements follow this same sequence but fail to follow the tenets of a Hire Purchase.

A Hire Purchase Agreement is a bailment transaction where the owner is deemed as a bailor and the hirer a bailee. The hirer retains actual possession and use of the goods after the completion of the agreement. The owner retains the property or title in the goods until the hirer completes the payment plan before the property in the goods is transferred to the hirer who now becomes the new owner.

The principal case that governs Hire Purchase Agreements is the case of Helby v Mathews [1895} A.C. 471. In that case, the principle was established that a hirer has the option to purchase the goods, he may also choose not to purchase it. This case distinguished a hire purchase from sale of goods.

In Ghana, a Hire Purchase Agreement is regulated by the Hire Purchase Act, 1974 (NRCD 292), before the promulgation of this law, the Sale of Goods Act, 1963 (Act 137) governed most of the cases involving hire purchase and conditional sales agreements.

Work and pay as the name suggest is a scheme that has the features of a hire purchase, the property in the goods in such a scheme remains with the owner and not the hirer. The hirer is made to pay an agreed amount in installment for a specific period. The hirer gets the opportunity to use the property whiles making the payment on the required dates. The property in the goods is transferred to the hirer after he makes the final payment for the property.

There are however certain formal and mandatory requirements of a hire purchase which must be adopted in a work and pay scheme.

In a hire purchase agreement, it is required that the agreement is in writing and signed by the hirer and all other parties to the agreement. The parties can also request their authorized agents to sign on their behalf.

In Yayo v Nyinase (1975) 1 GLR 422, the defendant argued that the agreement was not enforceable as it was not reduced into writing . The Court of Appeal in its ruling held that even though the agreement was not enforceable by the owner, non-compliance would not affect the rights of the buyer because the section made it clear that it was the seller who would suffer for failing to comply with the statutory provisions. Apart from a written agreement, the hirer must also ensure that he does not sign a blank page in the agreement or forced to sign the document under duress or without reading through to satisfy himself with the content of the agreement. Owners or hirers are fond of inserting snatch back clauses in such contracts and this aids them to take the goods back from the hirer at the least opportunity.

In most work and pay agreements, owners fail to mention the cash price of the goods, this anomaly has been cured with the promulgation of the Hire Purchase Act. Owners are now required to state orally to the buyer, the cash price and hire purchase price in a hire purchase agreement. In most work and pay agreements, the owners only mention the hire purchase price of the vehicle leaving out the cash price.

In Ampadu and another v Dadzie (1978) GLR 54, The appellant argued that his seizure of a vehicle due to a three months arrears makes his action lawful. The court held that the contract was unenforceable as a hire purchase contract since the agreement failed to state the cash price.

Every Hire Purchase agreement must state the cash price, hire purchase price and the total purchase price, the amounts to be paid in each instalment, the date for such payment and the mode of the payments, a sufficient description of the goods and a notice of a right to recovery of goods as contained in the first schedule of NRCD 292.

Sometimes owners in a work and pay scheme most often fail to include conditions, warranties and other details of the property to help the hirer or driver to make an informed decision. In some cases, the owner purchases the car and gives it to the hirer, the hirer has little to contribute in terms of the type of car he wants, the make and other important details that would help him pay for the facility.

Most work and pay schemes comes with clauses which makes it difficult for the hirer to terminate the contract. This is referred to as “minimum payment clause” in a Hire Purchase Agreement. In the case of Associated Distributors Ltd v Hall CA 1938 . The hirer returned a bicycle he hired after paying for one installment. A minimum payment clause in the agreement requires the hirer to pay half of the total price after termination by the hirer. The court ruled in favour of Associated Hall since that clause was stated in the agreement and agreed upon by both parties.

One other formal and mandatory requirement of a hire purchase is for a copy of the agreement to be delivered to the hirer within 14 days after the agreement has been made. The court is also empowered to decide on any breaches subject to the conditions of the agreement and also what it deems equitable to the parties.

It is important for parties in a work and pay scheme to ensure that they agree or conform to the conditions set up in a hire purchase agreement to ensure fairness and equity, if in doubt, the hirer must engage the services of a lawyer to ensure that a favourable agreement is drawn by the owner.

Mustapha Jimah

[email protected]


Former Law Student

Kings University College.

Aplaku - Accra