Hire Purchase

Installment System

Is an agreement of hiring

Is an agreement of outright purchase

Property in goods or the ownership remains with hire vendor until the last installment is paid by the purchaser.

The title to goods passes to the buyer immediately on agreement to purchase as is usual in the case of sale.

The hirer may return the goods without further payment as to future installments.

The goods are not returnable unless there is some default on the part of the buyer, the buyer is liable for the price agreed to or reasonable price if not agreed

Seller may take possession of the goods if the hirer is in default.

Seller can only sue for price if the buyer is in default.

The buyer can not hire-out, sell, pledge, assign, destroy, damage or transfer goods.

The buyer may dispose of and give title to any bona fide purchaser.

Advantages

•       Each department is viewed as separate profit centre where department accounts is useful to evaluate performance of individual department by ascertaining trading, profit or loss of each department
•        The financial results namely trading profit or loss of each department can allow management to either discontinue the departments which are incurring losses or to take measures to improve the performance
•         As the profitability of each department can be ascertained by department accounting, the efficiency or inefficiency of each department manager can be evaluated and accordingly remunerated or monitored.
•         Help management to know the fixed cost of each department
•         By ascertaining the fixed cost of each department, the break even point of each department can be worked out
•         Facilitate the preparation of departmental budgets after taking into account the future development/expansion plans of the firm
•       Inter-departmental transactions are priced as per transfer pricing rule agreed upon and departmental profitability is assessed independently which encourage constructive competition amongst the departments which should benefit the overall company’s business.

Joint Venture

Partnership

Limited to a specific venture.

Not limited to a specific venture.

Partners are called co-ventures.

Persons carrying on partnership business are called partners.

No specific Governing Act for joint venture.

Partnership firms are governed by the Partnership Act.

No common firm’s name in joint venture.

Carried on under firm’s name.

Joint venture is a terminable profit seeking venture.

Partnerships are continuing profit seeking enterprise.

Profit or loss is ascertained after the end of the specific venture.

Profit or loss is ascertained on an annual basis.

The doctrine of implied authority is not applicable to co-ventures

The doctrine of implied authority is applicable to partners.

        Parties:

• In consignment, the parties are the consignor and consignee whilst in a joint venture the parties are called co-ventures

          Relationship:

• In consignment, it is principal and agent relationship whilst in a joint venture it is like a partnership

         Powers:

• In consignment, the consignee is the agent who follows instruction from the consignor who is the principal whilst in a joint venture, the co-ventures enjoy full powers as to the sale and purchase of goods and collection of dues, etc

       Governing Act:

• In consignment, as it is a principal and agent relationship hence governed by the Law of Agency whilst in a joint venture it is governed by the Partnership Act

       Sharing Profits:

• In consignment, the consignee is given commission whilst in a joint venture the parties are entitled to profit sharing

        Scope/Activities:

• In consignment, concerned only with the sale of movable whilst, in a joint venture it can undertake all kinds of business activities like construction of infrastructure, film-making and many others and which includes the purchase and sale of goods.

      Capital Contribution:

• In consignment, the consignee do not contribute capital whilst in a joint venture, all the co-ventures contribute funds or capital to the joint venture business.

       Number of Person:

• In consignment, normally two parties namely consignor and consignee whilst in a joint venture it is at least two and can have more parties.