The hire industry is an integral part of our economy and serves a very important function. It simply wouldn’t be economic to purchase a trailer simply to assist your daughter to move into a new flat once every few years, or to buy a marquee for that once-in-a-lifetime party in the back yard. It makes much more sense to pay someone else for the use of their jackhammer or their campervan for the short period of time you plan to use it.
But what laws can the hirer turn to if the digger doesn’t perform as promised, and what can the hire company do if their customer absconds with the rental car and sells it to someone else? The starting point is that there is no “Hire Act” or anything like that. The relationship between the hire company and the hirer is governed by the basic law of contract. So it is the hire agreement that is the first port of call when determining what the parties’ respective rights and obligations are.
Of course the law of contract is supplemented by the general laws that all businesses are subject to like the Fair Trading Act, the Commerce Act, the Consumer Guarantees Act, the Employment Relations Act, and the Companies Act. And there are a couple of Acts of Parliament that do single hire companies out – the Health and Safety at Work Act 2015 (which has rules that particularly relate to the hire industry) and the Personal Property Securities Act 1999.
It often comes as a surprise to hire companies to learn that if they hire anything out for more than one year, they can lose their goods under the Personal Property Securities Act. This was first made clear in the NDG Pine/HSBC/Portacom case. The principle applies not only to hires of more than one year, but also hires for an indefinite period, and any renewable or “carry over” hires. In that case it is essential that the hire company registers its ownership of the goods on the Personal Property Securities Register. Otherwise if the customer goes bust, another creditor like a bank who has registered, can jump in ahead of the hire company and take the hired goods. Registration can be done on-line relatively cheaply and easily, but it pays to know what you are doing, otherwise you could make a fatal mistake.
If you happen to be a consumer hirer (as distinct from a business hirer), it may not matter what the hire contract says. That is because you will probably be covered by the Consumer Guarantees Act 1993. This Act gives hirers certain guarantees they can enforce against the hire company, and remedies they can insist upon, regardless of what the hire contract says. And the hire company can’t hide the fact that these rights apply, because that would be a breach of the Fair Trading Act 1986.
Finally, both hire companies and consumer hirers need to be aware that the Credit Contracts and Consumer Finance Act 2003 (the “CCCFA”) may have some application. Why should that Act be relevant to the hire industry? After all, hire companies don’t typically lend money. However, what they frequently do is hire out goods to consumers, on a long-term basis. And in those circumstances the hire contract may well constitute a “consumer lease” (in which case the hire company has to disclose a lot of information to the hirer), or a “consumer credit contract” (in which case the same disclosure requirements apply but a whole lot of additional constraints as well, including limitations on the right to repossess the goods).
If any of this is of interest to you, contact Geoff Hardy at Martelli McKegg. He is the lawyer for the Hire Industry Association of NZ and there isn’t much he doesn’t know about hire law. Contact Geoff on (09) 379 0700 or email@example.com.