Section 537. A hire of property is a contract whereby a person, called the letter, agrees to let another person, called the hirer, have the use or benefit of a property for a limited period of time and the hirer agrees to pay rent therefore.
Section 538. A hire of immovable property is not enforceable by action unless there be some written evidence signed by the party liable. If the hire is for more than three years or for the life of the letter or hirer, it is enforceable only for three years unless it is made in writing and registered by the competent official.
Section 539. Costs of a contract of hire are borne by both parties equally.
Section 540. The duration of a hire of immovable property cannot exceed thirty years. If it is made for a longer period, such period shall be reduced to thirty years. The aforesaid period may be renewed, but it must not exceed thirty years from the time of renewal.
Section 541. Contract of hire may be made for the duration of the life of the letter or of the hirer
Section 542. When several persons claim the same movable property under different contracts of hire, the hirer who has first taken possession of the property by virtue of his contract shall be preferred.
Section 543. When several persons claim the same immovable property under different contracts of hire:
- If none of the contracts is required by law to be registered, the hirer who has first taken possession of the property by virtue of his contract shall be preferred.
- If all the contracts are required by law to be registered, the hirer whose contract was first registered shall be preferred.
- If there is a conflict between a contract which is required by law, and a contract which is not required by law, to be registered, the hirer whose contract has been registered shall be preferred, unless the other hirer has taken possession of the property by virtue of his contract before the date of registration.
Section 544. Unless otherwise provided by the contract of hire, a hirer cannot sublet or transfer his rights in the whole or part of the property hired to a third person. If the hirer fails to comply with this provision the letter may terminate the contract.
Section 545. If the hirer rightfully sublets the property hired, the sub-hirer is directly liable to the letter. In such case a payment of rent made in advance by the sub-hirer to the hirer who sublets cannot be set up against the letter.
The provisions does not prevent the letter from exercising his rights against the hirer.
Duties and liabilities of the letter
Section 546. The letter is bound to deliver the property hired in a good state of repair.
Section 547. The letter is bound to reimburse to the hirer any necessary and reasonable expenses incurred by him for the preservation of the property hired, except expenses for ordinary maintenance and petty repairs
Section 548. In case of delivery of the property hired in a condition not suitable for the purpose for which it is let, the hirer may terminate the contract.
Section 549. The delivery of the property hired, the liability of the letter in case of defects and eviction and the effects of a non-liability clause are governed by the provisions of this Code concerning sale, mutatis mutandis.
Section 550. The letter is liable for any defects which arise during the continuance of the contract and he must make all the repairs which may become necessary, except those which are by law or custom to be done by the hirer.
Section 551. If the defect is not such as would deprive the hirer of the use and benefit of the property hired, and can be remedied by the letter, the hirer must first notify the letter to make it good. If the defect is not made good within a reasonable time, the hirer may terminate the contract provided the defect is serious enough to justify this course.
Duties and liabilities of the hirer
Section 552. The hirer cannot use the property hired for the purpose other than those which are ordinary and usual, or which have been provided in the contract.
Section 553. The hirer is bound to take as much care of the property hired as a person of ordinary prudence would take of his own property, and to do ordinary maintenance and petty repairs.
Section 554. If the hirer act contrary to the provision of Sections 552, 553 or contrary to the terms of the contract, the letter may notify the hirer to comply with such provisions or terms, and if the hirer fails to comply, the letter may terminate the contract.
Section 555. The hirer is bound to allow the letter or his agents to inspect the property hired at reasonable times.
Section 556. If the property hired requires urgent repairs during the continuance of the contract, and if the letter desires to do an act necessary for such repairs, the hirer cannot refuse permission to have such act done, though it may cause him inconvenience. However, if the repairs are of such nature as would take unreasonable length of time and thereby cause the property unsuitable for the purpose for which it is let, the hirer may terminate the contract.
Section 557. In any of the following cases:
- If the property hired is in need of repairs by the letter, or
- If a preventive measure is required for avoiding a danger, or
- If a third person encroaches on the property hired or claims a right over it, the hirer shall forthwith inform the letter of occurrence, unless the letter already has knowledge of it
If the hirer fails to comply with this provision, he is liable to the letter for any injury resulting from the delay occasioned by such failure.
Section 558. The hirer may not make alterations in, or addition to, the property hired without the permission of the letter. If he does so without such permission, he must, on request of the letter, restore the property to its former condition, and he is liable to the letter for any loss or damage that may result from such alteration or addition
Section 559. If no time for payment of rent is fixed by the contract or by custom, the rent must be paid at the end of each period for which it is stipulated, that is to say: if a property is hired at so much per year, the rent is payable at the end of each year, if a property is hired at so much per month, the rent is payable at the end of each month.
Section 560. In case of non-payment of rent, the letter may terminate the contract. But, if the rent is payable at monthly or longer intervals, the letter must first notify the hirer that payment is required within a period not less than fifteen days.
Section 561. If no written description of the condition of the property hired has been made and signed by both parties, the hirer is presumed to have received the property in good state of repair and he must return the property in such condition at the termination or extinction of the contract, unless he can prove that it was out of repair at the time of delivery.
Section 562. The hirer is liable for any loss or damage caused to the property hired by his own fault or by the fault of persons living with him or being his sub-hirer.
But he is not liable for loss or damage resulting from proper use.
Section 563. No action by the letter against the hirer in connection with the contract of hire can be entered later than six months after the return of the property hired.
Extinction of Contract of Hire
Section 564. A contract of hire is extinguished at the end of the agreed period without notice.
Section 565. A hire of garden land is presumed to be made for one year.
A hire of paddy land is presumed to be made for the agricultural year.
Section 566. If no period is agreed upon or presumed, either party may terminate the contract of hire at the end of each period for the payment of rent, provided that notice of at least one rent period is given, but no more than two months notice need be given.
Section 567. If the whole of the property hired is lost, the contract is extinguished.
Section 568. If part only of the property hired is lost without the fault of the hirer, he may claim that the rent be reduced in portion to the part lost.
If in such case the hirer cannot with the remaining part accomplish the purpose for which he entered the contract of hire, he may terminate.
Section 569. A contract of hire of immovable property is not extinguished by the transfer of ownership of the property hired.
The transferee is entitled to the rights and is subjected to the duties of the transferor towards the hirer.
Section 570. If, at the end of the agreed period, the hirer remains in possession of the property and the lessor knowing thereof does not object, the parties are deemed to have renewed the contract for an indefinite period.
Section 571. If a contract of hire of paddy land is terminated or extinguished after the hirer has planted the paddy, the hirer is entitled to remain in the possession till the harvest is finished, but he must pay rent.
Section 572. A hire-purchase is a contract whereby an owner of a property lets it out on hire and promises to sell it to, or that it shall become the property of, the hirer, conditionally on his making a certain number of payments.
The contract of hire-purchase is void unless made in writing.
Section 573. The hirer may at any time terminate the contract by redelivering the property at his own expense to the owner.
Section 574. The owner may also terminate the contract in case of default of two successive payments, or breach of any material part of the contract; in which case all previous payments are forfeited to the owner who is entitled to resume possession of the property.
In case of breach of contract by default of the last payment, the owner is entitled to forfeit previous payment and resume possession of the property only after the expiration of one installment period.