Contracts are agreements between two private parties that create mutual legal obligations for the parties involved. Contracts are a part of everyday life for the majority of people.
Contracts may be oral or written but oral contracts are more challenging to enforce. There are certain types of contracts that must be in writing in order to be valid, for example, those that involve a significant amount of money, such as over $500.
Contracts that courts will not enforce unless they are in writing fall under the Statute of Frauds. Examples of contracts that are governed by the Statute of Frauds include:
- Marriage contracts;
- Contracts that will not be performed in one year;
- Interest in land contracts;
- A guarantee to pay the debts of a decedent; and
- A contract for the sale of goods over a specific amount.
It is important to note that the majority of contracts are governed by state statutes. Because of this, it is important for an individual to consider local laws when dealing with contract issues.
Unilateral contracts involve a promise in exchange for a promise. Other common types of contracts an individual may encounter include:
- Express contracts: These contracts usually specify orally or in writing the exact terms of the contract;
- Conditional contracts: These contracts are based upon a completion of a condition;
- Joint and several contracts: These contracts have multiple parties involved;
- Implied contracts: These contracts arise when a court finds that a contract exists based on the situation;
- Unconscionable contracts: This type of contract puts one party at a greater advantage than another one and are considered unjust;
- Adhesion contracts: These contracts are considered to give one party more bargaining power than another and therefore results in a take it or leave it situation;
- Option contracts: These contracts allow a party to enter to another contract with another party at a later time; and
- Fixed priced contracts: These contracts involve a buyer and a seller that agree to pay a fixed price for a project.
It is important for individuals to keep in mind that contracts may come in all forms and are something that most individuals deal with every day. If an individual is unsure about what type of contract they are involved in, they should reach out to a local attorney to find out more information.
What Is an Installment Contract?
Installment contracts are a certain type of contract in which payments are made in a series of installments instead of in one large, lump payment. In the alternative, an installment contract may involve the delivery of goods or the provision of services that are completed in a series instead of all at one time.
An installment contract is used because it can offer benefits to the consumer who may not have sufficient fonts to make a total, one-time payment. These types of contracts can also benefit producers and sellers, whose sale of goods or distribution of services can only occur on a cyclical basis.
What Are Some Common Examples of Installment Contracts?
An installment contract can be used when a buyer needs to spread out their payments over time. These types of contracts can also be used in situations where a seller is only able to provide the goods or services in increments over time.
Common examples of situations when installments contracts can be used may include:
- Contracts for the sale of a piece of land;
- Vehicle sales;
- Contracts where the goods are subject to seasonal cycles, such as produce or agricultural goods;
- Computer or other technology services that need to be updated regularly; or
- Retail installment contracts, where the seller purchases in-style or in-season clothing from a wholesaler.
An installment contract may also be used in many other circumstances. A contract should be written clearly to include the specific details of how the installment payments or deliveries will work.
What Are Retail Installment Contracts?
Retail installment contracts allow consumers to pay for products or services over a period of time in fixed monthly installments. It is important to note that there are individual and federal state laws that regulate retail installment contracts.
A retail installment contract and security agreement is a type of retail installment contract that is commonly used when purchasing a motor vehicle.
What Are Examples of Retail Installment Contracts?
Retail installment contracts, also called retail installment agreements may include, but are not limited to:
- Health or country club memberships;
- Cosmetic or elective medical procedures;
- Jewelry purchases; and
- Dating service memberships.
What Makes a Retail Installment Contract Legally Binding?
In general, for a retail installment contract to be legally binding, there are certain terms and conditions that must be included, such as:
- Total amount due;
- Interest rate;
- Duration of contract;
- Amount of monthly payment;
- Fees, for example, late fees or payoff charges;
- Down payment received; and
- Cancellation or refund clauses, if applicable.
What if a Retail Installment Contract Is Violated?
A party may breach a contract when they fail to fulfill their side of the agreement as outlined in the contract terms. The terms of the contract are what guides the parties involved regarding what they have to do and how they have to do it in order to maintain their end of the contract.
If one of the parties does not do what the contract requires them to do, the non-breaching party will be permitted to take legal action and may file a lawsuit against the breaching party in court.
A breach of contract may be a partial or a complete breach. The court will also assess whether a breach was substantial or minor, which helps the court determine what type of damages the breaching party should be required to pay.
In the majority of breach of contract cases, the party that does not breach the contract is entitled to damages for at least the current installment that was breached. In other situations, it is also common for the non-breaching party to be paid a damages award that covers the remaining installments or deliveries.
This typically occurs when the breach makes it apparent that the other party will most likely breach on the remaining installments as well. In order to prevent any confusion from arising over the terms of the contract, the parties can include a section in the contract that governs a breach of the installment terms.
For example, the parties may choose to include a grace provision for a first time breach or a provision that states that any breach at all will result in a damages award for the remaining payments.
Do I Need a Contracts Attorney?
An installment contract may be a useful legal tool for individuals and businesses who may have specific preferences regarding a transaction. If you have any issues, questions, or concerns related to drafting, reviewing, or editing an installment contract, you should consult with a contracts lawyer.
If you are a consumer who has entered into a retail installment contract that you believe is illegal or unfair, an attorney can review the contract and advise you of the laws in your state. If you are a retailer, it is important to have an attorney review any installment contracts before you use them with clients to ensure they can be enforced in your state.
If the other party breaches a retail installment contract you are involved in, your lawyer will represent you in court if you have to file a lawsuit to recover damages you suffered as a result of the breach.
