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WHEN WILL MY LIABILITIES AS A GUARANTOR CEASE UNDER A HIRE PURCHASE AGREEMENT ?

As a guarantor, you guarantee to the finance company that the hirer would perform his or her obligations and normally in hire purchase agreement undertakes to repay the hirer's debt to the finance company should the hirer fail to pay the debt by the due date.

The liability of a guarantor will only cease if the total amount payable under the hire purchase agreement is being settled.

The liability of a guarantor continues even though the finance company, pursuant to the provisions of the hire purchase agreement, taken possession of the goods.

A guarantor's liability is strictly limited to that imposed on the hirer by the hire purchase agreement.

A guarantor's liability is not extended to cover a new agreement entered by the hirer and the finance company relating to the same goods comprised in the hire purchase agreement.

WHAT ARE MY RIGHTS AS A GUARANTOR UNDER A HIRE PURCHASE AGREEMENT ?

You can only discharge your liability under a hire purchase agreement by paying the outstanding amount due to the finance company from the hirer and upon such payment made you are entitled to

• sue the hirer in the name of the finance company for any breach of the hirer's obligation under the hire purchase agreement subject to providing the finance company with a suitable indemnity for costs or sue in your own name if you takes a legal assignment of the hire purchase debt
• insist upon the transfer to yourself of all securities taken by the finance company from the hirer to secure performance of the hirer's obligations.

You as a guarantor are even entitled in the event of any claim being made against you by the finance company on the guarantee to avail yourself of any set-off or counter-claim which the hirer may possess against the finance company

You also have the rights of guarantor against the hirer :

• being entitled to be indemnified by the hirer against any claim made by the finance company on the guarantee
• being entitled to compel the hirer to pay the installments in respect of the hire purchase agreement as and when they fall due and for this purpose he may apply to a court of a Magistrate for an order to that effect.