Welcome to Checker

Conditional sale agreements

Such agreements involve a creditor selling goods to a consumer (the buyer), but withholding title to the goods until all payments have been made.

Typically, a retailer, the creditor's agent, will supply the goods to the consumer, while transferring title to the creditor. The creditor will pay his agent for the transfer of title. The consumer can use the goods while continuing to make periodic payments to the creditor. On paying the final instalment, title passes from the creditor to the consumer.

Traditionally, conditional sale agreements have been regulated in parallel with hire-purchase agreements. If there has been a difference between them, it is purely that under hire-purchase, the consumer is under no obligation to take title to the goods, whereas under conditional sale, transfer of title is automatic. (And just to ensure that any difference between them was minimal, Section 9(3) of the Consumer Credit Act 1974 states that hire-purchase shall be treated as credit.)

But there is one odd difference between them, brought about my the 2003 changes to the Sale of Goods legislation. While all the new provisions for redress apply to all conditional sale agreements, only the old rights apply under hire-purchase agreements.