An installment contract involves one party performing in a series of installments, such as a car loan or a coffee delivery agreement. Breach of contract can result in termination or legal action. Careful review and legal advice are recommended before signing an installment contract.
An installment contract is a contract in which one party performs the contract in a series of installments, rather than being obligated to perform immediately. A simple and common example of an installment contract is a car loan. One party gets the possession and use of the car, in exchange for regular payments with interest. When the contract is fulfilled, the party using the car receives title from the other party to the contract.
Installment agreements can be used for many types of business agreements. In addition to payments, the person making the installment payment could also provide services or goods. For example, a coffee roasting company might agree to deliver certain quantities of coffee every two weeks as part of an installment deal with a coffee shop. Similarly, a computer technician might offer regular service visits in accordance with a service contract with an office.
When one party breaches an installment contract, the other party can bring an action for breach on the basis of the part of the contract that remains unfulfilled. In the car loan example, if someone is two years into a three-year loan and stops making payments, the lender can sue for the entire unpaid balance, not just the single missed payment, assuming that the borrower intends not to pay the loan. Similarly, once one party has breached an installment agreement by failing to meet an installment, the other party can terminate the agreement without penalty.
There are some inherent dangers to an installment contract, as such contracts often involve one party performing and then waiting for the other party to follow through on their end of the deal. In a deed contract with land, for example, the person who owns the land allows the buyer to use it while the buyer pays for it. If the buyer stops paying, he’ll still be on the land. Therefore, those contracts are structured to give people options in case the other party breaches. With a contract by deed, for example, the buyer does not have legal title to the land until the contract is fulfilled, even though he has the right to use the land. Similarly, the seller can also repossess the land for non-payment.
When entering into a deal involving an installment contract, the contract should be carefully reviewed to ensure that the terms are understood. If there is confusion, there appears to be a mistake or one of the terms is unsatisfactory, this should be addressed before the contract is signed. Because contracts can be filled with legal jargon, it’s helpful for a lawyer to review a contract before signing it, to avoid a situation where you get stuck in an unfavorable contract.
Protect your devices with Threat Protection by NordVPN
